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This study employs state-level panel data to explore the relationship between inward foreign direct investment (FDI) and income inequality in the United States. Using panel cointegration techniques that allow for cross-sectional heterogeneity and cross-sectional dependence, we find that, in the long run, FDI exerts a significant and robust negative effect on income inequality in the United States. This result for the United States as a whole does not imply that FDI narrows income gaps in each individual state. There is considerable heterogeneity in the long-run effects of FDI on income inequality across states, with some states (21 out of 48 cases) exhibiting a positive relationship between FDI in income inequality. (JEL F21, D31, C23), I. INTRODUCTION The challenges that foreign direct investment (FDI) might involve for high-income countries such as the United States are typically discussed with respect to the domestic repercussions of foreign [...]

The role of industry-level research-and-development and firm-level productivity for multinational enterprises' (MNEs') choice of making foreign direct investment (FDI) is explored. A decision process is accounted for through firm-specific datasets on German MNEs with differing equity stakes in Indian affiliates. How German firm decisions were influenced by Indian FDI liberalization is examined.

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-9701.2009.01233.x Byline: Axel Dreher (1), Florian Molders (2), Peter Nunnenkamp (3) Abstract: Abstract This paper analyses whether aid channelled through non-governmental organisations (NGOs) is less affected by selfish donor motivations and better targeted to needy recipient countries than aid distributed by state agencies. We employ Tobit (and Probit) models and make use of an exceptionally detailed database that allows an assessment of the allocation of Swedish aid channelled through NGOs in comparison to the allocation of Swedish official aid. Our analysis provides mixed results. On the one hand, NGOs appear to be altruistic as far as available indicators on political and commercial motivations of aid can tell. On the other hand, needs-based targeting of aid by NGOs turns out to be surprisingly weak. GDP per capita of recipient countries shapes the allocation of official aid, but not that of aid channelled through NGOs. The headcount of absolute poverty has a significantly positive effect on aid allocation, but its impact is not particularly strong when NGOs are involved. Overall, the Swedish case supports the sceptical view that NGOs are not necessarily superior donors compared to state aid agencies. Author Affiliation: (1)Georg-August University, Goettingen; KOF Swiss Economic Institute; IZA and CESifo (2)DIW German Institute for Economic Research, Berlin (3)Kiel Institute for the World Economy

Foreign direct investment (FDI) has led to employment generation in the non-maquiladora manufacturing sector of Mexico in both white- and blue-collared jobs. Details on the impact of FDI on the employment in export-oriented and capital-intensive markets are discussed.

Booming foreign direct investment (FDI) in post-reform India is widely believed to promote economic growth. We assess this proposition by subjecting industry-specific FDI and output data to Granger causality tests within a panel cointegration framework. It turns out that the growth effects of FDI vary widely across sectors. FDI stocks and output are mutually reinforcing in the manufacturing sector, whereas any causal relationship is absent in the primary sector. Most strikingly, we find only transitory effects of FDI on output in the services sector. However, FDI in the services sector appears to have promoted growth in the manufacturing sector through cross-sector spillovers. Key words foreign direct investment, economic reform, growth effects, India, cointegration, causality

The report was prepared to give a review on the UNCTAD publication on the foreign direct investment in the World Investment Report 2003 where the report discusses eight key issues related to development impact of foreign direct investment. The studies revealed that market failure was not sufficient condition for flexible and selective foreign direct investment policies to be effective.

The report here stated that it aim at overcoming several shortcomings of previous empirical studies on the relationship between IPR protection and FDI. The FDI is first of all analyzed on a disaggregated level, secondly the proposition that stronger IPR protection raises quality of FDI in term of its technology and thirdly the extent to which the relationship between IPR protection and FDI is affected by applying alternative measures of IPR protection. The studies also stated that strengthening IPR protection suffers from diminishing returns in inducing more and better FDI.

A study is conducted to find out the conditions that can effectively utilize foreign direct investment (FDI) to govern the economic growth in developing countries.

Summary It has been intensively and controversially discussed whether “good” economic policies and governance in the recipient countries render foreign aid more effective in alleviating poverty and stimulating economic growth. By contrast, the question of whether aid recipient countries would benefit from stronger income effects if foreign donors provided higher quality aid has received scant attention so far. We make use of the index of donor performance from the Center for Global Development to compare the effects of quality-adjusted aid and unadjusted aid on changes in GDP per capita. Our difference-in-differences analysis reveals significant and quantitatively important treatment effects for quality-adjusted aid after the introduction of the Paris Declaration on Aid Effectiveness in 2005, while we do not find significant treatment effects for unadjusted aid. This implies that only recipient countries with increased aid inflows of high quality benefit in terms of increasing GDP per capita. The quality of aid matters most when accounting for delayed effects. However, our results depend on the sample of recipient countries. [ABSTRACT FROM AUTHOR]

It is widely held that foreign direct investment (FDI) has a positive effect on economic growth. To test this hypothesis, we perform convergence regressions derived from a theoretical model on the impact of FDI on endogenous technological change in small economies. The model includes FDI externalities that enhance growth, but also shows that FDI can crowd out host country income and reduce local innovation. The empirical analysis employs disaggregated US data for various FDI-related activities—in addition to the conventionally used aggregate FDI stocks and flows. We estimate the net FDI impact on the convergence rate of per-capita income to US levels, controlling for human development, financial development, and trade. We find that FDI accelerates convergence for high-income countries only, otherwise slowing it down. [ABSTRACT FROM AUTHOR]

Using panel data for 143 countries over the period 1973–2002, this paper empirically analyzes the influence of US aid on voting patterns in the UN General Assembly. We use disaggregated aid data to account for the fact that various forms of aid may differ in their ability to induce political support by recipients. We obtain strong evidence that US aid buys voting compliance in the Assembly. More specifically, our results suggest that general budget support and grants are the major aid categories by which recipients have been induced to vote in line with the United States. When replicating the analysis for other G7 donors, no comparable patterns emerge. [ABSTRACT FROM AUTHOR]

We analyze the aid portfolio of various bilateral and multilateral donors, testing whether they have prioritized aid in line with the Millennium Development Goals (MDGs). Employing Tobit models that combine sectorally disaggregated aid data with various indicators reflecting the situation of recipient countries regarding the MDGs, we show that donors differ in the extent to which their sectoral aid allocation is conducive to achieving major MDGs. Some MDGs, notably the fight against HIV/AIDS, have shaped the allocation of aid. However, with respect to other MDGs such as primary education, there is a considerable gap between donor rhetoric and actual aid allocation. This invites the conclusion that the current focus on substantially increasing aid is unlikely to have the desired effects unless the targeting of aid is improved. [ABSTRACT FROM AUTHOR]

The paper applies an alternative approach to assess whether foreign aid promotes economic growth in developing countries, based on the concept of temporary growth accelerations suggested by Hausmann, Pritchett and Rodrik. In addition to aggregate aid, we differentiate between major aid categories, including grants, loans and so-called short-impact aid. It turns out that aid flows have a small but significantly positive effect on the conditional probability of growth accelerations. This result holds across different estimation methods. However, the significance of results crucially depends on the criteria applied to identify growth accelerations. [ABSTRACT FROM AUTHOR]