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Keywords: financial market development; foreign direct investment; gravity model Abstract We study an underexplored research question, namely whether financial market development in both host and source countries has an effect on bilateral stocks of foreign direct investment (FDI) and, particularly, whether the effect of financial market development in one member of the country pair conditions the effect of financial market development in the other member. We estimate gravity-type models in a global sample of 43 source and 137 host countries over the period 2001-12. We address reverse causality concerns by restricting the sample to observations where reverse causality, if existent, should be less relevant. Our major and robust findings are that bilateral FDI increases with better developed financial markets in both the host and the source country and that for developing host countries, financial market development in source and host countries functions as substitutes for each other. Byline: Ana Cuadros, Julian Donaubauer, Eric Neumayer, Peter Nunnenkamp

Byline: Julian Donaubauer, Peter Nunnenkamp Keywords: investor-state dispute settlement; arbitration tribunals; intra-EU disputes; appointment bias of arbitrators Abstract Recent information on investor-state dispute settlement, collected by UNCTAD, suggests that European investors are more litigious than non-European investors. Most of the intra-EU claims for financial compensation are directed at relatively poor respondent states in Central Europe. However, private investors win surprisingly few intra-EU disputes. The appointment bias of arbitrators and the composition of tribunals appear to matter for the outcome of investor-state dispute settlement. Article Note: We thank several reviewers for critical comments and helpful suggestions. Michaela Rank provided excellent research assistance. CAPTION(S): Table A1: Detailed information on intra-EU disputes

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.worlddev.2017.07.023 Byline: Anna Minasyan, Peter Nunnenkamp, Katharina Richert Abstract: * We address the question of whether the quality of donors matters for aid effectiveness. * We compare the effects of quality-adjusted and unadjusted aid on changes in GDP per capita. * We perform a difference-in-differences analysis. * We find significant and quantitatively important treatment effects for quality-adjusted aid. * The quality of aid matters most when accounting for delayed effects. Article History: Accepted 20 July 2017

Byline: Ayesha Ashraf, Dierk Herzer, Peter Nunnenkamp Abstract We examine the effects of greenfield FDI and cross-border mergers and acquisitions (M&As) on total factor productivity (TFP) in developed and developing host countries of FDI. Using panel data for up to 123 countries over the period from 2003 to 2011, we find that greenfield FDI has no statistically significant effect on TFP, while M&As have a positive effect on TFP in the total sample. Greenfield FDI and M&As both appear to be ineffective in increasing TFP in the subsample of developing countries. In contrast, M&As have a strong and positive effect on TFP in the subsample of developed countries.

Byline: Michael Hubler, Alexander Glas, Peter Nunnenkamp Abstract We hypothesise that North-South trade is associated with knowledge spillovers that create labour productivity gains depending on various aspects of Southern absorptive capacity. We use the novel World Input-Output Database (WIOD) that provides bilateral and bisectoral panel data for 39 countries and 35 sectors for 1995-2009. We examine growth in relative South-North labour intensities (South-North convergence) for 31 industrialised source and eight emerging recipient countries. We find strong evidence that various components and individual indicators of absorptive capacity interact with imports of investment goods in such a way that the relative labour intensity is reduced. GMM and GLS estimations corroborate the results. Policies that improve various of the identified aspects of absorptive capacity are more promising than policies that select only one. Elevating the absorptive capacity of emerging economies to the maximum level in the world would halve the South-North gap in labour intensities within a couple of decades if it were solely achieved through the trade channel. Article Note: We gratefully acknowledge financial support by the state of Baden-Wurttemberg within the programme Strengthening Efficiency and Competitiveness in the European Knowledge Economies (SEEK). We are very grateful to Susanne Becker and Simon Koesler for their excellent research support. We thank Rebecca Hartje, Florens Flues, Sourafel Girma, Carolyn Fischer, Michael Schymura, Andreas Loschel, Taran Faen, Ebru Voyvoda and participants of research seminars at the Centre for European Economic Research in Mannheim and at the Universities of Hanover and Gottingen and participants of the SEEK project workshop in Dublin for very helpful comments.

Byline: Julian Donaubauer, Birgit E. Meyer, Peter Nunnenkamp Abstract We construct comprehensive and comparable indices on the most relevant components of economic infrastructure. An unobserved components model is employed to cover the largest possible number of developing and developed countries over the period 1990-2010. We map major findings from the new indices of infrastructure and provide country rankings, which we also compare with subjective assessments of infrastructure in the World Economic Forum's Global Competitiveness Report. Finally, we exemplify possible applications related to trade and foreign aid. By overcoming several data limitations, our new global index can help assess the links between infrastructure and economic development more systematically. Article Note: We would like to thank an anonymous reviewer and the Associate Editor, Richard Kneller, for constructive criticism and most helpful advice. We are most grateful to Michaela Rank for excellent research assistance. CAPTION(S): Appendix S1. Additional tables and figures.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.worlddev.2015.10.015 Byline: Julian Donaubauer, Birgit Meyer, Peter Nunnenkamp Abstract: * We analyze whether foreign aid helps recipient countries to attract FDI. * Our estimation approach accounts for dependencies between aid, infrastructure, and FDI. * Targeted aid promotes FDI indirectly through the infrastructure channel. * Aid in infrastructure also impacts directly on FDI. Article History: Accepted 2 October 2015

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.euroecorev.2015.07.004 Byline: Axel Dreher, Anna Minasyan, Peter Nunnenkamp Abstract: Political misalignment and greater ideological distance between donor and recipient governments may render foreign aid less effective by adding to transaction costs and eroding trust. We test this hypothesis empirically by considering the political ideology of both governments along the left-right spectrum in augmented models on the economic growth effects of aid. Following the estimation approach of Clemens et al. (2012), we find that aid tends to be less effective when political ideology differs between the donor and the recipient. Author Affiliation: (a) Heidelberg University, Bergheimer Strasse 58, 69115 Heidelberg, Germany (b) KOF Swiss Economic Institute, Switzerland (c) CEPR, United Kingdom (d) University of Goettingen, Platz der Gottinger Sieben 5, 37073 Gottingen, Germany (e) IZA, Germany (f) CESifo, Germany (g) Kiel Institute for the World Economy, Kiellinie 66, 24105 Kiel, Germany Article History: Received 27 October 2014; Accepted 10 July 2015