Aid, Governance and Private Foreign Investment: Some Puzzling Findings for the 1990s
Abstract
Does official aid pave the road for private foreign investment or does it suffocate private initiative by diverting resources towards unproductive activities? We explore this question using panel data covering a large number of developing and emerging economies during the 1990s. Controlling for countries’ institutional environment, we find that, evaluated at the mean, the marginal effect of aid on private foreign investment is close to zero. Surprisingly, however, the effect is strictly positive for countries in which private agents face a substantial regulatory burden. This result is robust across a wide range of specifications, samples and estimation methods.
Integrity signals
Registry
Cites
Statistics
Claims the paper makes
Cites
The Determinants of Foreign Direct Investments: Sensitivity Analyses of Cross‐Country Regressions
Chakrabarti, A. (2001) · Kyklos · doi:10.1111/1467-6435.00142 · Cited by 1,073 · see citing works
Flagged first, then by citations
Cited by
Sorted by citations
Foreign Direct Investment, Aid and Terrorism: An Analysis of Developing Countries
Bandyopadhyay, S., Sandler, T., & Younas, J. (2011) · Federal Reserve Bank of St. Louis Working Paper · doi:10.20955/wp.2011.004 · Cited by 42 · see citing works
- Authors
- Harms, P., & Lutz, M.
- Affiliations
- RWTH Aachen University (DE)
- University of St.Gallen (CH)
- ORCID
- Harms, Philipp
- Venue
- The Economic Journal
- Publisher
- Oxford University Press (OUP)
- Published
- 2006-07-01
- Volume
- 116
- Issue
- 513
- Pages
- 773-790
- ISSN
- 0013-0133 (ISSN-L)
- 1468-0297
- OpenAlex
- W1990946619
- Cited by
- 152
- References
- 1
- Citations by year
- 2026: 4 · 2025: 9 · 2024: 9 · 2023: 11 · 2022: 4 · 2021: 15 · 2020: 8 · 2019: 7 · 2018: 6 · 2017: 7 · 2016: 9 · 2015: 16 · 2014: 7 · 2013: 9 · 2012: 6
- FWCI
- 20.92
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- The Economic Journal (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Alexandria (UniSG) (University of St.Gallen) (submittedVersion)
- RWTH Publications (RWTH Aachen) (submittedVersion)
- Topics
- Social Sciences › Development › International Development and Aid
- Social Sciences › Business, Management and Accounting › Strategy and Management › International Business and FDI
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Global trade and economics
- Keywords
- official development assistance, foreign direct investment, foreign private investment, aid effectiveness, regulatory burden, institutional environment, emerging and developing economies, governance
About these checks
Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
Statistics and arithmetic are recomputed, not judged.
Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
What counts as a claim ›How we measure confidence ›How we check this ›
Are you an author, or do you see a problem with this page? Request a review
