Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/100697
Authors: 
Donaubauer, Julian
Meyer, Birgit
Nunnenkamp, Peter
Year of Publication: 
2014
Series/Report no.: 
Kiel Working Paper 1954
Abstract: 
We raise the hypothesis that aid specifically targeted at economic infrastructure helps developing countries attract higher FDI inflows through improving their endowment with infrastructure in transportation, communication, energy and finance. By performing 3SLS estimations we explicitly account for dependencies between three structural equations on the allocation of sector-specific aid, the determinants of infrastructure, and the determinants of FDI. We find fairly strong and robust evidence that targeted aid promotes FDI indirectly through the infrastructure channel. In addition, aid in infrastructure appears to have surprisingly strong direct effects on FDI.
Subjects: 
aid effectiveness
sector-specific aid
foreign direct investment
infrastructure
JEL: 
F21
F35
O18
Document Type: 
Working Paper

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