Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/67340
Authors: 
Donaubauer, Julian
Herzer, Dierk
Nunnenkamp, Peter
Year of Publication: 
2012
Series/Report no.: 
Kiel Working Paper 1806
Abstract: 
We address the question of whether foreign aid helps attract foreign direct investment (FDI). This could be achieved if well targeted aid removed critical impediments to higher FDI inflows. In particular, test the hypothesis that aid for education is an effective means to increase FDI flows to host countries in Latin America where schooling and education appears to be inadequate from the viewpoint of foreign investors. We employ panel data techniques covering 21 Latin American countries over the period from 1984 to 2008. We find that aid for education has a statistically significant positive effect on FDI. This effect is robust to potential outliers, sample selection, alternative specifications and different estimation methods.
Subjects: 
foreign aid
foreign direct investment
aid effectiveness
human capital
JEL: 
E24
F21
F35
O15
O19
Document Type: 
Working Paper

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