124
E. Borensztein et al. / Journal of International Economics 45 (1998) 115 – 135
Table 1
FDI and per capita GDP growth: panel of two decades (1970–89)
Regression number
Independent
variable
Log (initial GDP)
Schooling
Government
consumption
Log (11black
market premium)
FDI
1.1
1.2
Coefficient
(standard error)
1.3
1.4
1.5
1.6
1.7
20.0124
(0.0040)
0.0162
(0.0044)
20.0969
(0.0339)
20.0183
(0.0055)
0.6590
(0.4689)
20.0122
(0.0039)
0.0128
(0.0045)
20.0811
(0.0333)
20.0185
(0.0054)
20.8489
(0.7203)
1.6231
(0.6086)
20.0100
(0.0041)
0.0078
(0.0044)
20.0818
(0.0326)
20.0188
(0.0060)
21.0190
(0.6883)
1.3891
(0.5715)
20.0188
(0.0060)
20.0202
(0.0057)
20.0125
(0.0041)
0.0058
(0.0043)
20.0817
(0.0323)
20.0125
(0.0052)
21.3665
(0.6746)
1.6639
(0.5743)
20.0200
(0.0060)
20.0221
(0.0058)
20.0024
(0.0124)
20.0077
(0.0050)
20.0032
(0.0014)
0.0061
(0.0044)
0.0033
(0.0042)
20.0668
(0.0323)
20.0104
(0.0054)
21.4628
(0.6612)
1.6531
(0.5930)
20.0197
(0.0064)
20.0219
(0.0067)
20.0092
(0.0128)
20.0024
(0.0057)
20.0023
(0.0014)
0.0011
(0.0117)
20.0119
(0.0090)
20.0111
(0.0050)
0.0005
(0.0005)
20.0435
(0.0316)
20.0113
(0.0054)
21.8535
(0.6759)
1.6365
(0.6365)
20.0253
(0.0068)
20.0155
(0.0070)
20.0050
(0.0129)
20.0002
(0.0057)
20.0001
(0.0014)
0.0031
(0.0117)
20.0087
(0.0092)
0.0056
(0.0019)
0.39(58)
0.15(60)
1.13
(22)
FDI*schooling
20.0126
(0.0043)
0.0142
(0.0043)
20.0870
(0.0330)
20.0180
(0.0054)
1.0659
(0.3850)
Sub-Saharan
African dummy
Latin American
dummy
Assassinations
Wars
Political rights
(1 best, 7 worst)
Financial
depth
Inflation
rate
Institutions
(1 worst, 10 best)
R 2 -adjusted, individual
periods (No. of obs.)
Education threshold
(No. countries.threshold)
0.28(69)
0.08(69)
0.32(69)
0.10(69)
0.33(69)
0.08(69)
0.52
(46)
0.34(69)
0.23(69)
0.73
(38)
0.37(69)
0.19(69)
0.82
(32)
0.32(64)
0.21(67)
0.89
(29)
Notes: The system has 2 equations, where the dependent variables are the per capita GDP growth rates over each decade. Each equation
has a different constant term (not reported)b . Other coefficients are constrained to be the same for all periods. Estimation is by the SUR
technique. The estimation allows for different error variances in each equation and for correlation of these errors across equations.
Education threshold indicates that countries with secondary schooling above this threshold will benefit positively from FDI. The number
of countries that satisfy it in 1980 for each regression is in the parenthesis.
Including the interaction between FDI and human capital improves the overall
performance of the regression. The specification in regression 1.2 replaces the FDI
variable by the product between FDI and human capital, and yields a coefficient
that is positive and highly statistically significant. While this specification follows
−0.17
−0.78
−1.10
−0.41
−0.52
−0.14
1.39
−1.27
Japan
Germany
Italy
Belgium
Australia
Austria
Dutch
Canada
1.30
(4.02)
1.09
(3.72)
1.27
(3.21)
0.85
(2.63)
0.26
(1.10)
0.38
(1.20)
0.39
(1.48)
1.99
(5.50)
0.82
(2.51)
0.36
(1.25)
0.42
(1.26)
0.82
(2.45)
0.57
(8.07)
0.28
(4.07)
0.13
(1.45)
0.18
(2.52)
0.18
(3.50)
0.06
(0.84)
0.03
(0.44)
0.33
(4.03)
0.05
(0.71)
0.35
(5.67)
0.30
(4.01)
0.40
(5.39)
0.06
(3.60)
0.07
(4.21)
0.07
(2.98)
0.19
(7.06)
0.14
(9.64)
0.04
(1.90)
0.09
(5.21)
0.04
(1.51)
0.09
(3.67)
0.07
(3.59)
0.12
(5.29)
—
—
0.94
(4.11)
—
0.39
(1.69)
0.76
(9.18)
1.51
(13.23)
0.80
(1.14)
0.21
(1.34)
0.67
(2.73)
1.28
(10.38)
2.77
(7.67)
—
Own
colony
0.08
(1.33)
0.02
(0.41)
0.25
(4.01)
0.12
(2.29)
0.15
(3.78)
0.07
(1.32)
0.22
(5.06)
0.23
(3.82)
0.04
(0.45)
0.18
(3.76)
0.47
(5.29)
0.19
(2.22)
Other
colony
40.09
(4.14)
0.34
(0.36)
3.16
(2.54)
0.67
(0.66)
1.22
(1.63)
−0.10
(0.10)
−0.77
(0.91)
3.46
(2.96)
2.37
(2.01)
1.23
(1.38)
1.18
(1.09)
1.17
(1.06)
Egypt
5.04
(3.94)
−5.99
(6.28)
0.38
(0.29)
0.74
(0.73)
3.43
(4.67)
2.39
(2.45)
1.51
(1.83)
−2.28
(1.98)
4.64
(4.07)
2.56
(2.95)
−2.50
(2.38)
0.67
(0.63)
Israel
0.01
(1.98)
0.002
(0.26)
−0.006
(0.73)
−0.01
(1.60)
0.008
(1.50)
0.03
(4.13)
0.03
(5.69)
−0.05
(5.69)
0.03
(3.25)
−0.006
(0.92)
−0.006
(0.81)
0.001
(1.73)
Muslim
0.01
(1.69)
0.00
(0.00)
0.004
(0.45)
−0.02
(2.17)
0.003
(0.60)
0.03
(3.89)
0.04
(6.24)
−0.05
(6.43)
0.01
(1.86)
0.02
(2.36)
0.001
(0.13)
0.009
(1.16)
Roman
Catholic
−0.004
(0.50)
0.002
(0.24)
−0.02
(2.66)
−0.02
(2.35)
−0.008
(1.36)
0.17
(0.22)
0.01
(1.60)
−0.03
(2.89)
0.01
(1.23)
−0.13
(0.19)
−0.007
(0.85)
0.62
(0.76)
Other
Relig.
0.50
0.41
0.48
0.47
0.55
0.54
0.56
0.51
0.62
0.60
0.58
0.50
R2
Note: Standard errors calculated with White’s correction for heteroskedasticity. t-statistics in parentheses. Coefficients on time dummies not reported.
1.96
−0.61
France
Scandinavia
−1.17
1.84
United Kingdom
United States
UN
Income Openness Democracy Friend
Table 5. OLS regressions: Dependent Variable: Log of aid (five-year averages), 1970 to 1994.
408
398
400
378
402
398
385
398
390
394
390
364
0.93
0.92
0.96
0.87
0.70
0.94
0.93
0.97
0.94
0.82
0.94
0.90
# of Non-zero
obs.
share
WHO GIVES FOREIGN AID TO WHOM AND WHY?
43
Asia
Sub-Saharan
Africa
Debt
Rescheduling
-0.061
(0.27)
- 0.008
(0.48)
~ 0.033
(1.74)
(2.17)
0.105
growth rate
Terms of
Trade
(3.03)
- 1.931
(0.53)
0.003
(0.26)
- 0.007
(0.44)
0.02 1
(2.66)
-0.168
(4.12)
1.988
(1.29)
- 0.027
(2.05)
0.022
(1.60)
0.003
(0.76)
-0.310
(1.01)
0.482
- 0.014
(3.10)
0.173
- 0.002
(0.44)
0.873
growth rate
Population
(2.63)
(1.06)
(2.54)
Per capita GNP
(0.22)
- 0.068
0.030
(0.17)
0.035
- 0.034
Indirect
taxes/GNP
III
(0.37)
0.240
(1.14)
- 0.006
(0.03)
0.150
(2.04)
1.724
(2.51)
- 22.00
(0.23)
0.040
(1.02)
0.062
(1.44)
-0.010
(2.00)
0.200
(0.97)
4.449
(0.32)
0.018
(1.04)
- 0.563
(0.42)
0.034
- 0.202
Alog Infant
Mortality
V
(0.59)
~ 0.005
(0.78)
- 0.028
(3.40)
0.002
(0.18)
0.089
(0.76)
- 0.072
(0.31)
~ 0.004
(1.28)
0.076
(0.29)
- 0.005
- 0.024
Alog life
expectancy
VI
(4.28)
- 0.014
(0.34)
0.062
(1.31)
0.047
(0.30)
4.198
(1.90)
0.667
(2.17)
- 0.041
(2.40)
1.254
(1.30)
-0.212
- 0.688
Alog primary
schooling
VII
(panel data using base sample with decade-averaged
- 0.05 1
(0.64)
- 7.778
(0.67)
(0.15)
- 0.320
0.395
Inflation
tax rate
IV
taxes and infant mortality
1.016
Investment/
GNP
II
investment,
(4.83)
- 0.098
(Public and private
cons.)/GDP
- 0.007
(1.17)
- 0.076
LGNPCAP2
LGNPCAP
RHS variable:
Aid/GNP
Dependent variable:
I
Regressions showing the impact of aid on consumption,
1971-80, 81-90) a.b
Table 5
data
%
!,
%
2
c.
2
2
2
g
5
B
h
a
,?
3
f’
,”
a
“3
$_
Table 1
Growth regressions with polynomial effects of aid and policy
Annual growth rate in GDP per capita
Sample
56 countries, five periods Ž1974–1977 to 1990–1993.
Regression
1.1
1.2
1.3
1.4
1.5
1.6
Aid
Aid 2
Aid=policy
Policy 2
Budget surplus
Inflation
Openness
Financial depth
Ethnic fractionalization
Assassinations
Ethnic=assassination
Institutional quality
Initial GDP per capita
Effect of aid at median
Degrees of freedom
DWH test a
Sargan test b
sˆ´ =100
0.238 Ž2.28.
y0.754 Ž2.31.
y0.006 Ž0.22.
0.0002 Ž0.26.
0.096 Ž2.36.
y0.013 Ž2.22.
0.016 Ž2.67.
0.010 Ž0.54.
0.002 Ž0.18.
y0.454 Ž1.98.
0.911 Ž2.15.
0.811 Ž4.57.
0.001 Ž0.13.
0.289 Ž2.31.
211
0.22
0.47
3.0
0.241 Ž2.34.
y0.763 Ž2.38.
0.044 Ž1.08.
0.262 Ž2.56.
y0.570 Ž2.02.
0.052 Ž1.26.
0.002 Ž2.22.
0.114 Ž2.63.
y0.016 Ž2.44.
0.015 Ž2.62.
0.012 Ž0.62.
0.002 Ž0.25.
y0.458 Ž1.99.
0.899 Ž2.11.
0.836 Ž4.82.
0.001 Ž0.10.
0.287 Ž2.37.
206
0.15
0.87
2.97
0.274 Ž2.64.
y0.699 Ž2.52.
0.134 Ž2.49.
a
y0.004 Ž0.15.
0.091 Ž2.49.
y0.011 Ž2.30.
0.017 Ž3.36.
0.010 Ž0.55.
0.001 Ž0.12.
y0.460 Ž2.02.
0.919 Ž2.17.
0.810 Ž4.57.
0.001 Ž0.14.
0.291 Ž2.37.
213
0.11
0.65
2.99
0.077 Ž1.89.
y0.013 Ž2.86.
0.019 Ž3.66.
0.018 Ž1.12.
y0.002 Ž0.21.
y0.418 Ž1.86.
0.775 Ž1.89.
0.676 Ž4.26.
y0.002 Ž0.33.
0.045 Ž1.14.
213
0.3
0.1
2.97
0.097 Ž2.22.
0.103 Ž2.56.
y0.007 Ž1.46.
0.018 Ž3.56.
0.010 Ž0.50.
0.003 Ž0.33.
y0.485 Ž2.16.
0.959 Ž2.30.
0.824 Ž4.60.
0.002 Ž0.26.
0.320 Ž2.64.
208
0.05
0.75
2.99
0.081 Ž1.95.
y0.015 Ž2.35.
0.025 Ž5.10.
0.018 Ž0.98.
y0.001 Ž0.12.
y0.427 Ž1.89.
0.783 Ž1.87.
0.762 Ž4.66.
y0.001 Ž0.19.
0.110 Ž2.24.
208
0.14
0.38
2.95
551
The p-value of the Durbin–Wu–Hausman test for equality of the OLS and the IV estimates.
The p-value of Sargan’s test for overidentifying restrictions. Heteroskedasticity-consistent t-values in parenthesis. Time dummies and dummies for
Sub-Saharan Africa and East Asia are included in all regressions. Regressions Ž1.4., Ž1.5., and Ž1.6. exclude five observations as discussed in the main text.
The five observations are: Nicaragua Ž1986–1989, 1990–1993., Gambia Ž1986–1989, 1990–1993. and Guyana Ž1990–1993.. Instruments: Dummy for Egypt,
Arms imports Ž t y1., Policy Ž t y1., Policy 2 Ž t, t y1., Policy=lnŽpopulation., Policy=Initial GDP per capita, Policy=ŽInitial GDP per capita. 2 , Policy=aid
Ž t y1., Policy=aid 2 Ž t y1., aid Ž t y1., aid 2 Ž t y1.. The reduced form partial R 2 measures for the endogenous regressors, Aid, Aid 2 and Aid=policy, are
0.30 Ž0.30., 0.38 Ž0.33., and 0.38 Ž0.39. in regression 1.1 Ž1.4., respectively.
b
H. Hansen, F. Tarp r Journal of DeÕelopment Economics 64 (2001) 547–570
Dependent variable