This short paper explores the complementarity between foreign aid and foreign direct investment (FDI). Recent studies on aid concluded that aid should come to an end or be reduced with a radical modification of the terms and conditions and FDI and trade should replace aid as the engine of development. In this paper, we argue that aid complements FDI and advances the efficacy of FDI in promoting...

" …the primary determinant of a country's standard of living is how well it succeeds in developing and utilizing the skills, knowledge, health and habits of its population. SUMMARY In recent years, academics and policy-makers have emphasized the role of human capital formation in economic development. By creating human capital, countries become more attractive to private investment, both domest...

On the basis of Dunning’s Investment Development Path (IDP) hypothesis, this paper tests the macroeconomic determinants of Chinese Offshore Direct Investment (ODI) from a home-country perspective. We review the recent firmand country-level studies on determinants of Chinese ODI. We propose a model and test seven home-country macroeconomic variables as determinants of Chinese ODI. Our results re...

In this paper we investigate how strategic aspects in uence the choice between exporting and servicing foreign markets by setting up a plant in the foreign country. We show that tari s on imports in conjunction with the size of the set up costs incurred while setting up plants and the size of the foreign market will determine whether domestic rms which face competition from a foreign rm will ch...

a r t i c l e i n f o Keywords: Foreign direct investment Total factor productivity Technological progress Panel data analysis Vietnam By making use of a recently released dataset that covers a large number of manufacturing firms over the period 2000–2005, this paper examines the impact of foreign direct investment (FDI) and FDI generated spillovers on total factor productivity (TFP) in eight r...

While the problems many African countries face are widely known and dominate the perceptions of the continent as a whole, there are a number of positive aspects that, although highly relevant for foreign investors, are little known. As in other continents, there are profitable investment opportunities to be found in most African countries. Foreign Direct Investment (FDI) is welcomed and, indeed...

Previous empirical work on the link between domestic and foreign investment provides mixed results which partly depend on the level of aggregation of the data. We argue that the aggregated home country implications of foreign direct investment (FDI) cannot be gauged using firm-level data. Aggregated data, in turn, miss channels through which domestic and foreign activities interact. Instead, in...

China is one of the most popular investment destinations in the world. This paper argues that FDI inflows into China are in fact driven by some fundamental inefficiencies in the Chinese economy. Specifically, one of the inefficiencies has to do with a high level of fragmentation of both goods and asset markets. This fragmentation increases demand for FDI both because market fragmentation makes ...

E conomic integration among countries has continued to deepen over the past decade. This is especially visible at the regional level, with the escalation of Regional Integration Agreements (RIAs) ranging from Free Trade Areas (FTAs) to Customs Unions (CUs). Nowadays, many developing countries have entered a new regional integration agreement with developed and developing countries. S...

Foreign investors access local knowledge by co-locating with other foreign direct investment (FDI) firms. However, different aspects of local knowledge can be obtained from different local businesses. Thus, some foreign investors co-locate with FDI firms from the same country of origin, while others co-locate with foreign industry peers. We argue that, relative to industry FDI agglomeration, co...