Crowds in or crowds out? The effect of foreign direct investment on domestic investment in Chinese cities

This study investigates the empirical relationship between foreign direct investment (FDI) and domestic investment (DI) in China using a comprehensive city-level panel over the period from 2003 to 2011. System-generalized method-of-moment estimation reveals mixed results. At the national level, FDI neither crowds in nor crowds out DI, indicating a neutral FDI–DI nexus. However, when the full sample is segmented by geographical topology, a positive and significant FDI–DI nexus can be found in eastern and, to a lesser extent, central cities. A negative, although insignificant, association is reported among western cities. Further, the empirical nexus is conditional on several local absorptive capacities including human capital, financial development, and institutional quality. These findings suggest that a region-based FDI strategy in general and local governments should strengthen their absorptive capacities to fully internalize FDI spillovers

Changing the conditions for development aid:A new paradigm?

The publication of the Assessing Aid report of the World Bank in 1998 has stimulated the debate on the future of development aid and aid policies. This collection contains a number of studies that aim to contribute to this debate. In this introduction we put the discussion on the future of development aid into perspective and summarise the main findings of the other contributions in this collection. We focus on two issues: the aid effectiveness debate. before and after the Assessing Aid report, and the discussion on policy conditionality and good governance. Our main conclusions are that the evidence on aid effectiveness provided in the World Bank report is less convincing than has been claimed and that the good governance criterion proposed by the World Bank for distributing aid comes down to introducing conditionality in disguise

Capital flight and the uncertainty of government policies

This paper shows that policy uncertainty, measured by the uncertainty of budget deficits, tax payments, government consumption and the inflation rate, has a statistically significant positive impact on capital flight. This result remains robust after having applied stability tests