In search of FDI-led growth in developing countries

This paper challenges the widespread belief that FDI generally has a positive impact on economic growth in developing countries. It addresses the limitations of the existing literature and re-examines the FDI-led growth hypothesis for 28 developing countries using cointegration techniques on a country-by-country basis. The paper finds that in the vast majority of countries FDI has no statistically significant long-run impact on growth. In very few cases, FDI indeed contributes to economic growth both in the long and the short run. But for some countries, there is also evidence of growth-limiting effects of FDI in the short or long term. Furthermore, our results indicate that there is no clear association between the growth impact of FDI and the level of per capita income, the level of education, the degree of openness, and the level of financial market development in developing countries.FDI; Growth; Developing countries; Cointegration

Analytic Solution to the Piecewise Linear Interface Construction Problem and its Application in Curvature Calculation for Volume-of-Fluid Simulation Codes

The plane-cube intersection problem has been around in literature since 1984 and iterative solutions to it have been used as part of piecewise linear interface construction (PLIC) in computational fluid dynamics simulation codes ever since. In many cases, PLIC is the bottleneck of these simulations regarding compute time, so a faster, analytic solution to the plane-cube intersection would greatly reduce compute time for such simulations. We derive an analytic solution for all intersection cases and compare it to the one previous solution from Scardovelli and Zaleski (Ruben Scardovelli and Stephane Zaleski. "Analytical relations connecting linear interfaces and volume fractions in rectangular grids". In: Journal of Computational Physics 164.1 (2000), pp. 228-237.), which we further improve to include edge cases and micro-optimize to reduce arithmetic operations and branching. We then extend our comparison regarding compute time and accuracy to include two different iterative solutions as well. We find that the best choice depends on the employed hardware platform: on the CPU, Newton-Raphson is fastest with vectorization while analytic solutions perform better without. The reason for this is that vectorization instruction sets do not include trigonometric functions as used in the analytic solutions. On the GPU, the fastest method is our optimized version of the analytic SZ solution. We finally provide details on one of the applications of PLIC: curvature calculation for the Volume-of-Fluid model used for free surface fluid simulations in combination with the lattice Boltzmann method.Comment: 18 pages, 6 figure

The Economic Benefits of Giving Aid in Terms of Donors` Exports

This paper uses the gravity model of trade to investigate the link between bilateral and multilateral foreign aid and exports. There are three primary findings from this approach. First, in the long term, the average return, in terms of an increase in the donor’s level of goods exports, is approximately $ 2.15 US for every aid dollar spent on bilateral aid. Second, multilateral aid has a positive effect on export levels only in the short term, whereas in the long term, the effect is negative. Third, aid from other donors does not give rise to a displacement effect for a given donor-recipient trade relationship. This paper also makes comparisons among donors and finds that aid has a positive and significant effect on most donors’ export levels.exports, foreign aid, donors, panel data, sample selection, GLM

Does German Development Aid Promote German Exports?

This paper uses a static and dynamic gravity model of trade to investigate the link between German development aid and exports from Germany to the recipient countries. The findings indicate that in the long run,German aid is associated with an increase in exports of goods that is larger than the aid flow, with a point estimate of 140 percent of the aid given. In addition, the evolution of the estimated coefficients over time shows an effect that is consistently positive but which oscillates over time. Interestingly, in the period from 2001 to 2005, a steady increase in the effect of aid on trade can be observed following a decrease in this phenomenon in the second half of the nineties. The paper also distinguishes among recipient countries and finds that the return on aid measured by German exports is higher for aid to countries considered “strategic aid recipients” by the German government.International Trade; Foreign Aid; Germany

In Search for a Long-run Relationship between Aid and Growth: Pitfalls and Findings

In this paper we investigate the relationship between per capita income and foreign aid for a panel of 131 (alternatively 52) recipient countries over the period 1960 to 2006 by employing annual data and 5-year averages. Reliance on standard panel estimation techniques, such as 2-ways FE estimation, panel GMM and SUR estimation, points to some pitfalls (impossibility of possible cointegration between aid and growth, autocorrelation of the error terms, endogeneity of the variables) that must be dealt with panel time series techniques (such as panel unit root test, panel cointegration tests and panel dynamic feasible generalized least squares estimation (DFGLS)). Estimations with DFGLS show that aid has an insignificant or a minute negative significant impact on per capita income. This result holds for countries with above- and below-average aid-to-GDP ratios, for countries with different levels of human development, with different income levels and from different regions of the world. It can be shown that by not controlling for autocorrelation, one erroneously attributes to aid a larger, significant negative impact on per capita income. We also find that aid has a significant positive (even though) small impact on investment, but a negative and significant impact on domestic savings (crowding out) and the real exchange rate (appreciation).Foreign aid; real per capita income; panel time series techniques; dynamic feasible generalized linear least squares (DFGLS)

Does Aid translate into Bilateral Trade? Findings for Recipient Countries

This paper uses the gravity model of trade to investigate the link between foreign aid and exports in recipient countries. Most of the theoretical work emphasizes the negative impact of aid on recipient countries' exports primarily due to exchange rate appreciation, disregarding possible positive effects of aid in overcoming supply bottlenecks and promoting bilateral trade relations. Our empirical findings -all based on endogeneity-proof techniques (such as Dynamic OLS or more refined techniques) - depend very strongly on whether bilateral trade relations and autocorrelation of the disturbances are controlled for. When not controlling for these phenomena, the impact of aid is quite substantial (especially in Asia, Latin America & Caribbean) but when sound estimation techniques are applied the net impact of aid on recipient countries' exports becomes insignificant in the full 130-country sample and the subsamples: Sub-Saharan Africa & MENA, Asia and Latin America & the Caribbean. However, this rather disappointing finding is in line with the small macroeconomic impact of aid found in earlier studies. --International trade,foreign aid,recipient exports,bilateral trade relations

Foreign Aid and Recipient Countries` Exports: Does Aid Promote Bilateral Trade?

This paper uses the gravity model of trade to investigate the link between foreign aid and exports in recipient countries. Most of the theoretical work emphasizes the negative impact of aid on recipient countries’ exports primarily due to exchange rate appreciation, disregarding possible positive effects of aid in promoting bilateral trade relations. The empirical findings, in contrast, indicate that the net impact of aid on recipient countries’ exports is positive -even though the macroeconomic impact of aid is rather small- and that the average return for recipients’ exports is about 1.50 US$ for every aid dollar spent. We argue that “bilateral aid” seems to promote good bilateral trade relations, mutual trust and familiarity and that those factors reinforce bilateral trade, including recipient country exports. The paper also estimates the effect of different types of aid (bilateral aid versus multilateral aid flowing to a specific recipient) and studies aid’s contribution to an expansion of exports in different regions of the world. It is found that aid is strongly export-enhancing in Asia and Latin America, but not in Africa.International trade; foreign aid; recipient exports; bilateral trade relations

Symphony on the Danube: A Classical Music Cruise

Suggested readings for the Penn Alumni Travel cruise along the Danube. See the Library Guide for the bibliography here

Untersuchung zur Eignung von Baumarten und waldbaulichen Verfahren für Restaurationsmaßnahmen im Nebelwaldgebiet Costa Ricas

Tropische Nebelwälder gehören zu den am meisten bedrohten Ökosystemen der Erde. Neben dem Schutz ist für den Erhalt des Lebensraumes tropischer Nebelwald dringend die Restauration ehemaliger, degradierter Nebelwaldflächen nötig. Leider sind die bisher erprobten Verfahren zu allgemein gehalten, um am jeweiligen Restaurationsstandort erfolgreich angewendet werden zu können. Zudem ist das derzeitige wissenschaftliche Erkenntnisvermögen über den Sukzessionsablauf und die Wuchseigenschaften der vorkommenden Baumarten unbefriedigend. Ziel der Untersuchung war daher eine Bewertung der Eignung von Baumarten und waldbaulichen Verfahren zur Anlage von Restaurationsflächen im montanen Eichennebelwald Costa Ricas. Das Untersuchungsgebiet lag in den Waldungen des Cloudbridge Reservates nahe dem Ort San Gerardo de Rivas. Als Versuchsflächenstandort wurde eine 1,05 Hektar große, auf einer Höhe von 1.828 bis 1.891 Meter gelegene, um 35 Grad geneigte Hangfläche mit einer Ausrichtung von Nordost bis Nordwest ermittelt. Es wurden 20 quadratische Parzellen mit einer Seitenlänge von 18 Metern errichtet, auf denen vier waldbauliche Verfahren und zwölf Baumarten mit Hilfe der statistischen Verfahren Regressionsanalyse und Kruskal-Wallis-Test bewertet wurden. Nach Feststellen der Degradationsstufe wurden die Restaurationsverfahren Framework Species (Verfahren 1) und Nurse Trees (Verfahren 2) ausgewählt. Weiterhin wurde eine Kombination der beiden Verfahren (Verfahren 3) und die natürliche Sukzession (Verfahren 0) untersucht. Datengrundlage bildeten die in den Jahren 2008, 2009, 2010 und 2012 aufgenommenen Werte für Baumhöhe, Wurzelhals- und Brusthöhendurchmesser, Kronenradius, Bodenbedeckung, Stammfußposition, Beschattung und Vitalität. Die Verfahren 1, 2 und 3 weisen bereits in den ersten vier Wuchsjahren gute Bedingungen für die natürliche Etablierung von Baumarten auf. In Verfahren 0 siedelten sich keine naturverjüngten Baumarten an. Verfahren 0, in dem die natürliche Sukzession ablaufen kann, ist für eine zügige Restauration im Untersuchungsgebiet aufgrund fehlender Naturverjüngung restaurationsrelevanter Baumarten ungeeignet. Die Verfahren 1 bis 3 sind zur Anlage von Restaurationsflächen unterschiedlich gut geeignet. In Verfahren 2 werden die höchsten Wuchsleistungen erreicht. Es ist aber aufgrund der hohen Individuensterblichkeit und geringen Verdrängung von Gräsern und Farnen am wenigsten für die Anlage von Restaurationsflächen geeignet. Weniger Individuensterblichkeit, bessere Beschattungswirkung und höhere Anziehungskraft auf samenverbreitende Tierarten wurden bei Verfahren 1 beobachtet. Verfahren 3 kombiniert die guten Eigenschaften von Verfahren 1 und 2, weswegen es für die Restauration im Untersuchungsgebiet am besten geeignet ist. Gräser und Farne werden ausreichend verdrängt, eine hohe vertikale Bestandesstruktur wird erreicht und die Individuensterblichkeit ist geringer als in Verfahren 2, so dass mit diesem Verfahren eine gute Grundlage für die natürliche Etablierung restaurationsrelevanter Baumarten geschaffen wird. Voraussetzung für eine gelungene Restauration ist bei den Verfahren 1, 2 und 3 die Beachtung der Ansprüche der jeweiligen Baumarten an die Exposition und die Wasserversorgung. Bis auf die Baumart Gordonia fruticosa sind alle weiteren untersuchten Baumarten für die Anlage von Restaurationsflächen geeignet. Vorteilhaft ist in jedem Fall die Pflanzung in Baumartenmischung. Die Baumart Cecropia polyphlebia sollte gruppenweise in Mischpflanzungen eingebracht werden. Alle weiteren Baumarten bevorzugen oder vertragen eine einzelbaumweise Mischung. Alnus acuminata und Inga oerstediana sind selbst schattenunverträglich und müssen daher mit langsamer wachsenden Baumarten, wie Quercus rapurahuensis oder Billia hippocastanum, kombiniert werden. Für die Position Senke sind alle Baumarten, mit Ausnahme von Alnus acuminata und der oben genannten Baumart Gordonia fruticosa, geeignet. Einschränkungen gibt es für die Positionen Nordosthang und Nordhang, an denen nur die Baumarten Alnus acuminata, Billia hippocastanum, Inga oerstediana, Quercus rapurahuensis und Ulmus mexicana gepflanzt werden sollten. Viburnum costaricanum kann ebenfalls am Nordhang eingesetzt werden. Unter sehr hohem Pflegeaufwand ist auch die Pflanzung von Sapium pachystachis an Nordost- und Nordhang möglich. Um Restauration im montanen Eichennebelwald Costa Ricas in Zukunft zielführend umzusetzen, wurden Pflanzschemata entwickelt, die auf Verfahren 3 basieren und die die Ansprüche der einzelnen Baumarten an Exposition und Wasserversorgung berücksichtigen. Die Pflanzung nach diesen Schemata bewirkt möglichst geringe Individuensterblichkeiten, hohe Wuchsleistungen und Vitalitäten. Ebenfalls wird dadurch eine hohe vertikale Struktur und Kronenüberdeckung des Bodens erreicht, um gute Voraussetzungen für das Anwachsen von Naturverjüngung zu gewährleisten

In search of FDI-led growth in developing countries

This paper challenges the widespread belief that FDI generally has a positive impact on economic growth in developing countries. It addresses the limitations of the existing literature and re-examines the FDI-led growth hypothesis for 28 developing countries using cointegration techniques on a country-by-country basis. The paper finds that in the vast majority of countries FDI has no statistically significant long-run impact on growth. In very few cases, FDI indeed contributes to economic growth both in the long and the short run. But for some countries, there is also evidence of growth-limiting effects of FDI in the short or long term. Furthermore, our results indicate that there is no clear association between the growth impact of FDI and the level of per capita income, the level of education, the degree of openness, and the level of financial market development in developing countries