Labor productivity impact of Internet infrastructure: evidence from a panel data

The study aims to shed more light on the relationship between Internet penetration and labor productivity by analyzing the aggregate cross-country panel data available for a wide range of countries in the period of 2001-2015. An overview of hypothetical mechanisms behind the communication technologies’ impact on productivity is provided, while the Augmented Solow model is used as a theoretic framework which motivates the choice of variables for empirical analysis. The estimates are obtained by using a selection of econometric estimators: fixed-effects OLS, mean-group common correlated effects and "Difference GMM" for additional robustness. Extensive empirical analysis is performed in order to account for certain well-known factors which can cause a bias in the estimates. When using a "penetration index" comprising a few dimensions of a country’s Internet development as a main variable of interest, the paper finds significant positive effect only in developed countries’ sample. Difference GMM estimates, however, are not significant. Additional analysis suggests that there may be a more pronounced connection between mobile subscriptions and labor productivity (and more than just in the developed countries). The independent variables’ estimates all have a theoretically expected signs. The results are fairly robust and allow a cautiously optimistic view on the relationship between Internet development and labor productivity growth. Nevertheless the extent of effect may sensitive to some unobserved country characteristic or industry

Evaluating the Impact of BITs and Preferential Trade and Investment Treaties on Foreign Direct Investment between Developed Countries

This paper focuses on the effect of Bilateral Investment Treaties and Preferential Trade and Investment Agreements on outwards FDI stocks of developed countries (proxied by OECD countries) in one another in the period of 1985-2013. Estimations are obtained with use of the gravity equation in a large panel based on OECD FDI positions data, where the “knowledge-and-physical-capital model” of international investment motivates the choice of independent variables. This research is the first one to analyze the effect of both types of investment agreements on FDI of developed countries; moreover the most recent data available is used. Empirical analysis reveals an absence of statistically significant positive effect for FDI of both BITs and PTIAs with exception of a strong positive effect associated with joining the EU. Although the results are robust to changes in independent variables and estimation techniques, sensitivity analysis suggests that BITs had a stronger positive effect on FDI (34%) in the period of 1985-2000. PTIAs appear to have mixed effect on FDI because of the connection between trade and investment. Overall the findings reinforce doubts voiced about the effectiveness of bilateral treaties as a policy measure for increasing FDI attractiveness. Existence of such treaties between OECD countries may be partly explained by a growing wish on their part to create more liberalized and open markets rather than simply protect investment abroad