Foreign direct investment performance: a stochastic frontier analysis of location and variance determinants

The opening up process of the eastern European countries was marked by greater integration of foreign direct investment (FDI) with their western neighbouring countries. Using the single step maximum likelihood (ML) approach to stochastic frontier analysis (SFA), the location and variance determinants of FDI are estimated using the knowledge capital (KK) model framework. The findings, based on a panel of bilateral FDI stocks from 10 western to 10 eastern European countries over the 1996 to 2007 period, suggest FDI is determined by both horizontal and vertical motives while the process of liberalisation and infrastructural developments significantly reduce the variance of FDI. In using a stochastic frontier specification of the KK model, the efficiency of FDI performance is identified relative to maximum levels. The bilateral efficiency scores suggest a mixed performance, indicating scope to improve the efficiency of FDI

A stochastic frontier analysis of trade efficiency for the new EU member states: implications of Brexit

Examining the trade performance for the new European Union (EU) member states is an important issue in the context of the enlargement process – and in a new era of membership contraction with the likely exit of the United Kingdom from the EU. Typically, the degree of trade integration is assessed by comparing actual trade volumes with potential trade volumes projected from the gravity model parameters estimated for a reference group of countries that best represent normal trade relations. This approach, however, does not compare trade levels against a maximum level of trade defined by a stochastic frontier. In this paper, a stochastic frontier specification of the gravity model is used to identify the efficiency of trade integration relative to maximum trade levels. The findings, based on a panel dataset of bilateral exports from 18 Western European countries to the 13 new member states over the 1995-2022 period, indicate a high degree of trade integration close to two-thirds of frontier estimates. Using forecast data for 2017-2022, trade efficiency should remain broadly stable and even increase for the larger countries in the likely post-Brexit phase

The determinants of vulnerability to currency crises: country-specific factors versus regional factors

We investigate the determinants of exchange market pressures (EMP) for some new EU member states at both the national and regional levels, where macroeconomic and financial variables are considered as potential sources. The regional common factors are extracted from these variables by using dynamic factor analysis. The linear empirical analysis, in general, highlights the importance of country-specific factors to defend themselves against vulnerability in their external sectors. Yet, given a significant impact of the common component in credit on EMP, a contagion effect is apparent through the conduit of credit market integration across these countries under investigation

Parallels between Pathogens and Gluten Peptides in Celiac Sprue

Pathogens are exogenous agents capable of causing disease in susceptible organisms. In celiac sprue, a disease triggered by partially hydrolyzed gluten peptides in the small intestine, the offending immunotoxins cannot replicate, but otherwise have many hallmarks of classical pathogens. First, dietary gluten and its peptide metabolites are ubiquitous components of the modern diet, yet only a small, genetically susceptible fraction of the human population contracts celiac sprue. Second, immunotoxic gluten peptides have certain unusual structural features that allow them to survive the harsh proteolytic conditions of the gastrointestinal tract and thereby interact extensively with the mucosal lining of the small intestine. Third, they invade across epithelial barriers intact to access the underlying gut-associated lymphoid tissue. Fourth, they possess recognition sequences for selective modification by an endogenous enzyme, transglutaminase 2, allowing for in situ activation to a more immunotoxic form via host subversion. Fifth, they precipitate a T cell–mediated immune reaction comprising both innate and adaptive responses that causes chronic inflammation of the small intestine. Sixth, complete elimination of immunotoxic gluten peptides from the celiac diet results in remission, whereas reintroduction of gluten in the diet causes relapse. Therefore, in analogy with antibiotics, orally administered proteases that reduce the host's exposure to the immunotoxin by accelerating gluten peptide destruction have considerable therapeutic potential. Last but not least, notwithstanding the power of in vitro methods to reconstitute the essence of the immune response to gluten in a celiac patient, animal models for the disease, while elusive, are likely to yield fundamentally new systems-level insights

Foreign aid, debt interest repayments and Dutch disease effects in a real exchange rate model for African countries

The international competitiveness of developing countries is integral to their economic development, hence understanding the main determinants of the real exchange rate is important. The empirical literature supports the Dutch disease hypothesis that foreign aid inflows significantly contribute to a real appreciation of African currencies, but these studies do not account for the downward pressure on the exchange rate from foreign currency payments. Using a panel of sub-Saharan African countries from 1980 to 2017, we test the hypothesis that the real exchange rate appreciation from aid inflows is moderated by interest repayments on external debt. Our findings suggest that one-third of the Dutch disease effect of aid inflows on the real exchange rate is offset by external debt interest repayments. These findings are important in showing that countries with external debt servicing obligations can mitigate the Dutch disease effect of aid inflows on competitiveness