Search Results
Journal Article
Terrorism: A Threat to Foreign Direct Investment
Journal Article
Trade and Terror: The Impact of Terrorism on Developing Countries
We discuss some of the economic costs of terrorism. There are myriads of other costs like destruction of infrastructure, flight of skilled workers (brain drain) and diversion of funds to counterterrorism (compared to funding of health, education, etc.). A comprehensive discussion of these costs is beyond the scope of this article. However, a greater understanding of terrorism-related damages can help governments and multilateral organizations (e.g., United Nations, World Bank) to better direct scarce resources to mitigate terrorism-related costs.
Working Paper
Do donors care about declining trade revenues from liberalization? an analysis of aid allocation
Many developing country governments rely heavily on trade tax revenue. Therefore, trade liberalization can be a potential source of significant fiscal instability, and may affect government spending on development activities. Donor nations may take this into account in making their aid allocation decisions for developing nations. Our findings suggest that bilateral donors provide substantially larger amounts of aid to compensate (or reward) liberalizing recipient nations who also face declining trade tax revenues. Interestingly, these effects are statistically insignificant in the context of ...
Working Paper
Financing growth: foreign aid vs. foreign loans
Compared to foreign grants, do concessional loans from foreign governments and/or unsubsidized loans from foreign private banks lead to faster growth in developing nations? The answer has implications for aid agencies (i) in allocating a given amount of resources between grants and concessional loans; and (ii) in encouraging financial market reforms. We examine the effects of ODA grants, concessional ODA loans, and private offshore bank loans on growth rates of 131 developing nations over 1996-2010 in a unified way. We find evidence of non-linearities in all three relationships, suggesting ...
Working Paper
Foreign direct investment, aid, and terrorism: an analysis of developing countries
Using a dynamic panel data framework, we investigate the relationship between the two major forms of terrorism and foreign direct investment (FDI). We then analyze how these relationships are affected by foreign aid flows. The analysis focuses on 78 developing countries for 1984- 2008. Our findings suggest that all types of terrorism depress FDI. In addition, aid mitigates the negative effects of total and domestic terrorism on FDI; however, this is not the case for transnational terrorism. This finding highlights that different forms of terrorism call for tailoring mitigating strategies. ...
Working Paper
Should easier access to international credit replace foreign aid?
We examine the interaction between foreign aid and binding borrowing constraint for a recipient country. We also analyze how these two instruments affect economic growth via non-linear relationships. First of all, we develop a two-country, two-period trade-theoretic model to develop testable hypotheses and then we use dynamic panel analysis to test those hypotheses empirically. Our main findings are that: (i) better access to international credit for a recipient country reduces the amount of foreign aid it receives, and (ii) there is a critical level of international financial transfer, and ...
Working Paper
On the substitutability between foreign aid and international credit
We examine the effect of relaxing a binding borrowing constraint for a recipient country on theamount of foreign aid it receives. We do so by developing a two-country, two-period trade-theoretic model. The relaxation of the borrowing constraint reduces the flow of foreign aid, suggesting that the donor views developing nations' access to international credit markets as a substitute for foreign aid.
Journal Article
Do countries with greater credit constraints receive more foreign aid?
Donor nations may recognize that some developing nations face credit constraints in the world capital market. This knowledge may prompt donors to increase aid flows to alleviate the constraint. In such a situation, flows of foreign aid and foreign loans to developing nations may be substitutes for each other. The authors use data from 114 aid-recipient countries over the 1997-2008 period to investigate the relationship between foreign aid and foreign loans. The central finding is that this relationship is negative, lending support to the substitution hypothesis.
Journal Article
Increasing political freedom may be key to reducing threats
The root causes of terrorism might not be poverty and lack of education, as many believe. Rather, the lack of civil liberties, political rights and the rule of law might be more influential.
Journal Article
Do donors care about declining trade revenue from liberalization? an analysis of bilateral aid allocation
Many developing-country governments rely heavily on trade tax revenue. Therefore, trade liberalization can be a potential source of significant fiscal instability and may affect government spending on development activities-at least in the short run. This article investigates whether donors use aid to compensate recipient nations for lost trade revenue or perhaps to reward them for moving toward freer trade regimes. The authors do not find empirical evidence supporting such motives. This is of some concern because binding government revenue constraints may hinder development prospects of some ...