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Does foreign aid really attract foreign investors? New evidence from panel cointegration

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  • Julian Donaubauer

Abstract

This article examines whether foreign aid contributes to attracting foreign direct investment (FDI) in aid receiving countries. Using both homogeneous and heterogeneous panel cointegration techniques, I find that the effect of foreign aid on FDI is negative. This is in contrast to previous studies that usually found a positive association between aid and FDI.

Suggested Citation

  • Julian Donaubauer, 2014. "Does foreign aid really attract foreign investors? New evidence from panel cointegration," Applied Economics Letters, Taylor & Francis Journals, vol. 21(15), pages 1094-1098, October.
    • Handle: RePEc:taf:apeclt:v:21:y:2014:i:15:p:1094-1098
    DOI: 10.1080/13504851.2014.909570
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    Cited by:

    1. Liao, Hongwei & Chi, Yedi & Zhang, Jiarui, 2020. "Impact of international development aid on FDI along the Belt and Road," China Economic Review, Elsevier, vol. 61(C).

    More about this item

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O00 - Economic Development, Innovation, Technological Change, and Growth - - General - - - General

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