joined work with Julian Donaubauer, Alexander Glas and Peter Nunnenkamp; Review of World Economics (2018).
Abstract: Making use of considerably improved measures of infrastructure, the study assesses the impact of infrastructure on bilateral trade for a panel of 150 developed and emerging economies during the period 1992–2011. The authors make use of a gravity approach to disentangle the impact of infrastructure on trade and trade costs. Improving infrastructure endowments and quality decreases trade costs and increases international trade flows. Countries with improved infrastructure reduce not only bilateral trade costs but also multilateral trade costs. The decomposition of effects indicates that better infrastructure encourages higher export flows relative to domestic trade flows. Main results of the study prove to be robust, also when considering distinct trade categories (consumption goods, intermediates, and capital goods) for a smaller sample.
joined work with Julian Donaubauer and Peter Nunnenkamp; World Development, 2016, 78: 230-245.
Abstract: Official development assistance (ODA) and foreign direct investment (FDI) are widely perceived to be alternative means of supplementing domestic savings and promoting economic development in low- and middle-income countries. However, possible complementarities of aid and FDI have received limited attention so far. It remains open to debate whether aid could render recipient countries more attractive to FDI by removing specific bottlenecks that prevent higher FDI inflows. In particular, we raise the hypothesis that aid specifically targeted at economic infrastructure helps developing countries attract higher FDI inflows through improving their endowment with infrastructure in transportation, communication, energy, and finance. By performing 3SLS estimations we explicitly account for dependencies between three structural equations on the allocation of sector-specific aid, the determinants of infrastructure, and the determinants of FDI. We find strong and robust evidence that aid in infrastructure is effective in improving the recipient countries’ endowment with infrastructure. In sharp contrast, other aid is not effective in improving infrastructure. Infrastructure consistently proves to be an important determinant of developing countries’ attractiveness to FDI. Consequently, only targeted aid promotes FDI indirectly through the infrastructure channel. In addition, aid in infrastructure has direct effects on FDI. It appears that foreign investors anticipate longer term effects of aid on the country’s endowment with infrastructure and expect aid-financed infrastructure to serve them particularly well.
joined work with Julian Donaubauer and Peter Nunnenkamp; The World Economy, 2016, 39 (2): 236-259.
Abstract: We construct comprehensive and comparable indices on the most relevant components of economic infrastructure. An unobserved components model is employed to cover the largest possible number of developing and developed countries over the period 1990–2010. We map major findings from the new indices of infrastructure and provide country rankings, which we also compare with subjective assessments of infrastructure in the World Economic Forum's Global Competitiveness Report. Finally, we exemplify possible applications related to trade and foreign aid. By overcoming several data limitations, our new global index can help assess the links between infrastructure and economic development more systematically.
joined work with Philipp Hühne, Peter Nunnenkamp and Martin Roy; Applied Economics Letters, 2016, 23(11): 812-815.
Abstract: Estimating two-step selection models, we find that more democratic governments are more likely to conclude preferential trade agreements (PTAs) and to agree to stricter investment provisions related to pre-establishment national treatment and investor–state dispute settlement in PTAs. This is surprising when considering the potentially high costs of litigation.
joined work with Philipp Hühne and Peter Nunnenkamp; in: M. Arvin, and B. Lew (Editors), Handbook on the Economics of Foreign Aid, 2015, Chapter 10: 141-161, Edward Elgar, Cheltenham.
KEYWORDS: aid for trade; recipient exports; export diversification; south-south tradeJEL CLASSIFICATION: F35; F14Abstract: Considering that primary commodity dependence continues to be a major problem of various lower income countries, we analyze whether Aid for Trade (AfT) has helped recipient countries upgrade and diversify their exports. Estimating an asymmetric and aggregated gravity model, we find that AfT has been effective in promoting recipient exports of manufactures – whereas the effects on primary commodities are typically insignificant. These findings hold not only for trade relations with donor countries but also in south-south trade with other developing countries.
joined work with Philipp Hühne and Peter Nunnenkamp; Applied Economics Letters (2014), 21(17):1230-1233.
KEYWORDS: South-south-trade; aid for trade; aid effectiveness; OECD donorsJEL CLASSIFICATION: F35; F14DOI: https://doi.org/10.1080/13504851.2014.922665.Abstract: Our empirical estimations indicate that Aid for Trade (AfT) granted by OECD donors strengthens the trade relations of recipient countries with other developing countries. By focusing on South–South trade, we mitigate endogeneity concerns that have plagued analyses of trade between recipients and donors of AfT.
joined work with Philipp Hühne and Peter Nunnenkamp; Journal of Development Studies (2014), 50(9): 1275-1288.
Abstract: Recent studies offer an ambiguous picture on the effectiveness of foreign aid in strengthening the export capacity of recipient countries. Moreover, the literature on aid for trade (AfT) has often neglected the fact that exporters in the donor countries may be among the main beneficiaries. We simultaneously estimate and compare the effects of AfT on trade in both directions. We find that AfT increases recipient exports to donors as well as recipient imports from donors. The first effect tends to dominate the latter, which contradicts the sceptical view that donors grant AfT primarily to promote their own export interests.