We explore whether foreign aid affects developing countries' creditworthiness, as proxied by the Institutional Investor's measure of country credit risk. Based on a simple model of international borrowing and lending, we develop the hypothesis that current aid reduces the likelihood of future...

Mit Inkrafttreten des Vertrags von Lissabon im Dezember 2009 ist die Zuständigkeit für Investitionsverträge mit Drittstaaten auf die Europäische Union (EU) übergegangen und wurde somit Teil der Gemeinsamen Handelspolitik. Das vorliegende Working Paper beschreibt mögliche Auswirkungen...

Developing countries are constrained in financing current account deficits as real capital mobility is still far from perfect. At the same time, capital flows to these countries proved to be extremely volatile. The paper argues that the long-term problem of "too little" should not be confused...

Der zwischen Deutschland und Pakistan 1959 geschlossene Investitionsschutzvertrag gilt gemeinhin als Meilenstein in der Entwicklung des völkerrechtlichen Investitionsschutzes. Als erster bilateral investment treaty (BIT) ist er in das kollektive Gedächtnis eingegangen. In unserem vorliegenden...

Foreign direct investment (FDI) projects are assumed to be accompanied by potential external effects - so-called FDI spillovers - which are supposed to affect productivity levels of other firms in a host country. Empirical results on this topic are inconclusive and most studies focus on one...

We address the problem how to estimate default probabilities for sovereign countries based on market data of traded debt. A structural Merton-type model is applied to a sample of emerging market and transition countries. In this context, only few and heterogeneous default probabilities are...

Instruments of risk mitigation play an important role in managing country risk within the foreign direct investment (FDI) decision. Our study assesses country risk by state-dependent preferences and introduces futures contracts as a tool of risk mitigation. We show that country risk assessments...

Existing research on entry mode determinants is firmly grounded in the transaction cost and resource-based literature while location-and institution-specific characteristics lack attention. The primary goal of this article is to address the determinants of entry mode by Japanese manufacturing...

In this paper we do a couple of things: discussing a way to measure the welfare cost of country risk, and measuring it for Argentina in the period 1875-2006. There are two conclusions: a) the welfare cost of Argentine risk has been huge: for example, in the period 1976-2006 it was around 20% of...