Regions and Super-Regions in Economic Development: Global Demarcations in the Impact of Foreign Aid on Foreign Investment

Abstract

Global demarcations exist between development aid and foreign direct investment. Rigorous statistical analysis that contrasts the relative homogeneous and heterogeneous influences of time-series panel data allows regions in the developing world to define themselves endogenously. The results suggest that regions can be classified as either “aid-oriented” or “investment-oriented.” Evidence-based support for international development should appropriately account for these cross-region similarities when developing policies on the incentives for foreign investment and market-based economic growth.

Keywords: foreign aid, foreign direct investment, panel data, international organizations, spatial time series

JEL Classification: F21, F35, C33, O19