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This paper aims to examine the effect of development aid volatility on foreign direct investment (FDI) volatility in aid recipient countries.

The empirical analysis has relied on a sample of 117 countries over the period 1981–2016 and used the two-step system generalized methods of moments (GMM) approach.

The findings indicate that development aid volatility exerts a positive and significant effect on FDI volatility, with the magnitude of this positive effect rising as countries’ real per capita income increases. Furthermore, development aid volatility is non-linearly related to FDI volatility, as additional rises in the degree of development aid volatility further amplify FDI volatility.

These outcomes highlight that volatility of development aid inflows enhances the volatility of FDI inflows. Thus, the enhancement of the aid coordination system between donor-countries and recipient-countries would not only help mitigate the volatility of aid – which reduces the macroeconomic effectiveness of aid – but also stabilizes FDI inflows to developing countries.

A limitation of the present paper is its reliance on aggregate FDI inflows to perform the analysis. Availability of data on greenfield FDI inflows and cross-border mergers and acquisitions FDI inflows over a long-time-period would provide an opportunity to conduct an in-depth analysis of the volatility of development aid on FDI inflows volatility. Furthermore, it could be interesting to investigate in the future (if data is available) the extent to which aid coordination systems between donor-countries and recipient-countries versus recipient-countries’ domestic factors contribute to explaining the dynamics of FDI inflows volatility in recipient-countries of these two types of capital flows.

To the best of the authors’ knowledge, this topic has not been addressed in the literature.

South Asia has been an important destination of foreign aid over the past decades. Since a large part of aid is disbursed for social and economic infrastructure development in South Asian countries, and the volume of aid has tremendously increased in recent years, the purpose of this study is to investigate how far various categories of foreign aid affects economic growth rate in these countries. In addition, as the trend of each category of aid transfer appears to have been volatile, this study also investigates whether the volatilities inhibit growth rate in these countries.

In this study, South Asia refers to India, Bangladesh, Pakistan and Sri Lanka. The Random effects approach is employed incorporating panel data for the period of 1995‐2008. The aggregate foreign aid is classified into various categories to have a comprehensive investigation.

Foreign aid positively associated with growth whereas the volatility of aid hurts it. Long‐impact aid promotes growth more than short‐impact aid does. The volatility of short‐impact aid hurts growth, whereas the volatility of long‐impact aid has no effect on it. Pure aid and its volatility have no effect on growth.

This study has identified the structure of foreign aid disbursed in these countries, and explored how far each category and respective volatility affects growth. These findings would be useful to the scholars and policy makers in the recipient countries as well as donors, to make foreign aid much more effective in future.

The purpose of this study is to shed light on donors’ decision process in their choice of aid recipients, which is still only partly understood. In particular, it is still unclear whether any imitative behaviour within donors’ decision process actually affects the degree of selectivity in their choice of recipients. This study contributes to fill such a gap by assessing whether the selectivity of donors’ aid allocation reflects an imitative behaviour and, if so, who leads the game and how the game has changed over time.

Donors’ selectivity is estimated using the Suits index for the analysis of aid allocations. The evolution of the Suits index is analysed in an autoregressive manner to test whether donors’ selectivity reflects an imitative behaviour.

This study documents a general increase in aid selectivity with regards to poverty, while selectivity according to governance reveals only limited change. The analysis shows how a redistributive process of donor leadership and influential power over aid allocation has been in place over three decades between 1980 and 2010, with the 1990s signing the main phase of transition.

This study contributes to shed light on donor coordination through the identification of leaders and followers among donors in terms of aid selectivity.

This paper investigates the effect of the volatility of resource revenue on the volatility of non-resource revenue.

The empirical analysis has utilized an unbalanced panel data set comprising 54 countries over the period 1980–2015. The two-step system generalized methods of moments (GMM) is the main economic approach used to carry out the empirical analysis.

Results show that resource revenue volatility generates lower non-resource revenue volatility only when the share of resource revenue in total public revenue is lower than 18%. Otherwise, higher resource revenue volatility would result in a rise in non-resource revenue volatility.

In light of the adverse effect of volatility of non-resource revenue on public spending, and hence on economic growth and development prospects, countries whose total public revenue is highly dependent on resource revenue should adopt appropriate policies to ensure the rise in non-resource revenue, as well as the stability of the latter.

Economic diversification in resource-rich countries (particularly in developing countries among them) could contribute to reducing the dependence of economies on natural resources, and hence the dependence of public revenue on resource revenue. Therefore, policies in favour of economic diversification would contribute to stabilizing non-resource revenue, which is essential for financing development needs.

To the best of our knowledge, this topic has not been addressed in the literature.

This paper aims to examine how the volatility of foreign direct investment (FDI) inflows affects the volatility of corporate income tax revenue.

The study has used an unbalanced panel data set of 129 countries over the period 1981–2016 and the two-step system generalized methods of moment approach to perform the empirical analysis.

The main findings are that FDI volatility enhances the volatility of corporate income tax revenue in less advanced economies, but reduces it in relatively advanced countries. The positive corporate income tax revenue volatility effect of FDI inflows is far higher in non-tax haven countries than in tax haven countries. Additionally, FDI volatility exerts a higher positive effect on corporate income tax revenue volatility as countries experience greater dependence on natural resources. Finally, the positive effect of FDI volatility on corporate income tax revenue volatility is further amplified by higher FDI volatility.

One important limitation of the present analysis is the use of aggregate FDI inflows because of the lack of data over a long period on greenfield FDI inflows and cross-border mergers and acquisitions FDI inflows. Therefore, an avenue for future research could be to explore separately the effect of the volatility greenfield FDI inflows and the volatility of cross-border mergers and acquisitions FDI inflows on the volatility of corporate income tax revenue, when long-time series data (covering many countries) would be available.

These outcomes particularly shed light on the role of FDI volatility on the volatility of corporate income tax revenue, particularly in countries that are highly dependent on natural resources. Foreign capital flows, notably FDI flows, play an essential role for countries’ economic development through, inter alia, technology transfer, jobs creation and economic growth. Policymakers should aim to attract FDI, while also reducing their volatility, by designing and implementing policies and measures (such as those in favor of business environment improvement, property rights enforcement and political stability) that would assure foreign investors of the continuous high returns of their investments.

To the best of the author’s knowledge, this is the first time this topic is being addressed empirically in the literature.

The purpose of this paper is to contribute to existing literature by examining whether development aid has any measurable impact on food security, whether the impact is conditioned on the quality of governance and whether it differs based on the type of aid provided.

Panel-data analysis of 85 developing countries between 1994 and 2011, using generalized method of moments and two-stage least squares estimators.

The paper finds that aid in general has a small positive impact on food security; that multilateral aid, grants and social and economic aid have a positive effect on food security in their own right, and that bilateral aid, loans and agricultural aid are more conditioned on the quality of governance that other aid.

The main limitations rest with the imperfect nature of cross-country data on food security and governance, which I have tried to overcome through a series of robustness tests.

The findings suggest that aid, despite its many deficiencies, can play a positive role in strengthening food security. Furthermore, they indicate that concessional loans, bilateral aid and agricultural aid are likely to foster food security only in countries with better governance.

The paper constitutes a novel contribution to existing literature because it is one of the first to use cross-country data to explore the impact of aid on food security and because it utilizes a relatively complex aid categorization, which allows its conclusions to be more nuanced.

This study aims to examine the effect of foreign direct investment (FDI) inflows on tax revenue in 34 developed and developing countries from 2006 to 2020.

Feasible generalised least squares (FGLS), a dynamic panel of a two-step system generalised method of moments (GMM) system and a pool mean group (PMG) panel autoregressive distributed lag (ARDL) approach were used to compare the developed and developing countries. Basic estimators were used as pre-estimators and diagnostic tests were used to increase robustness.

The FGLS, a two-step system of GMM, PMG–ARDL estimator’s results showed that there was a significant negative long and positive short-term in most countries relationship between FDI inflows and tax revenue in developed countries. This study concluded that attracting investments can improve the quality of institutions despite high tax rates, leading to low tax revenue. Meanwhile, there was a significant positive long and negative short-term relationship between FDI inflows and tax revenue in the developing countries. The developing countries sought to attract FDI that could be used to create job opportunities and transfer technology to simultaneously develop infrastructure and impose a tax policy that would achieve high tax revenue.

The present study sheds light on the effect of FDI on tax revenue and compares developed and developing countries through the design and implementation of policies to create jobs, transfer technology and attain economic growth in order to assure foreign investors that they would gain continuous high profits from their investments.

The paper discusses various important issues of development aid in the context of the emerging new landscape for Official Development Assistance (ODA) and in particular how aid effectiveness issues are now perceived in a world of scaled-up aid. The paper also discusses the overall nexus between aid, growth and domestic policies in aid-recipient countries by reflecting on the relevant ongoing debate in this area. A substantial part of the paper is devoted to the discussion of the central issues involved in development aid, particularly in connection with recent calls in the international development community for scaling-up aid so that the Millennium Development Goals can be attained, as well as the challenging new policy agenda in this regard.