Kiel Institute for the World Economy

About: Kiel Institute for the World Economy is a facility organization based out in Kiel, Germany. It is known for research contribution in the topics: Foreign direct investment & Productivity. The organization has 318 authors who have published 1909 publications receiving 42832 citations. The organization is also known as: Institut für Weltwirtschaft an der Universität Kiel.

Aid on Demand: African Leaders and the Geography of China's Foreign Assistance

Abstract: This article investigates whether China's foreign aid is particularly prone to capture by political leaders of aid-receiving countries. We examine whether more Chinese aid is allocated to the birth regions of political leaders and regions populated by the ethnic groups to which leaders belong, controlling for indicators of need and various fixed effects. We have collected data on 117 African leaders' birthplaces and ethnic groups and have geocoded 1,650 Chinese development finance projects across 3,097 physical locations that were committed to Africa over the 2000{2012 period. Our econometric results show that when leaders hold power their birth regions receive substantially more funding from China than other subnational regions. We also find -less robust- evidence that African leaders direct more Chinese aid to areas populated by individuals who share their ethnicity. However, when we replicate the analysis for the World Bank, our regressions show no evidence of favoritism. We also evaluate the impact of Chinese aid on regional development, exploiting time variation in the amount of Chinese aid that results from China's production of steel and geographical variation in the probability that a subnational region will receive such aid. We find that Chinese aid improves local development outcomes, as measured by per-capita nighttime light emissions at the first and second subnational administrative level. We therefore conclude that China's foreign aid program has both distributional and developmental consequences for Africa.

Why 'Buy American' is a Bad Idea but Politicians Still Like It

Abstract: When the world economy was recently hit by a severe recession, governments all over the world reacted by initiating stimulus packages. Some countries (among them, most notably, China and the US) tried to put special emphasis on their home industries by including “Buy local” clauses into the stimulus package. By analyzing the dynamics of transitory changes of trade barriers as a short-run response to an economic downturn, we show that beggar-thy-neighbor policies do not work. We then come up with two rationales that help to understand why countries nevertheless consider protectionism to be a good response to a recession: (i) the lobbying of domestic, non-exporting firms, and (ii) the relationship between vulnerability, the degree of openness and loss aversion of consumers.

Detecting Proximal Secondary Caries Lesions: A Cost-effectiveness Analysis

Abstract: When choosing detection methods for secondary caries lesions, dentists need to weigh sensitivity, allowing early initiation of retreatments to avoid lesion progression, against specificity, aiming to reduce risks of false-positive diagnoses and invasive overtreatments. We assessed the cost-effectiveness of different detection methods for proximal secondary lesions using Monte Carlo microsimulations. A vital permanent molar with an occlusal-proximal restoration was simulated over the lifetime of an initially 20-y-old. Three methods were compared: biannual tactile detection, radiographic detection every 2 y, and biannual laser fluorescence detection. Methods were employed either on their own or in pairwise combinations at sensitive and specific thresholds estimated with systematically collected data. A mixed public-private payer perspective in the context of German health care was applied. Effectiveness was calculated as years of tooth retention. Net-benefit analyses were used to evaluate cost-effectiveness acceptability at different willingness-to-pay thresholds. Radiographic detection verified by tactile assessment (both at specific thresholds) was least costly (mean, 1,060 euros) but had limited effectiveness (mean retention time, 50 y). The most effective but also more costly combination was laser fluorescence detection verified by radiography, again at specific thresholds (1157 euros, 53 y, acceptable if willingness to pay >32 euro/y). In the majority of simulations, not combining detection methods or applying them at sensitive thresholds was less effective and more costly. Net benefits were not greatly altered by applying different discounting rates or using different baseline prevalence of secondary lesions. Current detection methods for secondary lesions should best be used in combination, not on their own, at specific thresholds to avoid false-positive diagnoses leading to costly and invasive overtreatment. The relevant characteristics, such as predictive value, of different methods should be assessed in longitudinal clinical studies.

Credit depth, government intervention and innovation in China: evidence from the provincial data

Abstract: This paper investigates the role of regional credit systems for Chinese regional innovation, using data for the period 2000–2008. Both the effects of credit depth and government intervention are investigated. Results show that regional credit depth has a significantly positive effect on regional innovation performance. Credit depth has more marked impacts on major innovations (i.e., invention patents) than on less complicated innovations (i.e., utility model and external design patents). Additionally, our results do not suggest a reduction in the efficiency of regional innovation from increased government intervention via state-owned commercial banks.

The productivity spillover potential of foreign-owned firms: firm-level evidence for Hungary

Abstract: This paper analyses the potential for productivity spillovers from inward foreign direct investment using administrative panel data for firms for Hungary. The productivity spillovers potential (PSP) is expected to be a function of the importance of firm-specific assets (FSA) within multinationals and the extent to which they are transferred to foreign affiliates. We hypothesise that the presence of FSA is related to observable characteristics of the production process of foreign affiliates. We further explore the role of competition in explaining productivity spillovers within industries. We find that productivity spillovers depend on its potential, the degree of competition and absorptive capacity. Firms that relocate labour-intensive activities to Hungary to exploit differences in labour costs are not found to generate productivity spillovers, while spillovers increases in the capital and material intensity of foreign affiliates. Second, we find that foreign presence tends to affect the productivity of domestic firms negatively whenever they compete in the same market, be it the local or export market. Finally, larger exporting firms appear better able to absorb productivity spillovers in the industry.