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Table 1: Data Sources
Variable Source Year Units
FDI World Development
Indicators 1997-2003 In 1000 millions
Government Indicators World Bank 1998,,2000,2002, 2004 High levels measure high quality
CPI Transparency
International 1997-2003 Reversed, so high levels measure high levels of corruption
GDP World Development
Indicators 1997-2003 In 10 billions GDP per capita World Development
Indicators 1997-2003 In thousands
Population total World Development
Indicators 1997-2003 In 10 millions
Labour force World Development
Indicators 1997-2003 In 10 millions
General government final
consumption expenditure World Development Indicators 1997-2003 In 10.000 millions General government final
consumption expenditure / GDP
World Development
Indicators 1997-2003 General government final consumption expenditure as a percentage of GDP Exports/GDP World Development
Indicators 1997-2003 Exports as a percentage of GDP Imports/GDP World Development
Indicators 1997-2003 Imports as a percentage of GDP Tax on international
Table 2 Definitions
DefinitionFDI Foreign direct investment is net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. It is the sum of equity capital, reinvestment of earnings, other long-term capital, and short-term capital as shown in the balance of payments. This series shows total net, that is, net FDI in the reporting economy less net FDI by the reporting economy. Data are in current U.S. dollars.
GDP GDP at purchaser's prices is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. Data are in current U.S. dollars. Dollar figures for GDP are converted from domestic currencies using single year official exchange rates. For a few countries where the official exchange rate does not reflect the rate effectively applied to actual foreign exchange transactions, an alternative conversion factor is used.
GDP per capita GDP per capita based on purchasing power parity (PPP). PPP GDP is gross domestic product converted to international dollars using purchasing power parity rates. An international dollar has the same purchasing power over GDP as the U.S. dollar has in the United States. GDP at purchaser's prices is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. Data are in constant 2000 international dollars.
Population Total population is based on the de facto definition of population, which counts all residents regardless of legal status or citizenship--except for refugees not permanently settled in the country of asylum, who are generally considered part of the population of their country of origin.
Labour force Total labor force comprises people who meet the International Labour Organization definition of the economically active population: all people who supply labor for the production of goods and services during a specified period. It includes both the employed and the unemployed. While national practices vary in the treatment of such groups as the armed forces and seasonal or part-time workers, in general the labor force includes the armed forces, the unemployed, and first-time job-seekers, but excludes homemakers and other unpaid caregivers and workers in the informal sector.
Government
expenditure General government final consumption expenditure (formerly general government consumption) includes all government current expenditures for purchases of goods and services (including compensation of employees). It also includes most expenditures on national defense and security, but excludes government military expenditures that are part of government capital formation. Data are in current U.S. dollars
Government expenditure / GDP
General government final consumption expenditure (formerly general government consumption) includes all government current expenditures for purchases of goods and services (including compensation of employees). It also includes most expenditures on national defense and security, but excludes government military expenditures that are part of government capital formation
Imports Imports of goods and services comprise all transactions between residents of a country and the rest of the world involving a change of ownership from nonresidents to residents of general merchandise, goods sent for processing and repairs, non monetary gold, and services. Data are in current U.S. dollars.
Exports Exports of goods and services comprise all transactions between residents of a country and the rest of the world involving a change of ownership from residents to nonresidents of general merchandise, goods sent for processing and repairs, non monetary gold, and services. Data are in current U.S. dollars.
Taxes on international trade
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Table 3: Bivariate correlations
1 2 3 4 5 6 7 8 1.Gov. exp/GDP 1 2.Gov. exp. 0.506987 1 3.Exports/GDP 0.371481 0.037277 1 4.Imports/GDP 0.337083 -0.017558 0.993836 1 5. GDP 0.025301 0.85835 -0.158588 -0.204323 1 6. GDP per cap. 0.375516 0.181356 0.970063 0.960669 -0.000569 1 7. Labour force -0.601523 0.128737 -0.714048 -0.725700 0.524801 -0.632863 1 8.Population -0.565532 0.117930 -0.702537 -0.714567 0.510311 -0.632143 0.992788 1
Table 4: Bivariate correlations
1
2
3
4
5
6
1. Imports/GDP 1 2. Gov.exp/GDP 0.337083 1 3. FDI 0.825957 0.289737 1 4. GDP -0.204323 0.025301 -0.112283 1 5. GDP per cap. 0.960669 0.375516 0.837901 -0.000569 1 6. Population -0.714567 -0.565532 -0.665066 0.510311 -0.632143 1Table 5: Descriptive statistics
Variable Mean Std.Dev
Table 6: Results of Multiple regression analysis for dependent variable FDI
*, ** and *** indicate statistical significance at 10%, 5% and 1 % respectively Standard errors in parentheses
N= number of observations 1: log-log model
Model 1 Model 21 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8 Model 9 Model 10
Intercept (1.058)*** 13.38 (0.227)*** 2.294 (3.283) 2.213 (10.712) * 18.617 (12.087) 15.346 (12.855) 14.978 (5.274)*** -18.213 (11.286) -12.768 (12.568) -15.148 (12.990) -16.868 Import/GDP 5.992 (1.298) *** (4.816) -1.465 (4.936) -0.941 (5.351) -0.761 (2.415)*** 16.222 (5.214)** 13.699 (5.351)** 14.037 (5.601)** 14.972 Population (0.142) ** -0.345 (0.145)* -0.277 (0.153) -0.251 -0.2531 (0.156) (0.161) 0.132 (0.165) 0.146 (0.176) 0.171 (0.179) 0.160 GDP (0.129) ** 0.276 (00.142 0.177 (0.185) 0.248 (0.191) 0.251 (0.201)*** 0.674 (0.217)*** 0.631 (0.000)*** 0.001 (0.000)*** 0.000 Government expenditure/GDP (0.243) -0.372 (0.238) -0.388 (0.345) -0.235 (0.355) -0.237 (0.216)*** -0.516 (0.219) ** -0.507 (0.357) -0.378 (0.364) -0.411 Tax on trade (0.147)*** 0.579 (0.151)*** 0.566 (0.158)*** 0.549 (0.161)*** 0.559 CPI (0.1666)*** -1.682 (0.133)*** -0.841 (1.016) -1.631 (1.026) -1.605 (1.116) -1.567 (0.938) -0.514 (0.956) -0.476 (1.008) -0.294 Dummy ‘no WTO
member’ (2.523) 1.523 (64.60) 7.673 (2.548) 1.183 (58.274) 39.583
Dummy ‘no WTO
member’* CPI (8.659) -0.824 (7.853) -5.180
N 42 36 42 42 42 42 31 31 31 31
R-square 0.718077 0.537 0.729 0.747 0.749 0.749 0.853 0.855 0.857 0.860
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Table 7: Results of Multiple regression analysis for dependent variable CPI
Model 1 Model 21 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8 Model 9 Model 10
Intercept (0.253)*** 7.363 (0.144)*** 2.150 (1.515)* 2.810 (1.379)*** 6.379 (2.102) 1.896 (1.961) 2.432 (2.166) 1.774 (2026) 2.301 (1.772)*** 7.081 (1.797) ** 4.530 Government expenditure/GDP (0.138) 0.0222 (0.116) 0.016 (0.142) * 0.267 (0.141) * 0.255 (0.147) * 0.276 (0.145) * 0.265 (0.132) -0.23 (0.122) 0.069 GDP (0.072)*** -0.224 (0.063) -0.075 (0.076) 0.056 (0.077) 0.056 (0.119) -0.011 (0.116) -0.152 Population (0.059)*** 0.394 (0.063) ** 0.147 (0.063) 0.166 (0.054)*** 0.188 (0.064)** 0.169 (0.056)*** 0.192 (0.131) 0.076 (0.138) ** 0.299 FDI (0.042) *** -0.427 (0.102)*** -0.638 (0.061)*** -0.304 (0.057)*** -0.273 (0.055)*** -0.264 (0.058)*** -0.272 (0.056)*** -0.262 (0.063)*** -0.314 (0.172) 0.185 Dummy for communist state (0.987) 2.649 (0.754)*** 2.184 (2.594) 3.385 (2.507) 2.951 Dummy for communist state *FDI -0.456 (1.484) (1.474) -0.473 Dummy for having been a British colony -0.677 (1.060) (1.209) 1.606 Dummy for having been a British colony * FDI -0.498 (0.162)*** N 42 36 42 42 42 42 42 42 42 42 R-squared 0.718 0.537 0.615 0.772 0.809 0.806 0.810 0.807 0.774 0.822 F 101.882*** 39.510*** 20.262*** 31.252*** 30.636*** 38.635*** 24.903*** 30.179*** 24.683*** 26.974*** *, ** and *** indicate statistical significance at 10%, 5% and 1 % respectively
Table 8: Correlation matrix for corruption index and institutional indicators
1 2 3 4 5 6 7 1.Control of corruption 1.000000 2. CPI -0.938959 1.000000 3. Government effectiveness 0.986491 - 0.928703 1.000000 4. Political stability 0.840809 - 0.804618 0.824730 1.000000 5. Regulatory quality 0.898791 - 0.865014 0.907538 0.637244 1.000000 6. Rule of law 0.964995 - 0.909613 0.961439 0.840078 0.922411 1.0000007. Voice and accountability 0.531394 - 0.392708 0.561157 0.166707 0.719069 0.602554 1.000000
Table 9: Auxiliary regression for the dependent variable CPI
Intercept 99.47239 (12.58004) Control of corruption - 0.398210 (0.375803) Government effectiveness - 0.244909 (0.470288) Political stability 0.219411 (0.196939) Regulatory quality - 0.355116 (0.232308) Rule of law - 0.352520 (0.361406) Voice and accountability 0.562181 (0.174255) ***
N 24
R2 0.9322
F stat 38.969 ***
*, ** and *** indicate statistical significance at 10%, 5% and 1 % respectively Standard errors in parentheses
