Table 1. Empirical (extended) investment...

Table 1.

Empirical (extended) investment model

Dependent variable: Investment/GDP	(1)	(2)
Dependent variable: Investment/GDP	DFGLS	DOLS
Aid	0.30*** (0.09)	0.35*** (0.04)
Domestic saving	0.34*** (0.04)	0.24*** (0.03)
Trade openness	0.12*** (0.02)	0.11*** (0.01)
Growth	0.37*** (0.06)	0.51*** (0.06)
External debt	−0.004 (0.006)	−0.003 (0.004)
Investment generated by 1 dollar of aid⁷	1.67	1.95
AR term	0.72***	−−−−
	(0.02) Control for omitted variable bias	No control for omitted variable bias
Country-fixed effects	Yes	Yes
R²	0.83	0.64
Durbin-Watson	1.88	0.58
Obs.	2513	2613
Countries	90	91

Dependent variable: Investment/GDP	(1)	(2)
Dependent variable: Investment/GDP	DFGLS	DOLS
Aid	0.30*** (0.09)	0.35*** (0.04)
Domestic saving	0.34*** (0.04)	0.24*** (0.03)
Trade openness	0.12*** (0.02)	0.11*** (0.01)
Growth	0.37*** (0.06)	0.51*** (0.06)
External debt	−0.004 (0.006)	−0.003 (0.004)
Investment generated by 1 dollar of aid⁷	1.67	1.95
AR term	0.72***	−−−−
	(0.02) Control for omitted variable bias	No control for omitted variable bias
Country-fixed effects	Yes	Yes
R²	0.83	0.64
Durbin-Watson	1.88	0.58
Obs.	2513	2613
Countries	90	91

Notes:

These estimations include country-fixed effects. Control for Endogeneity via DOLS, autocorrelation via DFGLS technique (Prais-Winsten transformation). Robust standard errors in parentheses; ⁷The amount of investment generated by aid is computed in the following way: $β * \bar{I} / \bar{A}$ ⁠; $\bar{I} = a v e r a g e i n v e s t m e n t = 21.56; \bar{A} = a v e r a g e a i d = 3.85;$ sample: 90/91 countries

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