Barthel, Fabian
(2011)
Spatial dependence in dyadic data: the cases of double
taxation treaties, official development assistance, and
asylum migration.
PhD thesis, London School of Economics and Political Science.
Abstract
The thesis analyses spatial dependence in dyadic data by the means of three applications.
These have in common that they concern bilateral international relations or flows between
two countries with a particular focus on the relationship between developing and developed
countries. While the first chapter provides a general introduction to spatial dependence with
a focus on dyadic datasets, the second chapter looks at double taxation treaties (DTTs) and
analyses whether strategic interaction among capital importing countries can explain the
widespread conclusion of double taxation treaties between an industrialised and a
developing country. This is important since upon entering such a treaty, the net-capital
importer can lose a significant amount of tax revenues from foreign direct investment
(FDI), while the net-capital exporter is better off. The analysis reveals that a country is
more likely to enter a DTT if competitor countries for FDI also negotiated such a DTT,
providing evidence for the hypothesis that the group of net-capital importers finds itself in a
situation which can be described as a prisoners’ dilemma: individually they would be better
off if they refused to negotiate a treaty, but collectively they have an incentive to sign such
a tax treaty. The third chapter is on official development assistance and deals with the
question whether a specific donor tends to dedicate a larger share of its aid budget to a
certain recipient if other donors give money to the same beneficiary. A considerable degree
of spatial dependence is found in the form that donors tend to allocate their money to the
same recipients. Donors particularly follow the example of the most important aid donors.
This behaviour has negative implications for aid effectiveness, contributes to harmful aid
volatility and leads to aid darlings and orphans. However, there is no evidence that donors
strategically interact with each other in order to pursue their military strategic and
economic goals. Spatial dependence in asylum migration is the third application, discussed
in the fourth chapter. It is well documented in the literature that personal networks of
migrants reduce the risk of migration and facilitate transition to the host country. So far it
has always been assumed that these personal networks only exist for fellow countrymen.
The empirical analysis, however, shows that the positive effects also operate across borders
and that also migrants from other geographically close source countries make asylum
migration from a given source country more likely. Furthermore, it is shown that a more
restrictive asylum policy in one destination country provides a negative externality for
other destinations. This is because asylum seekers are deflected by a tighter asylum regime
and encouraged to lodge their application in more liberal target countries.
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