Latin America has experienced a surge in foreign direct investment (FDI) in the last two decades, in parallel with the ratification of major regional trade agreements (RTAs) and bilateral investment treaties (BITs). This paper uses the latest developments in the structural gravity model theory to study if the co-existence of BITs and two major regional agreements, Mercosur and the Latin American Integration Association (ALADI), exerts enhancing or overlapping effects on FDI for eleven countries in Latin America over the period 1995–2018. The study is novel as it accounts for variations in the degree of investment protection across BITs within Latin America by computing a quality index of BITs. It also explores the nature of interactions (enhancing/overlapping effects) between RTAs and BITs. The findings reveal that belonging to a well-established regional trade agreement, such as Mercosur, is significantly more effective than BITs in fostering intra-regional FDI. Phasing-in effects are large and significant and there is evidence of enhancing effects. Results within the bloc are heterogeneous: BITs exert a positive, but small effect, for middle income countries. However, BITs are not effective in attracting FDI in the case of middle to low income countries, unless these countries ratify BITs with a high degree of investment protection.

We conduct an empirical application based on Coe and Helpman's (1995) seminal work, in order to measure the elasticity of technical progress with respect to R&D capital for the G5 countries between 1971 and 2003. For this purpose, a series for technological capital is built for the 1990–2003 period, and linked with Coe and Helpman's series for the 1971–1990 period. The technical progress of leading countries depends critically on the domestic R&D capital stock, in line with Coe and Helpman's (1995) and Coe, Helpman and Hofmaister's (2009) work. Nevertheless, there are some important differences. The estimations for the elasticity values appear to be higher and show larger differences between countries than in previous studies. Furthermore, the results give evidence in favour of Schumpeterian models, as TFP growth is positively related to the distance to the technological frontier represented by the US.

This paper analyses the size of the border effect or home bias within the European Union (EU) with the aim to quantify its impact in the trade integration process which started in 1992. The gravity model serves as a general framework where the use of sectoral data allows obtaining a more accurate measure of the border effects. The econometric analysis applied to a gravity model that contains a high disaggregation in the data introduces heteroskedasticity problems together with the presence of zero values, therefore, in order to obtain consistent estimates, the use of the Poisson Pseudo-Maximum Likelihood estimation method is recommended. Our results show that the bilateral trade ?ows depend upon the size and proximity of the trade partners, together with other variables as adjacency or language. Evidence in favour of a positive and diminishing border effect has been found for the period 1995-2006 and it accounts for 20% to 22% within the EU-19. Este artículo se centra en el estudio de la evolución de la integración comercial en la Unión Europea. Para ello se ha utilizado un enfoque basado en los efectos frontera aplicado sobre diecinueve países europeos durante el periodo 1995-2006. Hemos empleado un modelo gravitatorio como marco de análisis, en el que los ?ujos bilaterales de comercio dependen del tamaño económico de los países y la distancia que les separa. Además, hemos considerado otras variables como el idioma o el hecho de compartir frontera terrestre. Con el ?n de obtener estimadores consistentes, evitar la posible heteroscedasticidad y tratar de una manera correcta la presencia de ceros en la muestra se ha empleado el método de estimación de pseudo-máxima verosimilitud de Poisson. Los resultados evidencian la existencia de efectos frontera en la UE, no obstante, dichos efectos frontera han disminuido a lo largo del periodo analizado alrededor de un 20-22% para la UE-19.

This paper uses the Jones (1995) framework to examine the contribution of imitation activities and innovative research effort on productivity growth for the US and some European leading economies. We carry out a comparative analysis for the last 50 years, with two model specifications, assuming country differences in the parameters associated with R&D effort. In the first one, the technological frontier position is determined by the country with the highest productivity, the United States. Alternatively, in the second specification, we alter the definition of the technological frontier, allowing it to transcend the leader. The empirical analysis leads to very different outcomes. The first specification estimation, using GMM techniques, indicates that American researchers are more technology growth enhancing than their European counterparts. In contrast, the results obtained for the second, using Kalman’s filter, show that when using an alternative definition of technological frontier, it is possible to observe a boost in innovation that reduces the dispersion among countries. Then, the leading European countries can take advantage; in this case, Germany exhibits the best performance, followed by the US.