The opening up process of the eastern European countries was marked by greater integration of foreign direct investment (FDI) with their western neigbouring countries.Using the single step maximum likelihood (ML) approach to stochastic frontier analysis (SFA), the location and variance determinants of FDI are estimated using the knowledge capital (KK) model framework. The findings, based on a panel of bilateral FDI stocks from 10 western to 10 eastern European countries over the 1996 to 2007 period, suggest FDI is determined by both horizontal and vertical motives while the process of liberalisation and infrastructural developments significantly reduce the variance of FDI.In using a stochastic frontier specification of the KK model, the efficiency of FDI performance is identified relative to maximum levels. The bilateral efficiency scores suggest a mixed performance, indicating scope to improve the efficiency of FDI.JEL Classification: C33, F21, P27

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Given the importance of remittances it is crucial for the governments and the financial sectors in the region to recognize the specificity of each kind of remittance. A systematic analysis of the determinants of remittances would provide invaluable insights to policy makers and contribute to the design of more appropriate regulations. This in turn can promote an effective strategy for the mobilisation of remittances. In this paper the macroeconomic determinants of remittances are estimated for a set of Latin American and Caribbean countries. Generally two approaches to modelling the determinants of remittances have been undertaken in the empirical literature. First a microeconomic approach utilising household survey data (DE LA BRIÈRE, 2002; AMUENDO-DORANTES and POZO;YANG, 2008). Second a macroeconomic approach which uses balance of payments data (VARGAS-SILVA and HUANG, 2006; ADAMS, 3 2009). A third approach which combines a microeconomic foundation with macroeconomic data has been gaining some momentum (RAPOPORT and DOCQUIER, 2005; SCHIOPU and SIEGFRIED, 2006). It is this latter approach upon which the current study is based.A panel data set of bilateral remittance flows from 18 industrialised remittance sending countries 3 to 27 remittance receiving Latin American and Caribbean (LAC) countries 4 over the period 1998 to 2007 is utilised to study the determinants of remittances. This paper makes several contributions to the literature on remittances.Generally research on remittances in the LAC region is concentrated on a single country or a minority of countries (SAYAN et al., 2010;VARGAS-SILVA and HUANG, 2006; CASTILLO-PONCE et al, 2011). A number of studies have used bilateral data to study remittances (LUETH and RUIZ-ARRANZ, 2008;FRANKEL, 2011; DOCQUIER et al, 2012). These studies feature selected Latin American countries as part of a larger data set that focuses on developing countries in general. In this study a new measure of bilateral remittances is proposed, one that is based on the assumption that aggregate remittance inflows for a country are directly linked to the pattern of a migrating population. This makes it possible to derive bilateral estimates of remittances for a larger group of countries in the LAC region than has been available previously.Second, the effect on remittances is examined for a comprehensive set of economic, demographic and risk related factors (both man-made and natural). This is unlike earlier studies which tend to ignore the potential effects of demographic and/or risk related factors that may be important in capturing altruistic and investment motivations (VARGAS-SILVA and HUANG, 2006; LIN, 2011). Finally, microeconomic 4 theory provides the foundation for exploring the motives for remittances, which are then captured in a model comprising macroeconomic variables. Previous macroeconomic studies of remittances tend to utilise a reduced form equation for remittance with little or no reference to the underlying microeconomic foundations (HIGGINS et al, 2009;FONCHAMYO,...

The effects of regionalism on trade have been extensively evaluated within a gravity model framework. With the expected exit of the United Kingdom (UK) from the European Union (EU), the prospect of regional disintegration has brought about a new impetus to studying trade policy effects. Using actual and forecast data for a panel of bilateral imports between the EU15 and the rest of the world, this paper examines the trade effects of EU economic integration agreements (EIAs), their evolution over time and the related counterfactual Brexit trade policy scenarios. Distinct trade effects are obtained for the EU trade related agreements; positive, significant and of similar magnitude for the EU and free trade agreement (FTA) coefficients, but negative and significant (and smaller in magnitude) for the regional economic partnership agreements (EPAs). The subperiod results suggest the positive coefficients of EU and FTA membership tend to diminish over time, implying earlier membership of EIAs came with greater trade benefits. Finally, in generating the predicted values for the trade effects of three alternative counterfactual Brexit scenarios (hard Brexit, hard Brexit plus, global Britain), the findings suggest an asymmetric effect depending on the perspective of the UK versus the EU. Whereas the UK's trade would decline substantially with all three country groups (the EU, the FTAs and regional EPAs) and rise substantially with the rest of the world, only minor percentage changes are predicted for EU bilateral trade.