#delimit;
log using "c:\classes\EC607 Econometrics II\FDI Basic.log", replace; 


/* File name: FDI Basic.do

Author: Bruce Blonigen

Date: January 2004 */

set memory 50000;

set matsize 100;

use "C:\papers\fditreaty\data_master\USFDIMaster.dta", clear;

/* GENERATE THE NECESSARY VARIABLES */


/* MAKE FDI MEASURES IN CONSTANT 1996 DOLLARS TO MATCH PW DATA */

gen rpos=position*100/deflate;
gen rsales=sales*100/deflate;

/* CREATE GDP VARIABLES */

gen hm_gdp=hm_pop*hm_rgdpch;
gen ht_gdp=ht_pop*ht_rgdpch;
gen sumgdp=hm_gdp/1000000+ht_gdp/1000000;
gen gdpdiff=(hm_gdp-ht_gdp)/1000000;
gen gdpdifsq=gdpdiff^2;


/* CREATE SKILL VARIABLES*/

gen skdiff=(hm_blayr-ht_blayr);
gen skdgdpd=skdiff*gdpdiff;
gen skdifsq=skdiff^2;


/* CREATE TRADE AND INVESTMENT BARRIERS */

gen hm_tcost=100-hm_openk;
gen ht_tcost=100-ht_openk;
gen beri=100-ht_beri;
drop ht_beri;
gen ht_beri=beri;

gen htskd2=ht_tcost*skdifsq;


/* BASIC REGRESSION OF CMM MODEL */

reg rpos sumgdp gdpdifsq skdiff skdgdpd ht_tcost hm_tcost ht_beri htskd2 distance;


clear;
log close;