Heterogeneous effects of bilateral investment treaties

Research output: Book/ReportReportProfessional

Abstract

Bilateral Investment Treaties (BITs) are an increasingly used policy instrument to encourage FDI inflows, particularly inflows into developing countries. In this paper we estimate a gravity model of FDI flows from a sample of OECD countries to a broader sample of developing economies, examining the impact of BITs on these flows. BITs are signed between highly heterogeneous country-pairs, with important differences found in terms of the institutional and economic distance between BIT signatories. These differences may help explain the mixed results on the effects of BITs on FDI flows in the existing literature, with our exploration of non-linearities in this relationship suggesting that the effects of BITs are increasing in the difference in GDP and GDP per capita between source and host. BITs appear to have no impact upon FDI flows for country-pairs that are too dissimilar in terms of the strength of their political institutions.
Original languageEnglish
PublisherUNU-MERIT working papers
Volume2017
Edition027
Publication statusPublished - 19 Jun 2017

JEL classifications

  • c21 - "Single Equation Models; Single Variables: Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions"
  • f21 - "International Investment; Long-term Capital Movements"
  • o16 - "Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance"

Keywords

  • Foreign Direct Investment
  • FDI Inflows
  • Developing countries
  • Economic development
  • Bilateral Investment Treaties
  • Heterogeneous Effects

Fingerprint

Dive into the research topics of 'Heterogeneous effects of bilateral investment treaties'. Together they form a unique fingerprint.

Cite this