Do bilateral investment treaties attract foreign direct investment? The role of international dispute settlement provisions

Frenkel, Michael; Walter, B.

doi:10.1111/twec.12743

Cited by 45 publications

(37 citation statements)

References 22 publications

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“…Pillar 2: Protection Pillar 3: Recourse clauses in bilateral investment treaties (BITs) and FDI inflows. Frenkel and Walter (2019) find that stronger international dispute settlement provisions in BITs are associated with positive effects on FDI activity. Because of various empirical challenges, evidence about the impact of IIAs remains mixed.…”

Section: Data Sources For the Regulatory Risk Measurementioning

confidence: 75%

Global Investment Competitiveness Report 2019/2020: Rebuilding Investor Confidence in Times of Uncertainty

2020

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This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries.Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved.

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Section: Data Sources For the Regulatory Risk Measurementioning

confidence: 75%

Global Investment Competitiveness Report 2019/2020: Rebuilding Investor Confidence in Times of Uncertainty

2020

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“…The values and significance of the BITs coefficient is very similar when combining the BITs indicator with the PTA depth and the PTA dummy variables (not shown), but the PTA indicators have higher coefficients than the BITs indicator. These mixed results are common on the literature (see for example, Frenkel and Walter, 2019). Some studies, for example Bergstrand and Egger (2013) find a positive impact of BITs using the standard gravity specification, but did not use country-pair fixed effects to account for unobservable bilateral country determinants.…”

Section: Assessing the Fdi Impact Of Different Policy Variablesmentioning

confidence: 91%

Gravity Estimations with FDI Bilateral Data: Potential FDI Effects of Deep Preferential Trade Agreements

Kox¹,

Rojas‐Romagosa²

2019

SSRN Journal

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This study employs a structural gravity approach to analyse the impact of preferential trade agreements (PTAs) on bilateral FDI. We use the UNCTAD global database on bilateral FDI stocks and flows. To control for the heterogeneous nature of PTAs we employ three different indicators of PTA depth. We find that 'deeper' or comprehensive PTAs (e.g. including provisions on investment, public procurement and intellectual property rights provisions) have a significant positive impact on bilateral FDI between partners. For instance, we estimate that the deepest PTA (with an index of seven in the DESTA database) is expected to increase bilateral FDI stocks between signatory countries by around 54%. We also show the importance and policy-relevant information contained in the structurally estimated inward multilateral resistance terms (IMR). We find that strictly domestic policies have a significant impact on the IMR, thus explaining the variation in the national barriers to FDI. As an example, we analyse the potential impact on foreign direct investment of the economic cooperation agreement signed by the

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“…Some literature points to the explanation of FDI flow associated with the signing and ratifying of IIAs and the investment provisions in IIAs (Aisbett et al 2018;Beebeejaun 2018;Bengoa et al 2020;Dixon and Haslam 2015;Egger and Merlo 2007;Egger and Merlo 2012;Egger and Pfaffermayr 2004;Frenkel and Walter 2018;Jacobs and Ostergard 2019;Jung and Kim 2019;Neumayer et al 2016;Tulayasathien and Tejapaibul 2017;Xiao 2011;Zeng and Lu 2016). The first strand of reasoning makes the case that the signing and ratifying IIAs are used to attract foreign direct investment.…”

Section: Effect Of International Investment Agreement On Foreign Dirementioning

confidence: 99%

“…Similarly, Frenkel and Walter (2018) built the individual 'BIT' scores of the BITs that explained the strength of international dispute settlement provision in all BITs that a country has signed. They hypothesized that higher BIT scores could raise FDI inflows, and their empirical results confirmed their hypothesis, i.e., stronger international dispute settlement provisions in BITs tended to attract foreign investment flow to recipient countries.…”

Section: Effect Of International Investment Agreement On Foreign Dirementioning

confidence: 99%

International Investment Agreements Provisions and Foreign Direct Investment Flows in the Regional Comprehensive Economic Partnership Region

Uttama

2021

Economies

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The international investment agreements (IIAs) are a strategic policy instrument that member countries could use to achieve win-win cooperation. Meanwhile, the extension of the Association of Southeast Asian Nations (ASEAN) membership toward the Regional Comprehensive Economic Partnership (RCEP) membership has induced the rich and deep investment agreement that challenges the ASEAN countries to take advantage. This study demonstrates the effects of investment provisions in international investment agreements on the bilateral foreign direct investment (FDI) in the RCEP economies. It also investigates the effect of ASEAN membership on investment creation and investment diversion toward the RCEP region. Using panel data on RCEP countries during the period 2009 to 2018 and a Poisson pseudo-maximum likelihood estimator, the results show that the relationship between inward FDI and investment provisions in IIAs are positive and significant. Likewise, the investment protection, facilitation, and promotion provisions in bilateral investment treaties have positive and significant effects on the inward FDI. Moreover, the findings indicate that the ASEAN membership tends to cause the investment creation toward the RCEP region; and it is a stepping stone on the road to the investment policy framework for sustainable development.

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Do bilateral investment treaties attract foreign direct investment? The role of international dispute settlement provisions

Cited by 45 publications

References 22 publications

Global Investment Competitiveness Report 2019/2020: Rebuilding Investor Confidence in Times of Uncertainty

Global Investment Competitiveness Report 2019/2020: Rebuilding Investor Confidence in Times of Uncertainty

Gravity Estimations with FDI Bilateral Data: Potential FDI Effects of Deep Preferential Trade Agreements

International Investment Agreements Provisions and Foreign Direct Investment Flows in the Regional Comprehensive Economic Partnership Region

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