Do Bits Really Work? Revisiting the Empirical Link between Investment Treaties and Foreign Direct Investment

32 Pages Posted: 18 Sep 2007

See all articles by Jason W. Yackee

Jason W. Yackee

University of Wisconsin Law School

Date Written: October 2007

Abstract

In this article I replicate, expand, and critique an earlier analysis by Neumayer and Spess claiming to have identified strong evidence that developing countries that sign bilateral investment treaties (BITs) enjoy massive increases in foreign direct investment (FDI). In the face of a series of relatively small but very justifiable changes in methodology and model specification the apparently positive effect of BITs on FDI largely (and in some cases entirely) falls from statistical significance. I conclude that the case for BITs is far weaker than Neumayer and Spess suggest.

Keywords: BITs bilateral investment treaties, FDI foreign direct investment

Suggested Citation

Yackee, Jason W., Do Bits Really Work? Revisiting the Empirical Link between Investment Treaties and Foreign Direct Investment (October 2007). Univ. of Wisconsin Legal Studies Research Paper No. 1054, Available at SSRN: https://ssrn.com/abstract=1015083 or http://dx.doi.org/10.2139/ssrn.1015083

Jason W. Yackee (Contact Author)

University of Wisconsin Law School ( email )

975 Bascom Mall
Madison, WI 53706
United States

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