Attracting FDI Through BITs and RTAs: Does Treaty Content Matter?
Columbia FDI Perspectives No. 75
Posted: 2 Aug 2012
Date Written: July 30, 2012
It may appear all too obvious that the extent to which foreign direct investment (FDI) is attracted by bilateral investment treaties (BITs) and regional trade agreements (RTAs) depends on the strength of key investment provisions. Still, BITs and RTAs have typically been treated as black boxes in prior empirical literature, ignoring two important legal innovations: investor-state dispute settlement (ISDS) and re-establishment national treatment (NT) provisions. An assessment of the impact of different classes of BITs and RTAs on bilateral FDI flows between up to 28 home and 83 developing host countries (covering the period 1978-20042) yields strong evidence that liberal admission rules promote bilateral FDI.
Keywords: foreign direct investment, bilateral investment treaties, regional trade agreements, admission rules, investor-state dispute settlement
JEL Classification: F21, F23, K33
Suggested Citation: Suggested Citation