Attracting FDI Through BITs and RTAs: Does Treaty Content Matter?

Columbia FDI Perspectives No. 75

Posted: 2 Aug 2012

See all articles by Axel Berger

Axel Berger

German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)

Matthias Busse

Ruhr-University Bochum; HWWI - Hamburg Institute of International Economics

Peter Nunnenkamp

University of Kiel

Martin Roy

World Trade Organization (WTO) - Trade in Services Division

Date Written: July 30, 2012

Abstract

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

Berger, Axel and Busse, Matthias and Nunnenkamp, Peter and Roy, Martin, Attracting FDI Through BITs and RTAs: Does Treaty Content Matter? (July 30, 2012). Columbia FDI Perspectives No. 75. Available at SSRN: https://ssrn.com/abstract=2122255

Axel Berger (Contact Author)

German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE) ( email )

Tulpenfeld 6
Bonn, 53113
Germany

HOME PAGE: http://www.die-gdi.de

Matthias Busse

Ruhr-University Bochum ( email )

Faculty of Management and Economics, GC 3/145
D-44780 Bochum, DE 44780
Germany

HWWI - Hamburg Institute of International Economics

Heimhuder Str. 71
Hamburg, 20148
Germany

Peter Nunnenkamp

University of Kiel ( email )

D-24100 Kiel
Germany

Martin Roy

World Trade Organization (WTO) - Trade in Services Division ( email )

Centre William Rappard
Rue de Lausanne 154
12111 Geneva
Switzerland

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