European Bilateral Investment Agreements - Is There a Real Value Added?

Abstract

Our paper contributes to the discussion about economic effects of regional trade agreements (RTA) and bilateral investment treaties (BIT). The fundamental aim of our research is to investigate the influence of different agreements and their scope on EU FDI outflow. For an empirical test we use a data set covering the period from 2000 to 2012. Standard factors of FDI models have been tested, such as the size of the markets of trade partners or GDP per capita of trade partners using loglinear specification of the model. To control the effect of RTAs and BITs we add several dummy variables indicating the scope of cooperation. Positive effects of growing GDP and GDP per capita were expected by us, as usual. We also suppose that concluding RTA or BIT enhance FDI outflow from EU. To test for this hypothesis, and to exercise control over additional factors, we estimate a model based on panel data with the use of Hausman-Taylor method.

Keywords: regional trade agreements; bilateral investment treaties; EU law; log-linear analysis; Hausman-Taylor method.