FDI promotion through bilateral investment treaties: more than a bit?
By M. Busse, Jens Koeniger, Peter Nunnenkamp. 2010
253 citations recorded by the source corpus.
Policy makers in developing countries have increasingly pinned their hopes on bilateral investment treaties (BITs) in order to improve their chances in the worldwide competition for foreign direct investment (FDI). However, the effectiveness of BITs in inducing higher FDI inflows is still open to debate. It is in several ways that we attempt to clarify the inconclusive empirical findings of earlier studies. We cover a much larger sample of host and source countries by drawing on an extensive data set on bilateral FDI flows. Furthermore, we account for unilateral FDI liberalization, in order not to overestimate the effect of BITs, as well as for the potential endogeneity of BITs. Employing a gravity-type model and various model specifications, including an instrumental variable approach, we find that BITs do promote FDI flows to developing countries. BITs may even substitute for weak domestic institutions, though probably not for unilateral capital account liberalization.
Subfields: Economics and Econometrics, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/acb65a981077fd0758829e1c4cd33e59e4d8e96a
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Economics and Econometrics
- M. Busse
- Fabian Barthel
- Eric Neumayer
- Bart Verspagen
- D. Crombrugghe
- K. Farla
- Philip A. Lawn
- Sylvia Szabo
In Strategy and Management
- M. Busse
- Fabian Barthel
- Bart Verspagen
- Eric Neumayer
- D. Crombrugghe
- K. Farla
- John S. Liu
- Louis Y. Y. Lu
Citations in the corpus
- The Impact of Double Taxation Treaties on Foreign Direct Investment: Evidence from Large Dyadic Panel Data (2009, background): “Such a contract reduces uncertainty and should therefore foster FDI (Neumayer and Spess, 2005; Busse, Königer, and Nunnenkamp, 2008).”
- Institutions, Foreign Direct Investment, and Domestic Investment: Crowding Out or Crowding In? (2016, background): “Busse et al. (2010) and Büthe and Milner (2008) provide evidence about the effectiveness of such policies in attracting FDI.”