Bilateral Investment Treaties and Foreign Direct Investment: A Political Analysis *

Tim Büthe and Helen V. Milner

in The Effect of Treaties on Foreign Direct Investment

Published in print April 2009 | ISBN: 9780195388534
Published online May 2009 | e-ISBN: 9780199855322 | DOI:
 Bilateral Investment Treaties and Foreign Direct Investment: A Political Analysis *

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This chapter examines the effect of bilateral investment treaties (BITs) on inward foreign direct investment flows (FDI) into least developed countries (LDCs). It suggests that BITs should not only boost FDI between the signatory states but more broadly increase inward FDI into the developing country signatory. The chapter begins with a discussion of the often narrow, legalistic conceptualization of BITs in previous studies, as well as previous dyadic and monadic empirical findings. It presents a statistical analysis of inward FDI flows into 122 developing countries with a population of more than 1 million from 1970 to 2000, and a qualitative analysis of the hypothesized causal mechanisms. It shows that the positive correlation between BITs and subsequent FDI is driven by the hypothesized causal mechanisms.

Keywords: BIT; FDI; investment flows; developing countries; LDC; least developed countries

Chapter.  24984 words. 

Subjects: Public International Law

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