Chapter

Do Bilateral Investment Treaties Increase Foreign Direct Investment to Developing Countries? *

Eric Neumayer and Laura Spess

in The Effect of Treaties on Foreign Direct Investment

Published in print April 2009 | ISBN: 9780195388534
Published online May 2009 | e-ISBN: 9780199855322 | DOI: https://dx.doi.org/10.1093/acprof:oso/9780195388534.003.0007
 Do Bilateral Investment Treaties Increase Foreign Direct Investment to Developing Countries? *

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This chapter addresses the question of whether of bilateral investment treaties (BITs) increase foreign direct investment (FDI) to developing countries. Developing countries that sign more BITs with developed countries receive more FDI inflows. The effect is robust to various sample sizes, model specifications, and whether or not FDI flows are normalized by the total flow of FDI going to developing countries. There is some limited evidence that BITs function as substitutes for institutional quality. The message to developing countries, therefore, is that succumbing to the obligations of BITs does have the desired payoff of higher FDI inflows.

Keywords: BIT; FDI; developing countries; investment inflows

Chapter.  11067 words.  Illustrated.

Subjects: Public International Law

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