DO BILATERAL INVESTMENT TREATIES AFFECT FDI FLOWS? A RETROSPECTIVE STUDY WITH SOME IMPLICATIONS FOR ASIA

The effects of bilateral investment treaties (BITs) on foreign direct investment (FDI) is a controversial topic. This paper, extending the work of Neumayer and Spess (2005), supports the argument for positive effects. In particular, this study observed that a positive effect on FDI flows occurred wh...

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Bibliographic Details
Published in:The Asia Pacific journal of economics & business 2010-12, Vol.14 (2), p.49
Main Author: Min, Byung S
Format: Article
Language:English
Subjects:
Agreements
Developing countries
Foreign investment
Host country
Impact analysis
Intellectual property
LDCs
Studies
Trade agreements
Trade policy
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Summary:The effects of bilateral investment treaties (BITs) on foreign direct investment (FDI) is a controversial topic. This paper, extending the work of Neumayer and Spess (2005), supports the argument for positive effects. In particular, this study observed that a positive effect on FDI flows occurred when neighbouring countries competed for BIT ratification. This finding was robust, regardless of whether a parametric (the difference-in-differences method) or non-parametric (i.e. the propensity score matching) estimation method was used. One overall policy implication from this estimation which is especially pertinent to countries in the Asia region is that a country's policy function to attract FDI may need to take into account neighbouring countries' FDI policies. [PUBLICATION ABSTRACT]
ISSN:1326-8481