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FDI intra-regional inflows per country (as percentage of total intra-regional inflows in Latin America) vs BITs pro-investor index (1995-2018). Source: Author's calculations using data from UNCTAD and WTO.
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Latin America has experienced a surge in foreign direct investment (FDI) in the last two decades, in parallel with the ratification of major regional trade agreements (RTAs) and bilateral investment treaties (BITs). This paper uses the latest developments in the structural gravity model theory to study if the coexistence of BITs and two major regio...
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... Berger et al. (2013) demonstrated that only some selected RTAs with liberal admission rules promote FDI, while BITs consistently show a positive correlation with FDI. Bengoa et al. (2020) asserted that a wellestablished RTA (e.g., Mercosur) holds more of a boosting effect on intra-regional FDI than BITs, while the effects of BITs largely vary depending on the income level of the country. ...
This study explores the effects of Bilateral Investment Treaties (BIT) and Regional Trade Agreements (RTA) on foreign direct investment (FDI) inflows into Serbia, utilizing panel data for 2010–2021. The results indicate that both BIT and RTA independently exert positive impacts on Serbia’s inward FDI. Also, the interaction effects between BIT and RTA dummies and export/import variables on inward FDI are positive. This suggests that the implementation of BITs and/or RTAs fosters a complementary relationship between trade and FDI in Serbia as the predominant type of FDIs from partner states with which Serbia shares BITs and/or RTAs is vertical and export-platform rather than horizontal.
... The relationship between IIAs, FDI, and sustainable development is dynamically complex. The closing of IIAs does not necessarily lead to more FDI, as only those IIAs offering high-level investment protection do so [15], and an FDI does not automatically promote sustainable development [16]. Traditional standards of investment protection might be too restrictive regarding the government's capacity to introduce environmental protection measures [17]. ...
Environmental protection provisions in international investment agreements (IIAs) are designed to respond to relevant concerns in foreign direct investment (FDI) activities. Environmental protection concerns in international investment may be observed in both international investment rules and arbitration, as the numbers of both relevant provisions in IIAs and international arbitration cases are on the rise. China has its corresponding domestic legislative agendas with respect to social transformation, and environmental protection requirements are a factor in both its domestic FDI law and bilateral investment treaty-making. It is anticipated that, while China is domestically pursuing a more environmentally friendly economic growth model, it may further explore an appropriate model for an international investment regulatory system in the context of environmental protection.
... The two main industries that attracted a large portion of the FDI inflow were the oil and mining. As part of the activities Ghana undertakes in an attempt to lure foreign investors into the country, the Ghana Investment Summit, an annual event, is organized [13][14][15][16]. ...
... In order to establishment ways and opportunities of improving Ghana's foreign direct investment in the framework of international trade, the author conducted literature review [14][15][16][17][18][19][20][21]. The outcomes of this review stated that many researchers have mentioned factors (the host country's infrastructure, financial development, and human capital development) influence the foreign direct investment and hence the economic growth in their research works. ...
... The study affirms the need for human resource availability in order to ensure relation between FDI and economic growth. Though Bengoa & Sanchez [15] they further stated that a significant level of a stable economy and a more liberalized capital market also ensure the positive influence of FDI on growth. ...
It has been established that economic globalization is an important area of research when it comes to doing business across borders and has impacted it in many ways. International trade, though largely an economic activity is governed by rules and regulations. For example, assistance giving through subsidies makes the exported products cheaper and more affordable and may provide additional incentives to produce same products by domestic enterprises. The main goal of this work is to perceive implications of how the administration of policies on international market penetration by domestic producers in Ghana affects foreign trade and how to conduct business across borders, rules and regulations of the country. For this purpose, the paper identified how regulations of foreign trade can influence the way exporters and importers conduct business and the way to manage them. The work has provided, first of all, a review of the foreign trade figures of Ghana, trade barriers and import prohibitions as a protectionism to protect domestic producers. Then review of established potential ways and opportunities of improving Ghana’s foreign direct investment in the framework of international trade has been conducted and justified. The outcomes of proposed reviews helped the authors to clarify ways of improving and enhancing business development in the framework of foreign trade in Ghana. The methodological basis for this work were peer-reviews journal articles, acclaimed internet publications, personal data analysis and calculations.
... However, for countries with unsatisfactory institutional quality, BITs turn to substitute institutions. Furthermore, the promotional effects of RIAs are larger than BITs [40]. The economic integration agreements between two regions with many political barriers may turn Pareto-inefficient into Pareto-efficient, thereby decreasing institutional challenges [41]. ...
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... In particular, the membership of the RCEP agreement is important to stimulate intra-bloc FDI activities. Regarding the existing studies on the consequences of IIAs, although many of them investigated how IIAs were associated with the inward and outward FDI (Aisbett et al. 2018;Bengoa et al. 2020;Berger et al. 2013;Dixon and Haslam 2015;Egger and Merlo 2012;Jung and Kim 2019;Neumayer et al. 2016;Zeng and Lu 2016), few studies have discussed the relationship between various investment provisions (investment protection, facilitation, and promotion) of IIAs and FDI activities. Meanwhile, the relationship between IIAs and FDI in the RCEP remains questionable due to the lack of conclusive theoretical discussion and empirical results. ...
... Some literature points to the explanation of FDI flow associated with the signing and ratifying of IIAs and the investment provisions in IIAs (Aisbett et al. 2018;Beebeejaun 2018;Bengoa et al. 2020;Dixon and Haslam 2015;Egger and Merlo 2007;Egger and Merlo 2012;Egger and Pfaffermayr 2004;Frenkel and Walter 2018;Jacobs and Ostergard 2019;Jung and Kim 2019;Neumayer et al. 2016;Tulayasathien and Tejapaibul 2017;Xiao 2011;Zeng and Lu 2016). The first strand of reasoning makes the case that the signing and ratifying IIAs are used to attract foreign direct investment. ...
... They hypothesized that higher BIT scores could raise FDI inflows, and their empirical results confirmed their hypothesis, i.e., stronger international dispute settlement provisions in BITs tended to attract foreign investment flow to recipient countries. A recent review of the literature (Bengoa et al. 2020) addressed the BIT investment protection index capturing the variations in the degree of investment protection across individual BITs in the Latin American region. They also examined their relationship with intra-regional FDI by using a structural gravity model. ...
The international investment agreements (IIAs) are a strategic policy instrument that member countries could use to achieve win-win cooperation. Meanwhile, the extension of the Association of Southeast Asian Nations (ASEAN) membership toward the Regional Comprehensive Economic Partnership (RCEP) membership has induced the rich and deep investment agreement that challenges the ASEAN countries to take advantage. This study demonstrates the effects of investment provisions in international investment agreements on the bilateral foreign direct investment (FDI) in the RCEP economies. It also investigates the effect of ASEAN membership on investment creation and investment diversion toward the RCEP region. Using panel data on RCEP countries during the period 2009 to 2018 and a Poisson pseudo-maximum likelihood estimator, the results show that the relationship between inward FDI and investment provisions in IIAs are positive and significant. Likewise, the investment protection, facilitation, and promotion provisions in bilateral investment treaties have positive and significant effects on the inward FDI. Moreover, the findings indicate that the ASEAN membership tends to cause the investment creation toward the RCEP region; and it is a stepping stone on the road to the investment policy framework for sustainable development.
This paper analyses the impact of bilateral investment treaties (BITs) on sovereign default risk using monthly data for 29 emerging markets from 1996 to 2016. Under a BIT, foreign investors can use an international arbitration scheme to enforce compensation claims against the host country's government. We focus on the so far unexplored legal risk associated with BITs since a higher likelihood of government expropriations implicitly increases public debt. We do not find a significant unconditional effect of BITs on sovereign default risk (measured by the month‐over‐month percentage change in a country's Emerging Market Bond Index). Considering the heterogeneity of BITs and political risk, we find robust and strong negative effects of BITs on sovereign bond returns. In countries with high political risk of expropriation (measured by low executive constraints), we find that the implementation of BITs with strong investor protection is associated with a significantly negative impact on sovereign bond returns (−0.45 percentage points), which compares to roughly 11.7% of bond returns' monthly standard deviation.
This paper sets out to study the evolution and main results of Foreign Direct Investment (FDI) in Dominican Republic over the past three decades, in the context of a more complex global scenario characterised by new emergent actors, trade disputes, strong uncertainties stemming mainly from the world financial crisis and the pandemic, the geographical and functional reconfiguration of global value chains, and the industry 4.0. To check the hypothesis derived from the theoretical framework a correlation analysis, gravity equations, and a significance analysis are used. Among the main findings deriving from this work are: return on investments has showed a decreasing trend; there are causal relationships between FDI and GDP; the level of FDI generates a significantly positive impact on Dominican balance of payments; and the share of medium and high-tech manufactures of free trade zones exports has increased although technological improvements have not yet had any operational impact.
