Bilateral Investment Treaties

This paper, “Bilateral Investment Treaties: Liberal Tools Encouraging Greater Financial Direct Investment or Economic Nationalist Instruments?” will examine the legal arguments on how best to regulate Foreign Direct Investment, especially exploring the ramifications of the widespread use of Bilateral Investment Treaties (BTIs)

Beyond FDI: The Influence of Bilateral Investment Treaties on Debt

This paper examines theoretically and empirically the role of political risk guarantees, which bilateral investment treaties serve, in debt accumulation in low and middle income countries. The paper empirically finds that signed bilateral investment treaties with OECD countries have a positive influence on total and guaranteed debt accumulation, under system GMM and OLS estimation methodologies. Results suggest that the role of bilateral investment treaties extends beyond attracting FDI to international lending

Bilateral investment treaty and stock market correlation: Africa & Middle East case

This paper attempts to study the effects of bilateral investment treaties between countries on their stock market correlation. The study focuses on Africa and Middle East countries and how their bilateral investment treaties with other countries affect the stock market correlation of their indices. Some previous studies have ignored the effects of bilateral investment treaties on stock market correlation. Therefore, it is important to fill in this gap. The data examined are indices for Africa and Middle East countries who are involved in bilateral investment treaties with other countries to examine the effects of these bilateral investment treaties on the stock market correlation. Other macro economic variables are also examined to study their effects on stock market correlation. A fixed effect model is used to test 192 groups of African and Middle East countries with other countries having BIT and no BIT with them. The study shows that BIT has a positive effect on stock market correlation. While, it shows that openness to trade and membership of WTO have a negative impact on stock market correlation

Bilateral Investment Treaties: Concept and History

Bilateral Investment Treaties (BITs) are a policy tool for promoting and protecting foreign direct investment (FDI). FDI is simply defined as a type of investment by a resident of one country in an enterprise in another country, indicating a significant influence and long-term interest. In the age of globalisation, FDI is regarded as an essential component of a free and prosperous global economic system and a key development tool[1]. The proposed study will investigate these treaties and their impact on policy space, focusing on the BITs signed by India. It is argued that BITs limit sovereign governments' ability to take policy measures to promote and protect domestic development goals. Policy space is defined as an autonomous decision-making space that a host country government considers essential for promoting and protecting its citizens' basic needs[2]

Crossing the ocean by feeling for the BITs: Investor‐state arbitration in China’s bilateral investment treaties

This repository item contains a working paper from the Boston University Global Economic Governance Initiative. The Global Economic Governance Initiative (GEGI) is a research program of the Center for Finance, Law & Policy, the Frederick S. Pardee Center for the Study of the Longer-Range Future, and the Frederick S. Pardee School of Global Studies. It was founded in 2008 to advance policy-relevant knowledge about governance for financial stability, human development, and the environment.Although China began to sign bilateral investment treaties (BITs) in the 1970s, it refused to grant foreign investors the right to sue their host government in international arbitration tribunals. Few realize that China’s treaty negotiators have in fact abandoned this restriction in almost every Chinese BIT signed since 1998, including those with Latin America. Scholars have suggested that China reversed its policy in order to support Chinese overseas investors or to fit its general economic liberalization strategy. However, China’s BITs with Mexico, Peru, and Colombia as well as its arbitration case with Peru contradict these theories. I argue that China began signing open BITs to test the risks of granting open access to European countries and the United States, for whom open access is a key condition. China experimented gradually with open arbitration, just as it has experimented gradually with many economic changes since Reform and Opening began in 1978. This theory has interesting implications for China’s future BITs—as international arbitration tribunals threaten to make this experiment permanent, China has added new restrictions that bring China’s BITs closer to the US model and make a US-­‐China BIT more likely. However, the US avoids BITs with capital-­‐exporting countries, and China is now a large capital-­‐exporter. The main obstacle to US-­‐China BIT negotiations may no longer be the two nations’ differences, but rather their similarities

In defense of bilateral investment treaties

The exclusion of investor-state arbitration from the TTIP agreement would represent a regressive development in international investment law that is to be resisted rather than furthered. The key contentions advanced by critics of investor-state arbitration are exaggerated, and reform efforts should instead focus on its shortcomings

Bilateral Investment Treaties and FDI Flows

Given that one of the principal purposes of bilateral investment treaties (BITs) is to help countries attract investment flows (by protecting investments), it is only natural that the question has been raised whether they do, in fact, lead to higher investment flows. The main studies on this topic from the past decade are collected in The Effect of Treaties on Foreign Direct Investment: Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows (Oxford University Press, 2009), a volume I edited with Karl P. Sauvant

Learning from Brazil’s bilateral investment treaties

Investigations on the impact of BITs on FDI flows have neglected Brazil, a country that has attracted increased FDI flows despite not enacting any BIT. This Perspective, through a counterfactual analysis, argues that Brazil had not achieved its full potential and would have received additional FDI had it enacted BITs

Bilateral Investment Treaties, Political Risk and Foreign Direct Investment

The study constructs a linear model to evaluate the significant impacts of bilateral investment treaties (BITs) on foreign direct investment (FDI) and the possible consequences of BITs. The results show that BITs have significantly promoted FDI, and their effects are substitute for the level of political risk in a country. Another interesting finding is that BITs signed with non-OECD countries should not be overlooked. By estimating the growth of FDI resulting from an additional BIT ratified, the finding further indicates that BITs are more potential for most Asian countries to promote FDI. On average, a BIT ratified by a country in South, East, and South-East Asia can raise FDI by around 2.3 percent.Bilateral investment treaties, foreign direct investment, political risk

Do bilateral investment treaties increase foreign direct investment to developing countries?

Foreign investors are often skeptical toward the quality of the domestic institutions and the enforceability of the law in developing countries. Bilateral Investment Treaties (BITs) guarantee certain standards of treatment that can be enforced via binding investor-to- state dispute settlement outside the domestic juridical system. Developing countries accept restrictions on their sovereignty in the hope that the protection from political and other risks leads to an increase in foreign direct investment (FDI), which is also the stated purpose of BITs. We provide the first rigorous quantitative evidence that a higher number of BITs raises the FDI that flows to a developing country. This result is very robust to changes in model specification, estimation technique and sample size. There is also some limited evidence that BITs might function as substitutes for good domestic institutional quality, but this result is not robust to different specifications of institutional quality.Foreign direct investment, bilateral investment treaties, institutional quality, protection, risk