North‐South foreign direct investment and bilateral investment treaties

Falvey, Rod; Foster‐McGregor, Neil

doi:10.1111/twec.12539

Cited by 52 publications

(29 citation statements)

References 48 publications

(55 reference statements)

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“…Our results indicate that BITs have a positive (linear) effect on FDI flows from the OECD North to the developing South, with the effects found to be larger when zero and negative FDI flows are included. This suggests that at least part of the effect of BITs is to generate new or to renew disintegrating FDI relationships, a result that supports those of Falvey and Foster-McGregor (2015). Results further suggest the presence of non-linearities, with the effects of BITs found to be increasing in differences in the levels of GDP and GDP per capita between source and host country, and decreasing in the differences in political institutions between source and host.…”

Section: Introductionsupporting

confidence: 51%

“…Second, the apparent sensitivity of the results to whether only positive flows are included has been considered by Falvey and Foster-McGregor (2015). They use a matched difference-indifference approach to test for the effects of BITs at the intensive (positive and negative separately) and extensive margins of FDI and find significant effects only at the extensive and negative intensive margins.…”

Section: Introductionmentioning

confidence: 99%

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Heterogeneous effects of bilateral investment treaties

Falvey

Foster‐McGregor

2017

Rev World Econ

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Bilateral Investment Treaties (BITs) are an increasingly used policy instrument to encourage FDI inflows, particularly inflows into developing countries. In this paper we estimate a gravity model of FDI flows from a sample of OECD countries to a broader sample of developing economies, examining the impact of BITs on these flows. BITs are signed between highly heterogeneous country-pairs, with important differences found in terms of the institutional and economic distance between BIT signatories. These differences may help explain the mixed results on the effects of BITs on FDI flows in the existing literature, with our exploration of non-linearities in this relationship suggesting that the effects of BITs are increasing in the difference in GDP and GDP per capita between source and host. BITs appear to have no impact upon FDI flows for country-pairs that are too dissimilar in terms of the strength of their political institutions.

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Section: Introductionsupporting

confidence: 51%

Section: Introductionmentioning

confidence: 99%

Heterogeneous effects of bilateral investment treaties

Falvey

Foster‐McGregor

2017

Rev World Econ

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“…In 2015, the inflows of FDI have increased to US$1.8 trillion. Consistent with this massive increase in FDI flows, Falvey and Foster-McGregor (2018) have shown there has been a massive increase in bilateral investment treaties (BITs) during the last three decades, which had a positive and significant impact on FDI flows. However, they stress that this aggregate outcome masked quite different experiences, with no significant effect of BITs where FDI flows were already positive prior to the BIT.…”

Section: Unequal Evolution Of Foreign Direct Investment (Fdi) Flowsmentioning

confidence: 92%

Three decades of globalisation: Which countries won, which lost?

Gunter

Wilcher

2020

World Economy

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K E Y W O R D Scapital flows, economic integration, globalisation, marginalisation, trade | 1077 GUNTER aNd WILCHER shed more light on possible explanations for why some countries have been drivers of globalisation, while others have been marginalised. The last section provides some conclusions. | BRIEF REVIEW OF THE LITERATUREThough trade has been considered an engine of growth since at least Adam Smith, there have been doubts if all countries benefit from international trade. Given that the arguments and literature of trade optimists are relatively well known, 2 this literature review focuses on more critical contributions about the benefits of trade, especially for the developing countries, using a historical perspective.There is a long literature related to unequal economic relations between developing and industrialised countries dating back to the middle of the twentieth century grounded in so-called dependency theory built on Marxist theories of exploitive imperialist relations between the European and the non-European world. Building on a perceived unfair international order, a set of proposals was made during the 1970s by various developing countries, which supported by the United Nations Conference on Trade and Development (UNCTAD) led to a United Nations (1974) General Assembly Resolution declaring the establishment of a New International Economic Order (NIEO). 3 Examining the trade policies of the European Community (EC) towards the African, Caribbean and Pacific (ACP) countries, Agarwal, Dippl, and Langhammer (1985) concluded that the trade marginalisation of the ACP countries has been due largely to the overall economic stagnation of many ACP countries, specific barriers inhibiting ACP export performance, including droughts and desertification, plant and animal diseases, high transportation costs, expensive and often inadequate telecommunications, as well as the impact of oil price increases. Following up on the evolution of EC-ACP trade, Cosgrove (1994) concluded that additional factors for the trade marginalisation of ACP countries have been the high incidence of HIV/AIDS in Africa as well as an erosion of specific trade preferences since the mid-1980s.Examining shares of world trade, investment and output, Collier (1995) shows that sub-Saharan Africa was more marginalised in 1994 than at any time in the previous 50 years. He examines four possible explanations for this marginalisation: insufficient reform, insufficient scale, the high-risk environment and weakness of agencies of restraint. Based on a 1994 survey of 150 firms, which had either invested or were interested in investing in five African countries, Collier concludes that the most serious deterrent for investment was political and policy uncertainty, followed by fears of policy reversal, fear of expropriation (including failure of the legal system to protect private agents from government) and the risk of breach of contract (which is in effect a failure of the judiciary to create an environment in which contracts are respected). Ng an...

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“…McGregor (2018) find that the significant impact of BITs is in establishing new bilateral FDI links rather than expanding existing relationships. However, given that BITs are widely used instruments for protecting and attracting FDI, we explore the relationship between BITs and FDI further below.Hosts who are members of more PTAs do not necessarily receive more FDI, other things equal, which is consistent with the insignificant result on openness.…”

mentioning

confidence: 93%

The Effects of Preferential Trade Agreements on Foreign Direct Investment: Evidence from the African Caribbean Pacific Region

2019

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Our empirical analysis utilises panel data on bilateral FDI stocks from 34 OECD countries into 45 ACP countries over the period 2000-2017 to consider the role of PTAs in attracting FDI. We control for policies relating to trade, taxes and investment, along with other explanatory variables identified in the literature. We conclude the prevalence of market seeking FDI in the ACP region, with a role for regional integration in accessing surrounding market potential. We find no significant effect of PTAs on FDI in the Caribbean, while in Africa, the effects depend on the presence of a bilateral BIT.

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North‐South foreign direct investment and bilateral investment treaties

Cited by 52 publications

References 48 publications

Heterogeneous effects of bilateral investment treaties

Heterogeneous effects of bilateral investment treaties

Three decades of globalisation: Which countries won, which lost?

The Effects of Preferential Trade Agreements on Foreign Direct Investment: Evidence from the African Caribbean Pacific Region

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