Signalling Demand for Foreign Investment: Postsocialist Countries in the Global Bilateral Investment Treaties Network

Abstract

A unique dataset on bilateral investment treaties provides a novel source of evidence on the link between neoliberal globalisation and market transition. We argue that postsocialist countries of Europe and Eurasia, more than other developing regions in the world, signed such treaties to signal demand for foreign investment in the spirit of neoliberalism. We calculated the density of the whole BIT network since its inception in 1959 to 2009, and density and centrality of different regional blocks within it, and found strong support for our argument. Yet, even if bilateral investment treaties are designed to promote foreign direct investment, dynamic panel regression models show that signing them does not automatically translate into foreign direct investment inflows for postsocialist European and Eurasian countries in the 1990-2010 period.

Labour market flexibilisation in Lithuania: Outcomes and impacts on gender differences in work arrangements

“…in competition for foreign investment in conditions where information about local investment conditions is limited’ (Appel and Orenstein, 2018: 5–6). Labour law liberalisation in Lithuania may have been undertaken primarily because it was reflective of ‘widespread belief among investors and policymakers [that such reforms] were correlated with profitable foreign investment’ (Appel and Orenstein, 2018: 116; see also Bandelja et al, 2015; Campos and Kinoshita, 2008). It seems that with signalling accomplished, business interests gave little consideration to using new employment flexibility provisions.…”

Amplified Decoupling in the Global Economy: The Case of Bilateral Investment Treaties

“…Considering the centrality of FDI to the discourse around postcommunist economic transformation, researchers point out not only the importance of postcommunist countries in the global BIT network but also that signing BITs does not yield corresponding levels of FDI (Bandelj et al 2015). As Figure 2 shows, this may be because a substantial share of BITs signed by postcommunist countries are actually with other postcommunist and/or developing countries.…”

“…The contents of BIT agreements among states have remained remarkably consistent over time (Bandelj, Mahutga, and Shorette 2015). However, we can conceptualize BITs as a potentially multivalent institution because these treaties can be variously adopted by practical actors for legal, economic, political, and cultural purposes either as (1) a legal treaty for property rights protection after World War II to guard against nationalization during the decolonization period, (2) an economic instrument to compete for FDI, (3) a political instrument for outward-looking communist countries to forge geopolitical alliances outside of the Soviet Union during the Cold War and postcommunist countries to aid in global integration after the Cold War, or (4) a cultural policy script of neoliberal globalization promoted by UNCTAD and adopted by developing countries to perform a legitimate “globalization as development” (McMichael 2000) strategy.…”

Intensity of foreign investment promotion and development levels in Central–Eastern European regions

“…Foreign direct investment (FDI) has been considered instrumental in the restructuring of the Czech, Polish and Slovak regional economies, and hence courted by the governments and regional authorities since the beginning of the systemic transformation in the early 1990s (Turnock, 1997; Domański, 2001; Bradshaw, 2005; Bandelj et al , 2015). Accession to the European Union (EU) offered further potential for FDI attraction and resulted in the transfer of greater powers to the regional authorities which, next to National Investment Promotion Agencies (NIPAs), became key players in the inward investment promotion process (Young, 2005; Sellar and Pástor, 2015).…”