Do Bilateral Investment Treaties Attract Foreign Direct Investment? The Role of International Dispute Settlement Provisions

Michael Frenkel and Benedikt Walter ()

No 17-08, WHU Working Paper Series - Economics Group from WHU - Otto Beisheim School of Management

Abstract: This paper studies the effect of the strength of Bilateral Investment Treaties (BITs) on FDI activity. We develop an index for the strength of international dispute settlement provisions included in BITs in order to examine the role the content of BITs plays in attracting FDI. To this end we make use of data from the UNCTAD’s International Investment Agreement Mapping Project and measure the provision strength of 1,676 BITs. Using panel data of bilateral and total inward FDI flows and stocks we study the effect of BITs on FDI. Our main finding indicates that stronger international dispute settlement provisions in BITs are indeed associated with positive effects on FDI activity.

Keywords: Bilateral Investment Treaties (BITs); State-State Dispute Settlement (SSDS); Investor-State Dispute Settlement (ISDS); Foreign Direct Investment (FDI) (search for similar items in EconPapers)
JEL-codes: F02 F21 F23 F53 K33 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2017-12-21
New Economics Papers: this item is included in nep-int and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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