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The effects of India's bilateral investment treaties termination on foreign direct investment inflows

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  • Elena Kotyrlo
  • Hryhorii M. Kalachyhin

Abstract

India initiated the unilateral mass termination of bilateral investment treaties (BIT termination) in 2016. We consider it a natural experiment to clarify the issue of whether BITs attract foreign direct investment (FDI) to a developing country. We evaluate the effect of BIT termination on the FDI inflows using the double and triple difference approaches (DD and DDD) and the synthetic control (SCM) methods. Our study finds that BIT termination led to a significant decrease in FDI inflows from the country with which India terminated the agreement. Thus, the study confirms that BIT is an essential mechanism for attracting FDI.

Suggested Citation

  • Elena Kotyrlo & Hryhorii M. Kalachyhin, 2023. "The effects of India's bilateral investment treaties termination on foreign direct investment inflows," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 31(4), pages 1007-1033, October.
    • Handle: RePEc:wly:ectrin:v:31:y:2023:i:4:p:1007-1033
    DOI: 10.1111/ecot.12363
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