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Economic Impacts of Investment Facilitation

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  • Edward J. Balistreri
  • Zoryana Olekseyuk

Abstract

We quantify the impacts of a potential Investment Facilitation Agreement (IFA) given the outcomes of the structured discussions. The analysis is based on an innovative multi-region general equilibrium simulation model including bilateral representative firms. Consideration is given to Foreign Direct Investment (FDI) and monopolistic competition. The model shows empirically relevant gains associated with removal of investment barriers. The expected global welfare gains range between 0.56% and 1.74% depending on the depth of a potential IFA. The benefits are concentrated among the members with the highest welfare increase for the low and middle income countries. Notable spillovers accrue to non-participants, which can be increased by joining the agreement. Our results contribute to the relatively scarce research on investment facilitation and provide policy makers with information on the potential effects of an IFA.

Suggested Citation

  • Edward J. Balistreri & Zoryana Olekseyuk, 2021. "Economic Impacts of Investment Facilitation," Center for Agricultural and Rural Development (CARD) Publications 21-wp615, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:cpaper:21-wp615
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    Cited by:

    1. Berger, Axel & Bolmer, Ann-Margret & Gitt, Florian & Olekseyuk, Zoryana & Metz, Marius & Robardet, Guillaume & Schäfer, Julia & Schneider, Marie-Lisa & Schönberg, Frank, 2023. "Implementation of the WTO Investment Facilitation for development agreement: Identification of reform needs and development policy measure," IDOS Policy Briefs 7/2023, German Institute of Development and Sustainability (IDOS), Bonn.

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