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Does Investment Treaty Affect the Improvement on FDI?

Author

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  • Seo , Eunsook

    (Sangmyung University)

Abstract

The paper analyzes how investment treaty affects investment creation. Analysis results show that investment treaty could not directly affect the increase in investment with the form of investment agreement contradicting and the opening of investment treaty countries have increased a great deal of investment. Contracting the investment agreement means to ultimately improve the investment environment such as policy transparency, simplification of administration, and the simplification or the clearness of law regulation. Thus, this paper also focuses on the relation between contracting the investment treaty and the improvement of investment environment. According to these analyses, investment treaty contracting increases foreign direct investment (FDI) inflow by 7.04~8.87% on averagThe paper analyzes how investment treaty affects investment creation. Analysis results show that investment treaty could not directly affect the increase in investment with the form of investment agreement contradicting and the opening of investment treaty countries have increased a great deal of investment. Contracting the investment agreement means to ultimately improve the investment environment such as policy transparency, simplification of administration, and the simplification or the clearness of law regulation. Thus, this paper also focuses on the relation between contracting the investment treaty and the improvement of investment environment. According to these analyses, investment treaty contracting increases foreign direct investment (FDI) inflow by 7.04~8.87% on average through the improvement of investment environment compared to the countries that do not improve the investment environment. Also, it shows that the FDI inflow from other countries than the investment agreement country is 5.02~ 5.5% higher on average than countries that did not contract investment treaty when investment environment was improved.

Suggested Citation

  • Seo , Eunsook, 2008. "Does Investment Treaty Affect the Improvement on FDI?," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 12(2), pages 121-150, December.
    • Handle: RePEc:ris:eaerev:0131
    DOI: 10.11644/KIEP.JEAI.2008.12.2.190
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    More about this item

    Keywords

    Investment Treaty; FDI; Gravity Model;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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