IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v53y2021i30p3535-3548.html
   My bibliography  Save this article

Foreign direct investment and institutional environment: the impact of bilateral investment treaties

Author

Listed:
  • Shi Li
  • Long Zhao
  • Hao Shen

Abstract

Institutional factors are a critical driving force for the rapid growth of outward foreign direct investment (FDI) in developing countries. This article attempts to explain how developing countries can take advantage of bilateral investment treaties (BITs) to reduce investment uncertainties caused by informal institutional distance and help domestic companies invest abroad. The results confirm that the cultural difference between China and a host country is negatively associated with the likelihood of FDI entry into the host country. BITs function as a substitute for the host country’s institutional environment by reducing investment uncertainties caused by cultural distance. Moreover, state-owned enterprises are less responsive to BITs in host countries than private enterprises, suggesting that private firms rely more on BITs to reduce their investment risks abroad.

Suggested Citation

  • Shi Li & Long Zhao & Hao Shen, 2021. "Foreign direct investment and institutional environment: the impact of bilateral investment treaties," Applied Economics, Taylor & Francis Journals, vol. 53(30), pages 3535-3548, June.
    • Handle: RePEc:taf:applec:v:53:y:2021:i:30:p:3535-3548
    DOI: 10.1080/00036846.2021.1883535
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2021.1883535
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036846.2021.1883535?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hong, Seiwoong & Lee, Junyong & Oh, Frederick Dongchuhl & Shin, Donglim, 2023. "Religion and foreign direct investment," International Business Review, Elsevier, vol. 32(1).
    2. Li, Dongkun & Chen, Xiaohong & Wohlfarth, Paul, 2022. "Public participation, investment networks, and China's outward FDI: Evidence from 58 countries along the belt and road," Emerging Markets Review, Elsevier, vol. 51(PB).
    3. Peter Egger & Alain Pirotte & Catharine Titi, 2023. "International investment agreements and foreign direct investment: A survey," The World Economy, Wiley Blackwell, vol. 46(6), pages 1524-1565, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:53:y:2021:i:30:p:3535-3548. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.