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Economic Impacts of Investment Facilitation

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  • Balistreri, Edward J.
  • Olekseyuk, Zoryana

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

  • Balistreri, Edward J. & Olekseyuk, Zoryana, 2021. "Economic Impacts of Investment Facilitation," Conference papers 333261, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:333261
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    1. Christoph Boehringer & Edward Balistreri & Thomas Rutherford, 2018. "Quantifying Disruptive Trade Policies," Working Papers V-415-18, University of Oldenburg, Department of Economics, revised Nov 2018.
    2. Jesper Jensen & David Tarr, 2014. "Deep Trade Policy Options for Armenia: The Importance of Trade Facilitation, Services and Standards Liberalization," World Scientific Book Chapters, in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 19, pages 453-508, World Scientific Publishing Co. Pte. Ltd..
    3. Balistreri, Edward J. & Jensen, Jesper & Tarr, David, 2015. "What determines whether preferential liberalization of barriers against foreign investors in services are beneficial or immizerising: Application to the case of Kenya," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 9, pages 1-134.
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    6. Burfisher,Mary E., 2011. "Introduction to Computable General Equilibrium Models," Cambridge Books, Cambridge University Press, number 9780521766968, December.
    7. Jesper Jensen & David Tarr, 2008. "Impact of Local Content Restrictions and Barriers Against Foreign Direct Investment in Services: The Case of Kazakhstan's Accession to the World Trade Organization," Eastern European Economics, Taylor & Francis Journals, vol. 46(5), pages 5-26, September.
    8. Edward J. Balistreri & Zoryana Olekseyuk & David G. Tarr, 2017. "Privatisation and the unusual case of Belarusian accession to the WTO," The World Economy, Wiley Blackwell, vol. 40(12), pages 2564-2591, December.
    9. Edward J. Balistreri & David G. Tarr & Hidemichi Yonezawa, 2015. "Deep Integration in Eastern and Southern Africa: What are the Stakes?," Journal of African Economies, Centre for the Study of African Economies, vol. 24(5), pages 677-706.
    10. Balistreri, Edward J. & Rutherford, Thomas F., 2013. "Computing General Equilibrium Theories of Monopolistic Competition and Heterogeneous Firms," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1513-1570, Elsevier.
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    13. Burfisher,Mary E., 2011. "Introduction to Computable General Equilibrium Models," Cambridge Books, Cambridge University Press, number 9780521139779, December.
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    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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