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Does Investor Protection Increase Foreign Direct Investment? A Meta-Analysis

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  • Brada, Josef C.
  • Drabek, Zdenek
  • Iwasaki, Ichiro
  • 岩崎, 一郎

Abstract

We undertake a meta-analysis of the effects of international investment agreements for the protection of foreign investors on foreign direct investment using 2107 estimates drawn from 74 studies. Our meta-analysis finds robust evidence that effect of international investment agreements is so small as to be considered zero. However, our results do not rule out the possibility that the effect of these agreements is, in fact, positive and that current research methods are insufficiently powerful or precise to identify the underlying genuine effect. FDI from developed countries appears to be more responsive to the existence of investment protection, and there is evidence of publication-selection bias in favor of studies that find a positive effect for investor protection.

Suggested Citation

  • Brada, Josef C. & Drabek, Zdenek & Iwasaki, Ichiro & 岩崎, 一郎, 2020. "Does Investor Protection Increase Foreign Direct Investment? A Meta-Analysis," CEI Working Paper Series 2020-4, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hitcei:2020-4
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    More about this item

    Keywords

    meta-analysis; foreign direct investment; investor protection; bilateral investment treaty;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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