Are Stricter Investment Rules Contagious? Host Country Competition for Foreign Direct Investment through International Agreements
We argue that the trend toward international investment agreements (IIAs) with stricter investment rules is driven by competitive diffusion, namely defensive moves of developing countries concerned about foreign direct investment (FDI) diversion in favor of competing host countries. Accounting for spatial dependence in the formation of bilateral investment treaties (BITs) and preferential trade agreements (PTAs) that contain investment provisions, we find that the increase in agreements with stricter provisions on investor-state dispute settlement and pre-establishment national treatment is a contagious process. Specifically, a developing country is more likely to sign an agreement with weak investment provisions if other developing countries that compete for FDI from the same developed country have previously signed agreements with similarly weak provisions. Conversely, contagion in agreements with strong provisions exclusively derives from agreements with strong provisions that other FDI-competing developing countries have previously signed with a specific developed source country of FDI
|Date of creation:||Mar 2014|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 431 8814-1
Fax: +49 431 85853
Web page: http://www.ifw-kiel.de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Axel Berger & Matthias Busse & Peter Nunnenkamp & Martin Roy, 2010.
"More Stringent BITs, Less Ambiguous Effects on FDI? Not a Bit!,"
Kiel Working Papers
1621, Kiel Institute for the World Economy.
- Berger, Axel & Busse, Matthias & Nunnenkamp, Peter & Roy, Martin, 2011. "More stringent BITs, less ambiguous effects on FDI? Not a bit!," Economics Letters, Elsevier, vol. 112(3), pages 270-272, September.
- Berger, Axel & Busse, Matthias & Nunnenkamp, Peter & Roy, Martin, 2010. "More stringent BITs, less ambiguous effects on FDI? Not a bit!," WTO Staff Working Papers ERSD-2010-10, World Trade Organization (WTO), Economic Research and Statistics Division.
- Richard Baldwin & Dany Jaimovich, 2009.
"Are Free Trade Agreements Contagious?,"
Global COE Hi-Stat Discussion Paper Series
gd09-057, Institute of Economic Research, Hitotsubashi University.
- Richard Baldwin & Dany Jaimovich, 2010. "Are Free Trade Agreements Contagious?," NBER Working Papers 16084, National Bureau of Economic Research, Inc.
- Baldwin, Richard & Jaimovich, Dany, 2010. "Are Free Trade Agreements Contagious?," CEPR Discussion Papers 7904, C.E.P.R. Discussion Papers.
- Baldwin, Richard & Jaimovich, Dany, 2009. "Are Free Trade Agreements Contagious?," CCES Discussion Paper Series 12, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
- Fabian Barthel & Matthias Busse & Eric Neumayer, 2010.
"The Impact Of Double Taxation Treaties On Foreign Direct Investment: Evidence From Large Dyadic Panel Data,"
Contemporary Economic Policy,
Western Economic Association International, vol. 28(3), pages 366-377, 07.
- Fabian Barthel & Matthias Busse & Eric Neumayer, 2010. "The impact of double taxation treaties on foreign direct investment: evidence from large dyadic panel data," LSE Research Online Documents on Economics 28823, London School of Economics and Political Science, LSE Library.
- David L. Carr & James R. Markusen & Keith E. Maskus, 2001.
"Estimating the Knowledge-Capital Model of the Multinational Enterprise,"
American Economic Review,
American Economic Association, vol. 91(3), pages 693-708, June.
- David L. Carr & James R. Markusen & Keith E. Maskus, 1998. "Estimating the Knowledge-Capital Model of the Multinational Enterprise," NBER Working Papers 6773, National Bureau of Economic Research, Inc.
- Richard Baldwin, 1993.
"A Domino Theory of Regionalism,"
NBER Working Papers
4465, National Bureau of Economic Research, Inc.
- Bergstrand, Jeffrey H. & Egger, Peter, 2013.
"What determines BITs?,"
Journal of International Economics,
Elsevier, vol. 90(1), pages 107-122.
- Jennifer Tobin & Susan Rose-Ackerman, 2011. "When BITs have some bite: The political-economic environment for bilateral investment treaties," The Review of International Organizations, Springer, vol. 6(1), pages 1-32, March.
- Lauge N. Skovgaard Poulsen & Emma Aisbett, 2013.
"When the claim hits: bilateral investment treaties and bounded rational learning,"
LSE Research Online Documents on Economics
45035, London School of Economics and Political Science, LSE Library.
- Lauge N. Skovgaard Poulsen & Emma Aisbett, 2011. "When the Claim Hits: Bilateral Investment Treaties and Bounded Rational Learning," Crawford School Research Papers 1105, Crawford School of Public Policy, The Australian National University.
- Egger, Peter & Larch, Mario, 2008. "Interdependent preferential trade agreement memberships: An empirical analysis," Journal of International Economics, Elsevier, vol. 76(2), pages 384-399, December.
- Baldwin, Richard, 1997.
"The Causes of Regionalism,"
CEPR Discussion Papers
1599, C.E.P.R. Discussion Papers.
- Mario Cleves & William W. Gould & Roberto G. Gutierrez & Yulia Marchenko, 2010. "An Introduction to Survival Analysis Using Stata," Stata Press books, StataCorp LP, edition 3, number saus3, November.
- Barbara Koremenos, 2007. "If Only Half of International Agreements Have Dispute Resolution Provisions, Which Half Needs Explaining?," The Journal of Legal Studies, University of Chicago Press, vol. 36(1), pages 189-212, 01.
- Neumayer, Eric & Plümper, Thomas, 2010. "Spatial Effects in Dyadic Data," International Organization, Cambridge University Press, vol. 64(01), pages 145-166, January.
- Srividya Jandhyala & Witold J. Henisz & Edward D. Mansfield, 2011. "Three Waves of BITs: The Global Diffusion of Foreign Investment Policy," Journal of Conflict Resolution, Peace Science Society (International), vol. 55(6), pages 1047-1073, December.
- Edward D. Mansfield & Helen V. Milner & Jon C. Pevehouse, 2008. "Democracy, Veto Players and the Depth of Regional Integration," The World Economy, Wiley Blackwell, vol. 31(1), pages 67-96, 01.
- Elkins, Zachary & Guzman, Andrew T. & Simmons, Beth A., 2006. "Competing for Capital: The Diffusion of Bilateral Investment Treaties, 1960 2000," International Organization, Cambridge University Press, vol. 60(04), pages 811-846, October.
When requesting a correction, please mention this item's handle: RePEc:kie:kieliw:1910. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dieter Stribny)
If references are entirely missing, you can add them using this form.