IDEAS home Printed from https://ideas.repec.org/p/zbw/wtowps/339598.html

Impact assessment of the Investment Facilitation for Development (IFD) Agreement

Author

Listed:
  • Bekkers, Eddy
  • Corong, Erwin L.
  • Smith, Donal
  • Yu, Roger So
  • Zhao, Danchen

Abstract

This paper presents quantitative projections on the expected economic impact of the Investment Facilitation for Development (IFD) Agreement, which proceeds in three steps. First, we estimate the empirical impact of the host-economy investment facilitation environment on foreign affiliate sales. Second, we map the agreement's mandatory and soft obligations (including best-endeavour) into advalorem equivalent reductions in the costs of multinational production. Third, the economic effects of these policy shocks are projected with a multi-region, multi-sector economic model that explicitly incorporates affiliate sales, foreign direct investment (FDI) and input-output linkages. Our benchmark simulations project that implementation of the IFD Agreement's mandatory obligations would increase global real GDP by 0.8 per cent over the next ten years, driven by a substantial expansion in global FDI flows and foreign affiliate sales. The simulations indicate that developing and low-income economies are expected to see the largest increases in GDP, since they are expected to see the largest improvement in the investment facilitation environment.

Suggested Citation

  • Bekkers, Eddy & Corong, Erwin L. & Smith, Donal & Yu, Roger So & Zhao, Danchen, 2026. "Impact assessment of the Investment Facilitation for Development (IFD) Agreement," WTO Staff Working Papers ERSD-2026-02, World Trade Organization (WTO), Economic Research and Statistics Division.
    • Handle: RePEc:zbw:wtowps:339598
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/339598/1/1967211728.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Christophe Gouel & Houssein Guimbard & David Laborde, 2012. "A Foreign Direct Investment database for global CGE models," Working Papers 2012-08, CEPII research center.
    2. Benedikt Heid & Mario Larch & Yoto V. Yotov, 2021. "Estimating the effects of non‐discriminatory trade policies within structural gravity models," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 376-409, February.
    3. Sjoerd Beugelsdijk & Jean-François Hennart & Arjen Slangen & Roger Smeets, 2010. "Why and how FDI stocks are a biased measure of MNE affiliate activity," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(9), pages 1444-1459, December.
    4. Bitzer, Jürgen & Geishecker, Ingo & Görg, Holger, 2008. "Productivity spillovers through vertical linkages: Evidence from 17 OECD countries," Economics Letters, Elsevier, vol. 99(2), pages 328-331, May.
    5. Sjoerd Beugelsdijk & Jean-François Hennart & Arjen Slangen & Roger Smeets, 2010. "Why and how FDI stocks are a biased measure of MNE affiliate activity," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(9), pages 1444-1459, December.
    6. Blalock, Garrick & Gertler, Paul J., 2008. "Welfare gains from Foreign Direct Investment through technology transfer to local suppliers," Journal of International Economics, Elsevier, vol. 74(2), pages 402-421, March.
    7. Fukui, Tani & Lakatos, Csilla, 2012. "A Global Database of Foreign Affiliate Sales," Conference papers 332203, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    8. Casella, Bruno, 2019. "Looking through conduit FDI in search of ultimate investors – a probabilistic approach," MPRA Paper 95188, University Library of Munich, Germany.
    9. Hertel, Thomas & Hummels, David & Ivanic, Maros & Keeney, Roman, 2007. "How confident can we be of CGE-based assessments of Free Trade Agreements?," Economic Modelling, Elsevier, vol. 24(4), pages 611-635, July.
    10. Bruno Casella, . "Looking through conduit FDI in search of ultimate investors – a probabilistic approach," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    11. Angel Aguiar & Maksym Chepeliev & Erwin L. Corong & Robert McDougall & Dominique van der Mensbrugghe, 2019. "The GTAP Data Base: Version 10," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 4(1), pages 1-27, June.
    12. Fukui, Tani & Csilla Lakatos, 2012. "A Global Database of Foreign Affiliate Sales," GTAP Research Memoranda 4009, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lakatos, Csilla & Fukui, Tani, 2014. "The Liberalization of Retail Services in India," World Development, Elsevier, vol. 59(C), pages 327-340.
    2. Konstantin M. Wacker & Bruno Casella & Maria Borga, 2025. "Measuring multinational production with foreign direct investment statistics: A survey of challenges and recent developments," Journal of Economic Surveys, Wiley Blackwell, vol. 39(4), pages 1462-1487, September.
    3. Kox, Henk L.M., 2024. "Towards time-consistent bilateral FDI statistics: A new dataset covering 2001-2022," MPRA Paper 122883, University Library of Munich, Germany.
    4. Henk L. M. Kox, 2025. "Repairing a Historical Mistake in Bilateral FDI Statistics: A New Dataset Covering 2001–2022," Review of International Economics, Wiley Blackwell, vol. 33(5), pages 1093-1114, November.
    5. Sébastien Miroudot & Davide Rigo, 2019. "Preferential Trade Agreements and Multinational Production," RSCAS Working Papers 2019/14, European University Institute.
    6. Saad Ahmad & Jeffrey Bergstrand & Jordi Paniagua & Heather Wickramarachi, 2025. "The Multinational Revenue, Employment, and Investment Database (MREID)," Review of International Economics, Wiley Blackwell, vol. 33(4), pages 817-836, September.
    7. Sébastien Miroudot & Ming Ye, 2020. "Multinational production in value-added terms," Economic Systems Research, Taylor & Francis Journals, vol. 32(3), pages 395-412, July.
    8. Sara L. McGaughey & Pascalis Raimondos & Lisbeth La Cour, 2018. "What is a Foreign Firm? Implications for Productivity Spillovers," CESifo Working Paper Series 7109, CESifo.
    9. Lakatos, Csilla & Fukui, Tani, 2012. "Liberalization of FDI in Retail Services: A Fast Death Instrument for India?," Conference papers 332222, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    10. Casella, Bruno, 2019. "FDI Statistics and International Production: Towards (Re-) Conciliation?," MPRA Paper 95203, University Library of Munich, Germany, revised 14 May 2019.
    11. Fukui, Tani & Lakatos, Csilla, 2012. "A Global Database of Foreign Affiliate Sales," Conference papers 332203, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    12. Sébastien Miroudot & Davide Rigo, 2022. "Multinational production and investment provisions in preferential trade agreements [Intra-industry foreign direct investment]," Journal of Economic Geography, Oxford University Press, vol. 22(6), pages 1275-1308.
    13. Casella, Bruno, 2019. "Looking through conduit FDI in search of ultimate investors – a probabilistic approach," MPRA Paper 95188, University Library of Munich, Germany.
    14. Yang Ruilin & Bathelt Harald, 2023. "How outward FDIs affect income: experiences from Chinese city-regions," ZFW – Advances in Economic Geography, De Gruyter, vol. 67(1), pages 47-64, May.
    15. Bekkers, Eddy & Lakatos, Csilla & So, Yu Roger & Yuan, Wen Jin & Traverso, Fabio, 2021. "A Global Foreign Direct Investment Stocks Database," Conference papers 333293, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    16. Dongin Kim & Sandro Steinbach, 2025. "Rising protectionism and foreign direct investment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 161(2), pages 469-510, May.
    17. Bruno Casella, . "Looking through conduit FDI in search of ultimate investors – a probabilistic approach," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    18. Alessia Amighini & Claudio Cozza & Roberta Rabellotti & Marco Sanfilippo, 2014. "Investigating Chinese Outward Foreign Direct Investments: How Can Firm-level Data Help?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 22(6), pages 44-63, November.
    19. Havranek, Tomas & Irsova, Zuzana, 2011. "Estimating vertical spillovers from FDI: Why results vary and what the true effect is," Journal of International Economics, Elsevier, vol. 85(2), pages 234-244.
    20. Yuwan Duan & Erik Dietzenbacher & Bart Los & Ruochen Dai, 2023. "Regional inequality in China during its rise as a giant exporter: A value chain analysis," Journal of Regional Science, Wiley Blackwell, vol. 63(1), pages 148-172, January.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:zbw:wtowps:339598. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/wtoerch.html .

    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.