Contingent Credibility: The Impact of Investment Treaty Violations on Foreign Direct Investment

2011 ◽  
Vol 65 (3) ◽  
pp. 401-432 ◽  
Author(s):  
Todd Allee ◽  
Clint Peinhardt
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Cross Sectional ◽  
Fdi Inflows ◽  
The Past ◽  
Investment Treaty ◽  
The World Bank ◽  
Time Series Analyses ◽  
The Impact ◽  
Bit Commitments

AbstractDuring the past few decades governments have signed nearly 2,700 bilateral investment treaties (BITs) with one another in an attempt to attract greater levels of foreign direct investment (FDI). By signing BITs, which contain strong enforcement provisions, investment-seeking governments are thought to more credibly commit to protecting whatever FDI they receive, which in turn should lead to increased confidence among investors and ultimately greater FDI inflows. Our unique argument is that the ability of BITs to increase FDI is contingent on the subsequent good behavior of the governments who sign them. BITs should increase FDI only if governments actually follow through on their BIT commitments; that is, if they comply with the treaties. BITs allow investors to pursue alleged treaty violations through arbitration venues like the International Centre for the Settlement of Investment Disputes (ICSID), a heavily utilized and widely observed arbitral institution that is part of the World Bank. Being taken before ICSID, then, conveys negative information about a host country's behavior to the broader investment community, which could result in a sizeable loss of future FDI into that country. We test these contingent effects of BITs using cross-sectional, time-series analyses on all non-OECD countries during a period spanning 1984–2007. We find that BITs do increase FDI into countries that sign them, but only if those countries are not subsequently challenged before ICSID. On the other hand, governments suffer notable losses of FDI when they are taken before ICSID and suffer even greater losses when they lose an ICSID dispute.

Measuring Value Change in Western Industrialized Societies: The Impact of Unemployment

1991 ◽  
Vol 85 (3) ◽  
pp. 905-920 ◽  
Author(s):  
Harold D. Clarke ◽  
Nitish Dutt
Keyword(s):  
Time Series ◽  
Economic Conditions ◽  
Aggregate Level ◽  
Value Change ◽  
Short Term ◽  
Cross Sectional ◽  
The Past ◽  
Value Priorities ◽  
Time Series Analyses ◽  
The Impact

During the past two decades a four-item battery administered in biannual Euro-Barometer surveys has been used to measure changing value priorities in Western European countries. We provide evidence that the measure is seriously flawed. Pooled cross-sectional time series analyses for the 1976–86 period reveal that the Euro-Barometer postmaterialist-materialist value index and two of its components are very sensitive to short-term changes in economic conditions, and that the failure to include a statement about unemployment in the four-item values battery accounts for much of the apparent growth of postmaterialist values in several countries after 1980. The aggregate-level findings are buttressed by analyses of panel data from three countries.

scholarly journals Impact of Foreign Direct Investment Inflows on Economic Growth; the Case of the Republic of Seychelles

2019 ◽  
Author(s):  
Yusheng Kong ◽  
Sampson Agyapong Atuahene ◽  
Geoffrey Bentum-Mican ◽  
Abigail Konadu Aboagye
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Least Square ◽  
Small Island ◽  
Host Countries ◽  
Fdi Inflows ◽  
Economic Trends ◽  
The Republic ◽  
The Impact

This paper aims to research whether there is link between FDI inflows and Economic growth in the Republic of Seychelles Island. The ordinary least square results obtained shows that in the impact of FDI inflows on economic growth is low. Small Island Developing States attracts less FDI inflow because they are limited to few resources that attracts overseas firms which results in retarded development. The research lighted that impact of foreign direct investment on host countries does not only depend on the quality and quantity of the FDI inflows but some other variables such as the internal policies and the management skills, market structures, economic trends among others.

scholarly journals The Use of Auto-Regressive Distributed Lag Method in Investigating The Impact of Interest Rate on Foreign Direct Investment in Yemen for the Period 1990-2018

2020 ◽  
Vol 26 (123) ◽  
pp. 145-157
Author(s):  
Saif Sallam Alhakimi
Keyword(s):  
Foreign Direct Investment ◽  
Interest Rate ◽  
Interest Rates ◽  
Direct Investment ◽  
Inflation Rate ◽  
Trade Openness ◽  
Fdi Inflows ◽  
Distributed Lag ◽  
Auto Regressive ◽  
The Impact

 Foreign direct investment has seen increasing interest worldwide, especially in developing economies. However, statistics have shown that Yemen received fluctuating FDI inflows during the period under study. Against this background, this research seeks to determine the relationship and impact of interest rates on FDI flows. The study also found other determinants that greatly affected FDI inflows in Yemen for the period 1990-2018. Study data collected from the World Bank and International Monetary Fund databases. It also ensured that the time series were made balanced and interconnected, and then the Auto Regressive Distributed Lag method used in the analysis. The results showed that the interest rates and inflation rate harmed FDI flows and, therefore, could not be used for policymaking purposes. The research also discovered that GDP growth and trade openness are the main determinants of foreign direct investment in Yemen. Trade openness policies should be encouraged, and GDP growth facilitated if the economy is to achieve long-term FDI flows. Purpose –The purpose of the paper is to discover the impact of interest rate on foreign direct investment with a combination of the exchange rate, inflation, gross domestic product, and trade openness. Design/methodology/approach – The paper implements the Auto Regressive Distributed Lag (ARDL)-Bounds testing approach to analyze maintaining the time series properties in terms of stationarity. Findings – The results indicate that there is a long-run equilibrium between the Foreign Direct Investment and the explanatory variables. Furthermore, the significant factors influencing, positively, FDI in Yemen are Growth domestic product, Exchange rate, and Trade openness. In contrast, both the Interest rate and Inflation rate have a substantial negative impact on Foreign Direct Investment. Practical implications – Policymakers in Yemen advised reconsidering many of the general state policies, including investment policies, financial and administrative governance, and monetary policy that focuses on maintaining an adequate interest rate and reduce the rate of inflation. Originality/value – As for the case of Yemen, this the first study empirically explores the impact of interest rate and the foreign direct investment using the Auto Regressive Distributed Lag method aiming for more reliable results.

scholarly journals Trade openness and foreign direct investment in Africa

2014 ◽  
Vol 9 (3) ◽  
pp. 355-370 ◽  
Author(s):  
T Kandiero ◽  
M Chitiga
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Trade Openness ◽  
Empirical Work ◽  
African Countries ◽  
Fdi Inflows ◽  
Services Sector ◽  
Openness To Trade ◽  
The Impact ◽  
Poor Infrastructure

Africa’s share of foreign direct investment (FDI) has lagged behind other regions in the world, despite a sharp increase in FDI inflows to the region in 2001. Factors contributing to this circumstance include perceptions of high corruption, weak governance and poor infrastructure. The motivation of this paper is to investigate the impact of openness to trade on the FDI inflow to Africa. In addition to economy-wide trade openness, we also analyse the impact on FDI of openness in manufactured goods, primary commodities and services. The empirical work uses cross-country data from selected African countries observed over four periods: 1980-1985, 1985-1990, 1990- 1995 and 1995-2001. We find that the FDI to GDP ratio responds well to increased openness in the whole economy and in the services sector in particular.

CONSTRAINTS TO FOREIGN DIRECT INVESTMENT IN INDIAN HOSPITALS

2010 ◽  
Vol 01 (01) ◽  
pp. 121-143 ◽  
Author(s):  
RUPA CHANDA
Keyword(s):  
Foreign Direct Investment ◽  
Health Insurance ◽  
Foreign Investment ◽  
Direct Investment ◽  
Medical Equipment ◽  
Domestic Investment ◽  
Fdi Inflows ◽  
Domestic Constraints ◽  
Insurance Penetration ◽  
The Impact

This paper examines the impact of a liberalised foreign direct investment (FDI) regime in Indian hospitals on FDI inflows. The paper shows that there is hardly any FDI in Indian hospitals due to domestic constraints such as high initial establishment costs, low health insurance penetration, manpower shortages, high cost of medical equipment, and regulatory deficiencies. These constraints also impede domestic investment in hospitals. The paper concludes that a liberal foreign investment regime may not result in increased FDI inflows if regulatory and structural impediments continue to constrain investment in the host economy. Investment liberalisation must thus be supplemented by domestic regulatory reforms to create an environment that is conducive to all investors.

Financial globalization and institutions in Africa: the case of foreign direct investment, central bank independence and political institutions

2020 ◽  
Vol 16 (6) ◽  
pp. 931-953
Author(s):  
Abel Mawuko Agoba ◽  
Elikplimi Agbloyor ◽  
Afua Agyapomaa Gyeke-Dako ◽  
Mac-Clara Acquah
Keyword(s):  
Foreign Direct Investment ◽  
Central Bank ◽  
Political Institutions ◽  
Direct Investment ◽  
Central Bank Independence ◽  
Financial Globalization ◽  
Turnover Rates ◽  
Fdi Inflows ◽  
Central Bank Governor ◽  
The Impact

AbstractIn this paper, we examine the bi-directional relationship between financial globalization (proxied by foreign direct investment (FDI) flows) and economic institutions (proxied by central bank independence (CBI)) taking into consideration the role of political institutions. We test our argument on a sample of 48 African countries (1970–2012) using a two-step System Generalized Methods of Moments, with collapsed instruments and Windmeijer robust standard errors. Using two proxies for CBI, the study finds that while legal CBI does not have a significant impact on FDI, high central bank governor turnover rates have a significantly negative impact on FDI inflows. However, higher levels of political institutions significantly enhance the impact of legal CBI on FDI inflows, and dampen the impact of high central bank governor turnover rates on FDI inflows. The study also shows that, higher FDI inflows have a significantly positive impact on both legal and de facto CBI. This impact is accelerated in countries characterized by higher levels of political institutions.

scholarly journals FOREIGN DIRECT INVESTMENT IMPACT ON MARKET CONCENTRATION IN THE MANUFACTURING SECTOR OF BOSNIA AND HERZEGOVINA

2018 ◽  
pp. 135 ◽  
Author(s):  
Radovan Kastratović
Keyword(s):  
Foreign Direct Investment ◽  
Bosnia And Herzegovina ◽  
Direct Investment ◽  
Manufacturing Sector ◽  
Least Square Method ◽  
Market Concentration ◽  
Least Square ◽  
Cross Sectional ◽  
Financial Reports ◽  
The Impact

There is no consensus regarding the effect of foreign direct investment on market concentration in the literature of foreign direct investment and the theory of industrial organization. The aim of the research is to empirically investigate this impact in the context of the manufacturing sector of Bosnia and Herzegovina. To achieve this aim we estimate the econometric model by applying ordinary least square method. The sample of 21 industries comprising manufacturing sector of Bosnia and Herzegovina was used for model estimation. Cross-sectional sample data was obtained from the Central Bank of Bosnia and Herzegovina and the financial reports of 4924 companies registered in the aforementioned industries for the year 2016. The results suggest that the impact of foreign direct investment on market concentration can best be described with a convex function.

scholarly journals Determinants of fdi inflows in india

2016 ◽  
Vol 6 (2) ◽  
pp. 186-198
Author(s):  
Siraj-ul-Hassan Reshi
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Direct Investment ◽  
Domestic Investment ◽  
Host Countries ◽  
Fdi Inflows ◽  
Explanatory Variables ◽  
The Impact ◽  
Fdi Determinants ◽  
The Relationship

Foreign direct investment (FDI) is often seen as an important catalyst for economicgrowth in the developing countries. It affects the economic growth by stimulating domestic investment, increasing human capital formation and by facilitating the technology transfer in the host countries. The main purpose of this paper is to investigate the impact of FDI determinants on FDI inflows in India from the period 1991-2009.The relationship between FDI inflow and its determinants have been analyzed by using the regression analysis and other variables that affect FDI inflows in India such as Developmental expenditure ratio, fiscal deficit ratio, exchange rate and other economic determinant such as GDP as the possible explanatory variables of foreign direct investment inflows in India. The expected results of the study are positive and statistically significant. Regarding the impact of various determinants on FDI in flows empirically, it has beenfound that all the variables except exchange rate have positively and significantly affecting FDI inflows i.e. increase in GDP, Developmental expenditure, foreign exchange reserves, increased the FDI inflows.

scholarly journals The Macroeconomic Determinants and the Impact of Sanctions on FDI in Iran: A Case Study

2019 ◽  
Author(s):  
Mehdi Rasouli Ghahroudi ◽  
Li chy Chong
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Direct Investment ◽  
Inflation Rate ◽  
Positive Impact ◽  
Macroeconomic Factors ◽  
Fdi Inflows ◽  
Macroeconomic Determinants ◽  
The Impact ◽  
Moderating Role

In this paper, we examine the impact of the macroeconomic determinants of foreign direct investment inflows. We also investigate the moderating role of sanctions in FDI inflows into Iran. The empirical results reveal that macro determinants such as infrastructure, exchange rate, inflation rate, investment return, and governance have a long-run impact on FDI inflows in Iran. Our findings also show that GDP growth rate and trade openness have no significant effect on FDI. Our results indicate that sanctions do not have a significant moderating role in the relationship between macroeconomic factors and foreign direct investment. Surprisingly, international sanctions have a positive relationship with FDI inflows in Iran. Furthermore, sanction has a positive impact on inflation rate and exchange rate in Iran. Finally, our findings show that sanctions have had a significant impact on Iran's economic growth in recent years due to increasing the severity level of sanctions.

scholarly journals Developing Countries' Attractiveness for Foreign Direct Investment - Debt Overhang and Sovereign Risk as Major Impediments?

1991 ◽  
Vol 30 (4II) ◽  
pp. 1145-1158 ◽  
Author(s):  
Peter Nunnenkamp
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Sovereign Risk ◽  
Financial Flows ◽  
Fdi Inflows ◽  
Debt Overhang ◽  
Private Lending ◽  
The Impact ◽  
The Empirical Analysis

With declining debt inflows, foreign direct investment (FDI) has again become one of the major pillars of private financial flows to developing countries (Des). This has created some expectation to replace private bank olending by FDI. However, many heavily indebted countries may not only be constrained in terms of new private lending, but also in terms of FDI inflows. In order to overcome constraints in the supply of FDI, the determinants of FDI flows have to be identified in the first place. This has been done by the Kiel Institute of World Economics in a comprehensive study commissioned by the World Bank. The present paper summarizes some of the major results for details, see Agarwal et aZ. (1991). The focus is on the impact of sovereign risk on FDI and on possible disincentives for FDI arising from a debt overhang, i.e. on those aspects that reflect the most important recent changes in international capital market conditions. The empirical analysis concentrates on the 1980s. Regressions are run for an overall sample of about 35 host Des and for various subgroups. The paper is organized as follows. Section II presents the major hypotheses. The empirical results are summarized in Sections III and IV. Finally, some policy conclusions are drawn in Section V.

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