scholarly journals Do Bilateral Investment Treaties Promote FDI Inflows? Evidence from India

2016 ◽  
Vol 41 (4) ◽  
pp. 275-287 ◽  
Author(s):  
Niti Bhasin ◽  
Rinku Manocha
Keyword(s):  
Panel Data ◽  
Fixed Effects ◽  
Generalized Method Of Moments ◽  
Political Stability ◽  
Special Focus ◽  
Bilateral Investment Treaties ◽  
Policy Objective ◽  
Fdi Inflows ◽  
Investment Treaties

Executive Summary In view of the catalytic role of foreign direct investment (FDI) in promoting economic development, countries adopt various unilateral as well as bilateral arrangements to create a conducive environment for FDI. One such significant form of arrangement is bilateral investment treaties (BITs). As sizeable cost and resources are involved in treaty formation, it becomes important to examine the potential benefits of BITs for investment and whether such measures actually translate into higher FDI flows. This article employs panel data regression on an augmented gravity model (under both static and dynamic conditions) to identify the determinants of FDI inflows into India with a special focus on the role of BITs. The panel data span over the period 2001–2012 and include the top investing countries in India accounting for around 92 per cent of India’s total FDI inflows. The explanatory variables employed are extended market size, vertical FDI drive, distance, colonial links, common language, political stability, financial openness, and population growth rate. BIT is incorporated as a dummy variable which takes the value 1 if a BIT exists between India and the investing countries in a given year, otherwise 0. The results for both the fixed effects and the two-step generalized method of moments (GMM) model specifications confirm the positive role of BITs in attracting FDI inflows into India. BITs have contributed to rising FDI inflows by providing protection and commitment to foreign investors contemplating investment in India. The model also finds support for other factors facilitating FDI such as the large size of the economy and a more liberal FDI regime. As attracting FDI is an important policy objective of developing countries like India, the results imply that one of the instruments of achieving this objective is for the government to negotiate BITs with countries which are prospective investors. By laying down clear guidelines with respect to investment and widening the scope of investment activities covered under a bilateral agreement, an environment of certainty is created which would facilitate FDI flows.

The Relation between Trade and FDI in Developing Countries -- A Panel Data Approach

2007 ◽  
Vol 7 (3) ◽  
pp. 1850114 ◽  
Author(s):  
Indradeep Ghosh
Keyword(s):  
Panel Data ◽  
Trade Liberalization ◽  
Fixed Effects ◽  
Explanatory Power ◽  
Trade Openness ◽  
The Other ◽  
Bilateral Investment Treaties ◽  
Right Hand ◽  
Investment Treaties ◽  
The Right

Using panel data for the period 1970-97, I examine the relation between a developing country's trade openness and the stock of its FDI liabilities. The paper makes two contributions. First, I find that trade openness is positively correlated with FDI liabilities, with or without country fixed effects. Moreover, this correlation remains robust to the inclusion of additional variables on the right hand side, such as GDP per capita, inflation, institutional quality, macroeconomic volatility and measures of capital controls. Secondly, I show that the source of this correlation is causality from FDI to trade openness, rather than the other way around. To establish this, I run IV regressions first with FDI as the dependent variable, and trade liberalization dates instrumenting for trade openness, and then with trade openness as the dependent variable, and bilateral investment treaties signed by countries instrumenting for FDI. I find that trade liberalization increases trade openness, but predicted trade openness has no explanatory power for FDI liabilities. On the other hand, the number of bilateral investment treaties signed by a country significantly increases its stock of FDI liabilities, and the predicted stock of FDI liabilities has significant explanatory power for trade openness. This is an important finding because the standard approach so far in the literature has been to include trade openness on the right hand side of regressions (with the left hand side involving some measure of FDI liabilities), thereby implicitly assigning to it a causal role. My paper shows that this practice introduces endogeneity bias in the regression coefficients.

Using information from singletons in fixed-effects estimation: xtfesing

2020 ◽  
Vol 20 (4) ◽  
pp. 965-975
Author(s):  
Laura Magazzini ◽  
Randolph Luca Bruno ◽  
Marco Stampini
Keyword(s):  
Panel Data ◽  
Method Of Moments ◽  
Fixed Effects ◽  
Generalized Method Of Moments ◽  
Panel Data Regression ◽  
Data Regression ◽  
Method Of Moments Estimator ◽  
Fixed Effects Estimation

In this article, we describe the xtfesing command. The command implements a generalized method of moments estimator that allows exploiting singleton information in fixed-effects panel-data regression as in Bruno, Magazzini, and Stampini (2020, Economics Letters 186: Article 108519).

scholarly journals Bias correction methods for dynamic panel data models with fixed effects

2017 ◽  
Vol 6 (2) ◽  
pp. 58
Author(s):  
Mohamed Abonazel
Keyword(s):  
Panel Data ◽  
Fixed Effects ◽  
Generalized Method Of Moments ◽  
Dynamic Panel Data ◽  
Estimation Methods ◽  
Time Dimension ◽  
Dynamic Panel ◽  
Cross Sectional ◽  
Cross Sectional Dimension ◽  
Ls Estimator

This paper considers the estimation methods for dynamic panel data (DPD) models with fixed effects, which suggested in econometric literature, such as least squares (LS) and generalized method of moments (GMM). These methods obtain biased estimators for DPD models. The LS estimator is inconsistent when the time dimension (T) is short regardless of the cross-sectional dimension (N). Although consistent estimates can be obtained by GMM procedures, the inconsistent LS estimator has a relatively low variance and hence can lead to an estimator with lower root mean square error after the bias is removed. Therefore, we discuss in this paper the different methods to correct the bias of LS and GMM estimations. The analytical expressions for the asymptotic biases of the LS and GMM estimators have been presented for large N and finite T. Finally; we display new estimators that presented by Youssef and Abonazel [40] as more efficient estimators than the conventional estimators.

Investments in Unsettled Maritime Boundary Contexts: The Role of Bilateral Investment Treaties in Delivering Certainty

2019 ◽  
Vol 34 (3) ◽  
pp. 666-696
Author(s):  
Kathryn Khamsi
Keyword(s):  
Renewable Energy ◽  
Oil And Gas ◽  
Energy Sector ◽  
Bilateral Investment Treaties ◽  
Maritime Boundary ◽  
Investment Treaties ◽  
Oil And Gas Sector ◽  
Inter State

Abstract Interest in offshore investment is growing: the oil and gas sector has been developing offshore reserves for some time; more recently, the renewable energy sector has also been investing offshore. In that context, this paper considers the legal uncertainties that overlapping sovereign claims in offshore areas create for investments. It then canvasses the commitments that States can accord to address these legal uncertainties, whether unilaterally or through inter-State authorities that jointly regulate areas subject to overlapping claims. This paper is then principally devoted to considering the role of bilateral investment treaties in enforcing such commitments, and otherwise addressing the legal uncertainties generated by overlapping maritime claims. By way of conclusion, this paper considers analogies to other situations where investments are subject to the sovereign rights of more than one State.

scholarly journals The Determinants of Economic Growth in CEMAC through a Panel Data Approach

2016 ◽  
Vol 4 (2) ◽  
pp. 483
Author(s):  
Nzingoula Gildas Crepin
Keyword(s):  
Economic Growth ◽  
Panel Data ◽  
Fixed Effects ◽  
Good Governance ◽  
Generalized Method Of Moments ◽  
Central Africa ◽  
Ordinary Least Squares ◽  
Fixed Effects Model ◽  
Main Determinants ◽  
Determinants Of Economic Growth

<div><p><em>This article highlights through a panel data approach the determinants of economic growth; observed over the last decade in the Economic and Monetary Community of Central Africa (CEMAC) and necessary to reach emerging economies stage. To do this, we essentially used Stata 12 software to come up with the results, and a panel data sample comprising six CEMAC member states, namely Congo, Cameroon, Gabon, Equatorial Guinea, Central African Republic and Chad, for the period ranging from 2000 to 2013. The results obtained after estimating ordinary least squares, fixed effects model, random effects model, generalized method of moments (GMM) and specification tests show that the best model to estimate these types of data is the fixed effects model. Besides, the main determinants of economic growth in CEMAC over that period are Foreign Direct Investment (FDI) and loans lending to the economy (LOAN). After estimation, FDI is found positive and significant on economic growth, while LOAN is significant and found negative maybe due to lack of good governance.</em></p></div>

scholarly journals An econometric study of the role of the political stability on the relationship between democracy and economic growth

2020 ◽  
Vol 67 (2) ◽  
pp. 187-206
Author(s):  
Nedra Baklouti ◽  
Younes Boujelbene
Keyword(s):  
Economic Growth ◽  
Data Model ◽  
Generalized Method Of Moments ◽  
Political Stability ◽  
Dynamic Panel Data ◽  
The Political ◽  
Dynamic Panel ◽  
Mena Countries ◽  
The Relationship

This article examines the nexus between democracy and economic growth while taking into account the role of political stability, using dynamic panel data model estimated by means of the Generalized Method of Moments (GMM) over the period 1998 to 2011 for 17 Middle East and North Africa (MENA) countries. Our empirical results showed that there is a bidirectional causal relationship between democracy and economic growth. Moreover, it was found that the effect of democracy on economic growth depends on the political stability. The results also indicated that there is important complementarity between political stability and democracy. In fact, political stability is a key determinant variable of economic growth. Eventually, democracy and political stability, taken together, have a positive and statistically significant effect on economic growth. This finding suggests that, if accompanied by a stable political system, democracy can contribute to the economic growth of countries. Thus, the MENA governments should use policies to promote political stability in the region.

scholarly journals Does Polarized Political Environment Hamper Foreign Investors? The Evidence from Parliamentary Democracies

2020 ◽  
Vol 67 (1) ◽  
pp. 45-73
Author(s):  
Nino Kokashvili ◽  
Irakli Barbakadze
Keyword(s):  
Fixed Effects ◽  
Political Stability ◽  
Political Polarization ◽  
The Political ◽  
Fixed Effects Model ◽  
Fdi Inflows ◽  
Parliamentary Democracies ◽  
Development Indicators ◽  
Party Polarization ◽  
Separate Dimension

The socio-political characteristics of the host environment influence investment decisions. The complexity of the political setup strengthens the need for advanced research in the field. The main contribution of this article is to identify the party polarization as a separate dimension of the political system. This paper examines the relationship between the foreign direct investment (FDI) inflows and the host country political factors: the party polarization and the political stability. Besides constructing the political polarization index in a traditional way, authors also formulate a novel measure, which explicitly shows the divergence of political parties on economic actions. By using the manifesto data of 50 parliamentary democracies based on fixed effects model, authors conclude that political polarization is an important socio-political factor which has been previously neglected in literature while addressing the determinants of foreign investments. The paper shows that the effect of political polarization on FDI inflows changes for country groups of different institutional and development indicators. Authors underline the importance of political instability in tackling the polarization impact on capital flows. Accounting together the two variables, the authors find a negative significant effect on FDI.

scholarly journals The Impact of Bilateral Investment Treaties on FDI Inflows Into India: Some Empirical Results

2021 ◽  
pp. 001573252110273
Author(s):  
Jaivir Singh ◽  
Vatsala Shreeti ◽  
Parnil Urdhwareshe
Keyword(s):  
International Investment ◽  
Bilateral Investment Treaties ◽  
Fdi Inflows ◽  
International Investment Agreements ◽  
Investment Treaties ◽  
Dispute Settlements ◽  
Generalised Method Of Moments ◽  
The Individual ◽  
State Rights ◽  
The Impact

After a run of adverse investor-state dispute settlements, India has recently denounced all its erstwhile investment treaties. New investment treaties need to be negotiated on the basis of a new Model Treaty that privilege state rights over investor rights. We study the impact of bilateral investment treaties on foreign direct investment (FDI) inflows into India before the denunciation with the intent of inferring the consequences of changing the system. Our work captures the effects of international investment agreements on FDI inflows specifically into India. We construct an empirical model drawing on the Gravity Model, and estimate parameters using generalised method of moments. The results show that while the individual signing of bilateral investment treaties does not influence the inflow of FDI, the effect of the cumulative bilateral investment treaties signed is statistically very significant—suggesting that the spill over effect of signing a series of bilateral investment treaties are important, signalling a regime of overall protection to investors. The importance of institutional variables in influencing FDI tells us that overall participation in a system governed by international investor agreements influenced the inflow of FDI positively and therefore recent policy changes should be viewed with caution. JEL Codes: F21, F23, F550, F63, K33, O19, C22, C29

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