Why Should I Believe You? The Costs and Consequences of Bilateral Investment Treaties

Bilateral Investment Treaties (BITs) are the primary legal mechanism protecting foreign direct investment (FDI) around the world. BITs are thought to encourage FDI by establishing a broad set of investor's rights and by allowing investors to sue a host state in an international tribunal if these rights are violated. Perhaps surprisingly, the empirical literature connecting BITs to FDI flows has produced conflicting results. Some papers have found that BITs attract FDI, while others have found no relationship or even that BITs repel FDI. I suggest in this paper that these results stem from statistical models that do not fully capture the causal mechanisms that link BITs to FDI. Extant literature has often suggested that BITs may encourage investment from both protected and unprotected investors, yet the literature has not allowed for a full evaluation of this claim. This paper explores the theoretical underpinnings and empirical implications of an institution that works in these direct and indirect ways, and offers a statistical test that is capable of distinguishing between the two. The results indicate that: (1) BITs attract significant amounts of investment; (2) BITs attract this investment from protected and unprotected investors; and (3) these results are obscured by endogeneity unless corrected for in the statistical model.

双边投资协定（BITs）是全球范围内保护外国直接投资（FDI）的核心法律机制。学界普遍认为，BITs通过确立广泛的投资者权利，并允许投资者在权利遭受侵害时向国际仲裁庭起诉东道国，以此促进外国直接投资流入。但颇为反直觉的是，探讨BITs与FDI流动关联的实证研究文献却得出了相互矛盾的结论：部分研究表明BITs能够吸引FDI，另有研究则未发现二者存在关联，甚至指出BITs会抑制FDI流入。本文认为，上述分歧源于现有统计模型未能充分捕捉BITs与FDI之间的因果传导机制。现有研究常提出，BITs可同时激励受保护与未受保护的投资者进行投资，但此前的研究未能对这一论断开展全面评估。本文探讨了兼具直接与间接作用的投资协定的理论基础与实证意涵，并提出了能够区分这两类作用路径的统计检验方法。研究结果显示：其一，BITs能够显著吸引外国直接投资；其二，BITs的引资效应同时覆盖受保护与未受保护的投资者群体；其三，若未在统计模型中对内生性问题加以校正，上述结论将被掩盖。