research paper on bilateral investment treaty

Bilateral investment treaty, technological intensity, and international trade

• Original Paper
• Published: 15 February 2024
• Volume 21 , pages 411–434, ( 2024 )

Cite this article

• Tingting Xiong   ORCID: orcid.org/0000-0002-6899-0122 1  

138 Accesses

Explore all metrics

This paper examines the impact of bilateral investment treaties (BITs) and technological intensity on exports. It incorporates technological intensity and firm heterogeneity into a simplified static, partial equilibrium model, proposing that BITs increase the extensive margin of exports and have a greater impact in technologically underdeveloped sectors. The empirical analysis utilizes a comprehensive dataset covering 191 countries and 22 sectors, employing Poisson pseudo maximum likelihood (PPML) estimation with various fixed effects to estimate the gravity equations. It provides robust evidence that BITs primarily affect exports by increasing the extensive margin of exports. Furthermore, in sectors with the lowest average technological intensity, an additional BIT is estimated to increase the extensive margin by approximately \(18.6\mathrm{\%}\) , while in sectors with the highest average technological intensity, the increase is estimated to be only \(8.1\mathrm{\%}\) .

This is a preview of subscription content, log in via an institution to check access.

Access this article

Subscribe and save.

• Get 10 units per month
• Download Article/Chapter or eBook
• 1 Unit = 1 Article or 1 Chapter
• Cancel anytime

Price includes VAT (Russian Federation)

Instant access to the full article PDF.

Rent this article via DeepDyve

Institutional subscriptions

Similar content being viewed by others

Trade agreements and international technology transfer

The impact of real exchange rate uncertainty on exports by technology classification in emerging economies

Schumpeterian loops in international trade: the evidence of the oecd countries

Data availability.

The data that support the findings of this study are available upon request. These data were derived from the following resources available in the public domain:

1. the United Nations Comtrade Database https://comtrade.un.org/data

2. the International Financial Statistics (IFS) Direction of Trade Statistics (DOT). https://data.imf.org/?sk=9D6028D4-F14A-464C-A2F2-59B2CD424B85

3. the UNCTAD database of International Investment Agreements (IIAs) https://investmentpolicy.unctad.org/international-investment-agreements

4. the OECD's STructural ANalysis (STAN) Database https://stats.oecd.org/Index.aspx?DataSetCode=STANI4_2020

5. Egger and Larch ( 2008 ) https://www.ewf.uni-bayreuth.de/en/research/RTA-data/index.html

6. Head et al. ( 2010 ) http://www.cepii.fr/CEPII/en/bdd_modele/bdd_modele_item.asp?id=8 (2015 version)

Data source: UNCTAD database on IIAs

Data source: UNCTADstat United Nations Conference on Trade and Development

The US BIT program, as delineated by the United States Trade Representative, plays a pivotal role in safeguarding foreign investments, fostering market-oriented policies in partner countries, and stimulating exports of the USA ( link ).

ITU World Telecommunication Indicators Database

The consumer selects the commodity \(\omega\)  from the product set in sector s  of country i , along with the corresponding consumption quantity  \({q}_{is}(\omega )\)  . If the product set contains a continuum of goods denoted by  \({\mathrm\Omega}_{is}\) , the aggregate utility for this consumer can be defined using the CES utility aggregator as \(\left[\int_{\omega\in{\mathrm\Omega}_{is}}q_{is}(\omega)^\rho d\omega\right]^\frac1\rho\)  . This sector-specific CES utility function implies consumers have a preference for variety.

The consumer aggregates the utility across all sectors in country i  based on CobbDouglas utility function. With this utility function, a utility-maximizing consumer will spend a proportion  \(\left({\theta }_{s}\right)\)  of the expenditure on goods in sector s .

Transporting final goods is assumed to be more expensive than transporting intermediate goods, \({\tau }_{ij}^{D}>{\tau }_{ij}^{U}\) .

This productivity is assumed to be the same regardless of whether final goods are produced in the home country or by a foreign affiliate.

In a competitive market, the price of intermediate goods is the wage.

According to the Leontief production function, each firm needs \(1/\varphi\) units of labor and \(1/\varphi\) units of intermediate goods to produce 1 unit of final goods. Since the cost of \(1/\varphi\) units of labor and the price of \(1/\varphi\) units of intermediate goods are both \({w}_{j}/\varphi\) in country \(j\) , each firm with the centralization strategy pays \(2{w}_{j}/\varphi\) to produce 1 unit of final goods. However, if this firm relocates the final goods production process abroad, the cost of \(1/\varphi\) units of labor changes to \({w}_{i}\) , which is unaffected by the technological intensity of the country \(j\) . Therefore, each firm with the branching strategy pays \(\left({t}_{js}{w}_{j}+{w}_{i}\right)/\varphi\) to produce final goods instead. Here, the technological intensity is ignored in the host country.

The exports of existing exporters and MNCs are a decreasing function of variable costs of selling abroad, \(\frac{\partial {X}_{ijs}^{C}}{\partial {\delta }_{ij}}<0\) and \(\frac{\partial {X}_{ijs}^{B}}{\partial {\delta }_{ij}}<0\) .

The United Nations Comtrade excludes zero trade flows (Bista 2015 ).

Data source: OECD's STructural ANalysis (STAN) Database

World Bank World Integrated Trade Solution

It is worth noting that the analysis covers 31 exporters when using sectoral R&D expenditure as a percentage of production gross output and 33 exporters when using sectoral  \(R\&D\)  expenditure as a percentage of value added.

The analysis covers 31 exporters when using the sectoral R&D expenditure as a percentage of production gross output and covers 33 exporters when using the sectoral R&D expenditure as a percentage of value added.

The marginal effect is given by \(\left({e}^{\widehat{{\beta }_{1}}}-1\right)\times 100\) .

The estimated coefficients of BIT get larger when using the date of signature.

\(\rho {P}_{is}{\left[\frac{{t}_{js}{f}_{ej}+{F}_{ij}^{X}}{(1-\rho ){\theta }_{s}{Y}_{i}}\right]}^{\frac{1}{1-\sigma }} > {\tau }_{ij}^{D}+{\delta }_{ij}\)

Baier SL, Bergstrand JH (2007) Do free trade agreements actually increase members’ international trade? J Int Econ 71:72–95

Article   Google Scholar  

Berger A, Busse M, Nunnenkamp P, Roy M (2013) Do trade and investment agreements lead to more fdi? accounting for key provisions inside the black box. Int Econ Econ Policy 10:247–275

Bista R (2015) Reconciling the wto effects on trade at the extensive and intensive margins. Int Econ J 29:231–257

Boffa M, Jansen M, Solleder O (2019) Do we need deeper trade agreements for gves or just a bit? World Econ 42:1713–1739

Clarke GR, Wallsten SJ (2006) Has the internet increased trade? developed and developing country evidence. Econ Inq 44:465–484

Colen L, Persyn D, Guariso A (2016) Bilateral investment treaties and fdi: Does the sector matter? World Dev 83:193–206

Egger P, Larch M (2008) Interdependent preferential trade agreement memberships: an empirical analysis. J Int Econ 76:384–399

Egger P, Merlo V (2007) The impact of bilateral investment treaties on fdi dynamics. World Econ 30:1536–1549

Egger P, Merlo V (2012) Bits bite: An anatomy of the impact of bilateral investment treaties on multinational firms. Scand J Econ 114:1240–1266

Egger P, Pfaffermayr M (2004) The impact of bilateral investment treaties on foreign direct investment. J Comp Econ 32:788804

Esteve-Pérez S, Gil-Pareja S, Llorca-Vivero R (2020) Does the GATT/WTO promote trade? After all, Rose was right. Rev World Econ 156:377–405

Falvey R, Foster-McGregor N (2018) North-south foreign direct investment and bilateral investment treaties. World Econ 41:2–28

Freund C, Weinhold D (2002) The internet and international trade in services. Am Econ Rev 92:236–240

Freund CL, Weinhold D (2004) The effect of the internet on international trade. J Int Econ 62:171–189

Goldfarb A, Trefler D (2018) Artificial intelligence and international trade. In: The economics of artificial intelligence: an agenda. University of Chicago Press, pp 463–492

Head K, Mayer T, Ries J (2010) The erosion of colonial trade linkages after independence. J Int Econ 81:1–14

Heid B, Vozzo I (2020) The international trade effects of bilateral investment treaties. Econ Lett 196:109569

Helpman E, Melitz MJ, Yeaple SR (2004) Export versus fdi with heterogeneous firms. Am Econ Rev 94:300–316

Kneller R, Pisu M, Yu Z (2008) Overseas business costs and firm export performance. Canadian Journal of Economics/revue Canadienne D’économique 41:639–669

Manova K (2013) Credit constraints, heterogeneous firms, and international trade. Rev Econ Stud 80:711–744

Melitz MJ (2003) The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica 71:1695–1725

Meltzer JP (2018) The impact of artificial intelligence on international trade. Brookings Institution, Thursday, December 13, 2016

Minges M, Gray V, Magpantay E, Union IT (2003) World telecommunication development report 2003: Access indicators for the information society. International Telecommunications Union, Geneva

Salacuse JW, Sullivan NP (2005) Do bits really work: An evaluation of bilateral investment treaties and their grand bargain. Harv Int’l LJ 46:67

Google Scholar  

Silva JS, Tenreyro S (2006) The log of gravity. Rev Econ Stat 88:641–658

Tang L (2006) Communication costs and trade of differentiated goods. Rev Int Econ 14:54–68

Xiong T (2022) The effect of bilateral investment treaties (bits) on the extensive and intensive margins of exports. Q Rev Econ Finance 84:68–79

Xiong T (2023) The effect of technological intensity on international trade. Int Econ 176:100456

Xiong T, Sun H (2021) Investment liberalization, credit constraints, and international trade. Glob Econ J 21(01):2150004

Xiong T, Sun H (2023) The international service trade effects of bilateral investment treaties. World Econ 46:2538–2555

Yotov YV (2022) On the role of domestic trade flows for estimating the gravity model of trade. Contemp Econ Policy 40:526–540

Yotov YV, Piermartini R, Monteiro JA, Larch M (2016) An advanced guide to trade policy analysis: the structural gravity model. World Trade Organization Geneva

Zawislak PA, Fracasso EM, Tello-Gamarra J (2018) Technological in- tensity and innovation capability in industrial firms. Innov Manag Rev 15:189–207

Download references

Author information

Authors and affiliations.

Department of Economics, Howard University, 2400 6th Street NW ASB-B Room 314, Washington, DC, 20059, USA

Tingting Xiong

You can also search for this author in PubMed   Google Scholar

Contributions

The author confirms sole responsibility for the following: study conception and design, data collection, analysis and interpretation of results, and manuscript preparation.

Corresponding author

Correspondence to Tingting Xiong .

Ethics declarations

Ethical approval.

Not applicable.

Consent to participate

Consent to publish, competing interests.

The author declares no competing interests.

Additional information

Publisher's note.

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix 1. Theoretical Model

1.1 appendix 1.1 production, 1.1.1 appendix 1.1.1 centralization.

subject to \({q}_{ijs}=\frac{{p}_{ijs}^{-\sigma }{\theta }_{s}{Y}_{i}}{{P}_{is}^{1-\sigma }}\)

Take the first order condition on quantity

1.1.2 Appendix 1.1.2 Branching

1.1.3 appendix 1.1.3 proposition 1.

Set \({\pi }_{ijs}^{C}\left({\varphi }_{X}\right)=0\) , hence \({\varphi }_{X}=\frac{2{t}_{js}{w}_{j}}{\rho {P}_{is}{\left[\frac{{t}_{js}{f}_{ej}+{F}_{ij}^{X}}{(1-\rho ){\theta }_{s}{Y}_{i}}\right]}^{\frac{1}{1-\sigma }}-{\tau }_{ij}^{D}-{\delta }_{ij}}\) Footnote 20

Set \({\pi }_{ijs}^{C}\left({\varphi }_{I}\right)={\pi }_{ijs}^{B}\left({\varphi }_{I}\right)\) ,

\({\left(\frac{2{t}_{js}{w}_{j}}{{\varphi }_{I}}+{\tau }_{ij}^{D}+{\delta }_{ij}\right)}^{1-\sigma }-{\left(\frac{{t}_{js}{w}_{j}+{w}_{i}+{\tau }_{ij}^{U}}{{\varphi }_{I}}+{\delta }_{ij}\right)}^{1-\sigma }={A}^{1-\sigma }-{B}^{1-\sigma }=g\left({\varphi }_{I},{\delta }_{ij}\right)\) .

Based on A.4, \(\frac{\partial g\left({\varphi }_{I},{\delta }_{ij}\right)}{\partial {\delta }_{ij}}=0\) . Therefore,

Given that \({A}^{1-\sigma }-{B}^{1-\sigma }<0\) , and thus \({B}^{-\sigma }-{A}^{-\sigma }>0\) . In addition, following Kneller et al. ( 2008 ), this model assumes that exports and FDI co-exist, \(\frac{\partial {\pi }_{ijs}^{C}\left({\varphi }_{I}\right)}{\partial \varphi }<\frac{\partial {\pi }_{ijs}^{B}\left({\varphi }_{I}\right)}{\partial \varphi }\) . Hence, \(-\frac{2{t}_{js}{w}_{j}}{{\varphi }_{I}^{2}}{A}^{-\sigma }+\frac{{t}_{js}{w}_{j}+{w}_{i}+{\tau }_{ij}^{U}}{{\varphi }_{I}^{2}}{B}^{-\sigma }>0\) . Here,

\(\left(-\frac{2{t}_{js}{w}_{j}}{{\varphi }_{I}^{2}}{A}^{-\sigma }+\frac{{t}_{js}{w}_{j}+{w}_{i}+{\tau }_{ij}^{U}}{{\varphi }_{I}^{2}}{B}^{-\sigma }\right)\frac{1-\sigma }{\sigma }\frac{{\theta }_{s}{Y}_{i}}{{\left(\rho {P}_{is}\right)}^{1-\sigma }}<0\left(\sigma >1,\frac{{\theta }_{s}{Y}_{i}}{{\left(\rho {P}_{is}\right)}^{1-\sigma }}>0\right)\) .

Based on (A.4), \(\frac{\partial g\left({\varphi }_{I},{\delta }_{ij}\right)}{\partial {F}_{ij}^{I}}=\frac{-\sigma }{{\theta }_{s}{Y}_{i}}{\left(\rho {P}_{is}\right)}^{1-\sigma }<0\) .

Hence, \((1-\sigma )\left(-\frac{2{t}_{js}{w}_{j}}{{\varphi }_{I}^{2}}{A}^{-\sigma }+\frac{{t}_{js}{w}_{j}+{w}_{i}+{\tau }_{ij}^{U}}{{\varphi }_{I}^{2}}{B}^{-\sigma }\right)\frac{\partial {\varphi }_{I}}{\partial {F}_{ij}^{I}}<0\) . Therefore,

1.1.4 Appendix 1.1.4. Proposition 2

Based on A.3,

Appendix 2. Summary Statistics

Rights and permissions.

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Xiong, T. Bilateral investment treaty, technological intensity, and international trade. Int Econ Econ Policy 21 , 411–434 (2024). https://doi.org/10.1007/s10368-024-00589-w

Download citation

Accepted : 14 January 2024

Published : 15 February 2024

Issue Date : May 2024

DOI : https://doi.org/10.1007/s10368-024-00589-w

Share this article

Anyone you share the following link with will be able to read this content:

Sorry, a shareable link is not currently available for this article.

Provided by the Springer Nature SharedIt content-sharing initiative

• Bilateral investment treaty
• Extensive and intensive margins of exports
• Technological intensity
• Poisson pseudo maximum likelihood estimation
• Find a journal
• Publish with us
• Track your research

Bilateral Investment Treaties (BITs): The Global Investment Regime and Human Rights

• October 2017
• British Journal of Political Science

• Michigan State University

• Shanghai University of Finance and Economics

Abstract and Figures

Discover the world's research

• 25+ million members
• 160+ million publication pages
• 2.3+ billion citations

• Hong Chuong Pham
• Thanh Duong Nguyen
• Jica Anne Mary Sugui
• Princess Mae Nazarene Montojo
• Aurora Christina P. Bermudez
• Roos Van Os
• Roeline Knottnerus

• Peter Nunnenkamp

• J Int Arbitrat
• Judith Gill

• C.A. Kalemli-Ozcan

• Amar Bhattacharya
• Peter J. Montiel
• Lauge N. Skovgaard Poulsen
• M.S. Johnson
• Recruit researchers
• Join for free
• Login Email Tip: Most researchers use their institutional email address as their ResearchGate login Password Forgot password? Keep me logged in Log in or Continue with Google Welcome back! Please log in. Email · Hint Tip: Most researchers use their institutional email address as their ResearchGate login Password Forgot password? Keep me logged in Log in or Continue with Google No account? Sign up

Our systems are now restored following recent technical disruption, and we’re working hard to catch up on publishing. We apologise for the inconvenience caused. Find out more: https://www.cambridge.org/universitypress/about-us/news-and-blogs/cambridge-university-press-publishing-update-following-technical-disruption

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings .

Login Alert

• > Journals
• > British Journal of Political Science
• > Volume 44 Issue 1
• > What's the Risk? Bilateral Investment Treaties, Political...

Article contents

What's the risk bilateral investment treaties, political risk and fixed capital accumulation.

Published online by Cambridge University Press:  28 November 2012

This article argues that the political risk associated with foreign direct investment (FDI) is primarily a function of investment in fixed-capital, and not a homogeneous feature of FDI. As such, empirical tests of a political institution's ability to mitigate political risk should focus directly on investments in fixed capital and not on more highly aggregated measures of multinational corporation (MNC) activity, such as FDI flow and stock data that are affected by the accumulation of liquid assets in foreign affiliates. We apply this to the study of bilateral investment treaties (BITs). We find that BITs with the United States correlate positively with investments in fixed capital and have little, if any, correlation with other measures of MNC activity.

Access options

Department of Political Science, University of Michigan (email: [email protected] ); Department of Political Science, Emory University. The authors would like to thank seminar participants at the University of Michigan and those who attended the relevant session at the 2010 APSA convention for their advice.

1 R. Vernon, R. (1971). Sovereignty at Bay (New York: Basic Books, 1971 ) Google Scholar

Kobrin , Stephen J. , ‘Testing the Bargaining Hypothesis in the Manufacturing Sector in Developing Countries’ , International Organization , 41 ( 1987 ), 609 – 638 CrossRef Google Scholar

Duque , Mario E. Bergara , Henisz , Witold J. and Spiller , Pablo T. , ‘Political Institutions and Electric Utility Investment: A Cross-Nation Analysis’ , California Management Review , 40 : 2 ( 1998 ), 18 – 35 Google Scholar

2 Vernon, ‘Sovereignty at Bay’.

3 Yackee , Jason Webb , ‘Do Bilateral Investment Treaties Promote Foreign Direct Investment? Some Hints from Alternative Evidence’ , Virginia Journal of International Law , 51 ( 2010 ), 397 – 439 Google Scholar

Jensen , Nathan M. , ‘Democratic Governance and Multinational Corporations: Political Regimes and Inflows of Foreign Direct Investment’ , International Organization , 57 ( 2003 ), 587 – 616 CrossRef Google Scholar

Henisz , Witold J. , ‘The Institutional Environment for Multinational Investment’ , Journal of Law, Economics & Organization , 16 ( 2000 ), 334 – 364 CrossRef Google Scholar

Jensen , Nathan M. , Nation-States and the Multinational Corporation: A Political Economy of Foreign Direct Investment ( Princeton, N.J. : Princeton University Press , 2006 ) Google Scholar

4 Tobin , Jennifer and Rose-Ackerman , Susan , ‘When BITs Have Some Bite: The Political-Economic Environment for Bilateral Investment Treaties’ , Review of International Organizations , 6 ( 2010 ), 1 – 32 CrossRef Google Scholar

Elkins , Zachary , Guzman , Andrew T. and Simmons , Beth A. , ‘Competing for Capital: The Diffusion of Bilateral Investment Treaties, 1960–2000’ , International Organization , 60 ( 2006 ), 811 – 846 CrossRef Google Scholar

5 Desai , Mihir A. and Moel , Alberto , ‘Czech Mate: Expropriation and Investor Protection in a Converging World’ , Review of Finance , 12 ( 2008 ), 221 – 251 CrossRef Google Scholar

Allee , Todd and Peinhardt , Clint , ‘Contingent Credibility: The Reputational Effects of Investment Treaty Disputes on Foreign Direct Investment’ , International Organization , 65 ( 2011 ), 401 – 432 CrossRef Google Scholar

6 Aisbett , Emma , ‘Bilateral Investment Treaties and Foreign Direct Investment: Correlation versus Causation’ , in Karl Sauvant and Lisa Sachs, eds, The Effect of Treaties on Foreign Direct Investment: Bilateral Investment Treaties, Double Taxation Treaties and Investment Flows ( Oxford : Oxford University Press , 2009 ), pp. 395 – 436 CrossRef Google Scholar

Driemeier , Mary Hallward , ‘Do Bilateral Investment Treaties Attract FDI? A Bit, and They Could Bite’ (Washington, D.C.: World Bank Working Paper, No. 3121, 2003) Google Scholar

7 Neumayer , Eric and Spess , Laura , ‘Do Bilateral Investment Treaties Increase Foreign Direct Investment to Developing Countries?’ World Development , 33 ( 2005 ), 1567 – 1585 CrossRef Google Scholar

Busse , Matthias , Königer , Jens and Nunnenkamp , Peter , ‘FDI Promotion through Bilateral Investment Treaties: More Than a Bit?’ Review of World Economics , 146 ( 2010 ), 147 – 177 CrossRef Google Scholar

Egger , Peter and Merlo , Valeria , ‘The Impact of Bilateral Investment Treaties on FDI Dynamics’ , World Economy , 30 ( 2007 ), 1536 – 1549 CrossRef Google Scholar

8 Tobin and Rose-Ackerman, ‘When BITs Have Some Bite’.

9 Tobin , Jennifer and Rose-Ackerman , Susan , ‘Foreign Direct Investment and the Business Environment in Developing Countries: The Impact of Bilateral Investment Treaties’ (Yale Law School Center for Law, Economics and Public Policy, Research Paper No. 293, 2005) CrossRef Google Scholar

10 We use the term ‘foreign affiliate’ to mean any enterprise in which a foreign investor owns a controlling interest.

11 Lest we be accused of erecting straw men, our reading of the literature suggests that most extant work assumes that BOP data are sufficient for the purpose of testing the impact of institutions on MNC behaviour, not necessarily that these data are ideal.

12 Lipsey , Robert E. , ‘Foreign Direct Investment and the Operations of Multinational Firms: Concepts, History, and Data’ , in E. Kwan Choi and James Harrigan, eds, Handbook of International Trade ( Oxford : Blackwell Handbooks in Economics , 2003 ), pp. 287 – 319 Google Scholar

13 Duce , M. , ‘Definitions of Foreign Direct Investment (FDI): A Methodological Note’, (unpublished: Banco de Espana, 2003 ) Google Scholar

14 UNCTAD, ‘Methods of Data Collection and National Policies in the Treatment of FDI’ http://www.unctad.org/templates/Page.asp?intItemID=3157&lang=1 (2002).

15 International Monetary Fund, working paper on the measurement of international capital flows (1992): Report on the Measurement of International Capital Flows (Washington, D.C.: International Monetary Fund, 2000 ) Google Scholar

16 Dunning , Thad and Lundan , Sarianna , Multinational Enterprises and the Global Economy ( Northampton, Mass. : Edward Elgar , 2008 ) Google Scholar

17 IMF, ‘Foreign Direct Investment Statistics: How Countries Measure FDI’.

18 Hollyer , James R. , Rosendorff , B. Peter and Vreeland , James Raymond , ‘Democracy and Transparency’ , Journal of Politics , 73 ( 2011 ), 1191 – 1205 CrossRef Google Scholar

19 Lipsey, ‘Foreign Direct Investment and the Operations of Multinational Firms’.

20 Beugelsdijk et al., ‘Why and How FDI Stocks Are a Biased Measure’ , Journal of International Business Studies , 41 ( 2010 ), 1444 – 1459 CrossRef Google Scholar

Ibarra , Marilyn and Koncz , Jennifer , ‘Direct Investment Positions for 2007: Country and Industry Detail’ , Survey of Current Business ( Washington, D.C. : U.S. Bureau of Economic Analysis , 2008 ) Google Scholar

21 UNCTAD, ‘Methods of Data Collection and National Policies in the Treatment of FDI’.

22 Ibarra and Koncz, ‘Direct Investment Positions for 2007’.

23 Beugelsdijk et al ., ‘Why and How FDI Stocks Are a Biased Measure’.

24 Desai , Mihir A. , Foley , C. Fritz and Jr , James R. Hines , ‘A Multinational Perspective on Capital Structure Choice and Internal Capital Markets’ , Journal of Finance , 59 ( 2004 ), 2451 – 2487 CrossRef Google Scholar

25 Mataloni , Raymond , ‘A Guide to BEA Statistics on U.S. Multinational Companies’, Survey of Current Business (March 1995 ), 38–53 CrossRef Google Scholar

26 We identify holding companies as affiliates whose industry is noted as ‘Management of non-bank companies and enterprises’.

27 More precisely, we take the log of (1 + data) for logged variables. Adding 1 to the data allows for the log of a zero value. Total Assets is conceptually similar to commonly used stock variables, except that it accounts for assets acquired through local fundraising.

28 Investments in illiquid assets are likely to beget increases in liquid assets, so a positive relationship between BITs and non-PPE and Total Assets might be expected. However, investments in illiquid capital might be financed by reallocating capital away from liquid forms without any new capital actually being introduced into the foreign affiliate. This would suggest a negative relationship between BITs and non-PPE and a non-relationship with Total Assets . We do not have a theory to guide our expectations on these matters.

29 Hoechle , David , ‘Robust Standard Errors for Panel Regressions with Cross-Sectional Dependence’ , Stata Journal , 7 : 3 ( 2007 ), 281 – 312 CrossRef Google Scholar

30 Beck , Nathaniel and Katz , Jonathan N. , ‘What to Do (and Not to Do) with Time-Series Cross-Section Data’ , American Political Science Review , 89 ( 1995 ), 634 – 647 CrossRef Google Scholar

31 In unreported robustness tests we experimented with various definitions of ‘developing country’ that exclude Mexico and Turkey. The results are nearly identical.

32 Much of this remaining missing data results from the BEA not being able to disclose financial information for country-year pairings in which a single MNC was operating as doing so would violate confidentiality.

33 The quickest a BIT with the United States has moved from signing to entry into force is 358 days (Kyrgyzstan), and the vast majority of BITs enter into force within 2–5 years of signing. Even when entry into force in the near future is practically assured, the process through which that happens typically takes several months to a year. A signed US BIT must be transmitted to the US Senate, receive a hearing in the Committee on Foreign Relations, move back to the Senate for a resolution of advice and consent to ratification, have its instruments of ratification signed by the president and then wait thirty days before it enters into force. The US–Honduras BIT, which is typical in this regard, had been ratified by the Honduran government by 1999 and was submitted to the US Senate for ratification on 23 May 2000. Hearings on the treaty were held on 13 September 2000, and the vote for ratification was taken on 18 October 2000. The treaty finally entered into force on 11 July 2001. There is occasionally the additional step of reconciling divergent translations across versions of the treaty ratified in each country. This process took an additional two years in the case of the US–Jordan BIT. See http://www.jordanembassyus.org/new/aboutjordan/uj4.shtml .

34 The results of these models are available from the authors on request.

35 Yackee, ‘Do Bilateral Investment Treaties Promote Foreign Direct Investment?’ pp. 407–408 Google Scholar

This article has been cited by the following publications. This list is generated based on data provided by Crossref .

• Google Scholar

View all Google Scholar citations for this article.

Save article to Kindle

To save this article to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle .

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

• Volume 44, Issue 1
• Andrew Kerner and Jane Lawrence
• DOI: https://doi.org/10.1017/S0007123412000725

Save article to Dropbox

To save this article to your Dropbox account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you used this feature, you will be asked to authorise Cambridge Core to connect with your Dropbox account. Find out more about saving content to Dropbox .

Save article to Google Drive

To save this article to your Google Drive account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you used this feature, you will be asked to authorise Cambridge Core to connect with your Google Drive account. Find out more about saving content to Google Drive .

Reply to: Submit a response

- No HTML tags allowed - Web page URLs will display as text only - Lines and paragraphs break automatically - Attachments, images or tables are not permitted

Your details

Your email address will be used in order to notify you when your comment has been reviewed by the moderator and in case the author(s) of the article or the moderator need to contact you directly.

You have entered the maximum number of contributors

Conflicting interests.

Please list any fees and grants from, employment by, consultancy for, shared ownership in or any close relationship with, at any time over the preceding 36 months, any organisation whose interests may be affected by the publication of the response. Please also list any non-financial associations or interests (personal, professional, political, institutional, religious or other) that a reasonable reader would want to know about in relation to the submitted work. This pertains to all the authors of the piece, their spouses or partners.

The 2015 Indian Model BIT

Mahdev Mohan and Chester Brown (eds), The Asian Turn in Foreign Investment (Cambridge University Press 2021)

26 Pages Posted: 2 Jun 2021 Last revised: 18 Jul 2022

Shreyas Jayasimha

Abhimanyu george jain.

Graduate Institute of International and Development Studies (IHEID), Department of International Law

Date Written: March 23, 2018

In 2015 India released the final text of a model bilateral investment treaty (BIT) which sought to optimise the balance between these two goals, and which was to form the basis for negotiations of BITs with other countries. The text was perceived as a particularly radical departure from the existing status quo, and has been the subject of significant commentary and discussion. This contribution seeks to situate the 2015 Indian model BIT in the historico-legal context of India’s engagement with investment arbitration. Section I sets out a brief history of India’s engagement with investment treaties and investment arbitration in an attempt to place the model BIT in the historical context of India’s engagement with investment treaties and investment arbitration. Sections II to IV undertake a detailed analysis of scope and jurisdictional issues (Section II), substantive provisions (Section III) and the dispute resolution mechanism (Section IV) in the new model BIT, in an effort to provide a legal context to the model. By analysing the text of the model BIT and comparing it against previous model and negotiated texts, these sections hope to provide an insight into the genesis and rationale for the major innovations introduced by the 2015 Model.

Keywords: International investment law, investment arbitration, investor-state dispute settlement, Indian model BIT

Suggested Citation: Suggested Citation

Abhimanyu George Jain (Contact Author)

Graduate institute of international and development studies (iheid), department of international law ( email ).

Switzerland

Do you have a job opening that you would like to promote on SSRN?

Paper statistics, related ejournals, international economic law ejournal.

Subscribe to this fee journal for more curated articles on this topic

Public International Law: Sources eJournal

International finance ejournal, law & society: international & comparative law ejournal, development economics: macroeconomic issues in developing economies ejournal, development economics: regional & country studies ejournal, emerging markets economics: macroeconomic issues & challenges ejournal, india law ejournal, international political economy: investment & finance ejournal, conflict studies: international cooperation ejournal.