When BITs have some bite: The political-economic environment for bilateral investment treaties

Political risk frequently impedes the flow of capital into developing countries. In response, governments often adopt innovative institutions that aim to attract greater flows of international investment and trade by changing the institutional environment and limiting the risk to outside investors. One primary example of this is the Bilateral Investment Treaty (BIT), aimed specifically at increasing the flow of foreign direct investment (FDI) to developing countries. Yet the literature in political science and economics is inconclusive about whether or not BITs do indeed stimulate FDI, and it provides conflicting theoretical reasoning for the claimed connection. This article argues that BITs do attract FDI to developing countries, but the story is a complicated one. Two important factors must be taken into account. First, BITs cannot entirely substitute for an otherwise weak investment environment. Countries must have the necessary domestic institutions in place that interact with BITs to make these international commitments credible and valuable to investors. Second, as the coverage of BITs increases, overall FDI flows to developing countries increase. However, although remaining positive, the marginal effect of a country’s BITs on its own FDI may fall because of heightened competition for FDI from other BIT countries. Using data from 97 countries for 1984–2007, we provide empirical evidence consistent with both of these theoretical claims.     

The Effects of Political Risk on Different Entry Modes of Foreign Direct Investment

Although numerous studies document the effect of political institutions on foreign direct investment (FDI), few works in the political economy literature have investigated the link between political institutions and the mode of entry chosen by investors, be it mergers and acquisitions, joint ventures, or greenfield investments. Using panel data for 111 developing countries covering 1980–2006, we find that countries with political institutions that uphold good governance tend to attract higher levels of mergers and acquisitions, as opposed to joint ventures and greenfield investments, because such institutions help to mitigate the special risks faced by merger and acquisition investors. Our findings provide a nuance for understanding the different effects of political institutions based on the particular mode of entry.     

Investors,turbulence, and transition: Democratic transition and foreign direct investment in nineteen developing countries

Do profit‐seeking foreign direct investors value a country's transition to democracy? If they do, they should vote with their pocketbooks, resulting in a post‐transition increase in foreign direct investment flows. This study attempts to uncover links between transition to democracy and foreign direct investment (FDI) in Asia, Latin America, and the Caribbean, In doing so, it addresses existing arguments about connections between democracy and investor behavior. The regions examined have not only experienced democratic transitions, they also account for the majority of the increasing flow of FDI to the developing world. This research employs time‐series cross‐sectional (TSCS) economic and political data, using ordinary least squares with panel corrected standard errors. The central finding is that transition to democracy has a negative effect on FDI. Secondarily, political instability and higher levels of democracy also deter foreign direct investors.     

The effects of IMF programs on U.S. foreign direct investment in the developing world

Given the popular wisdom that the U.S. government influences IMF policies and tends to support the business community, it might be expected that IMF programs benefit U.S. firms abroad and thus borrower nations are attractive destinations for U.S. foreign direct investment (FDI). Surprisingly, no study has tested the impact of IMF loans on U.S. FDI. Controlling for common explanations in the literature, we use a treatment effects model and interviews with IMF staff researchers to investigate whether countries under different kinds of IMF programs receive more U.S. FDI than countries not under IMF arrangements. Using panel data for 126 developing countries from 1980 to 2003, we find that IMF borrowers tend to be more attractive to U.S. investors but not all IMF programs have the same effect. Our findings suggest that differences in loan duration, the extent of borrower input in policy decisions, and loan amounts affect borrowers’ leverage with the Fund and the U.S.     

TNCs: Aid agents for the new millennium?

Until very recently private capital flows to developing countries have been growing rapidly. In the wake of the 1997 East Asian financial crisis, foreign direct investment has been identified as a vital ingredient to restore and invigorate the economies in the Asian region and beyond. In an attempt to attract overseas capital and to stimulate economic development, countries such as the Philippines have stepped up the adoption of policies that allow for greater access by foreign investors. Increasingly, it appears that foreign capital, provided through transnational corporations, is set to replace official aid and to promote economic development first and foremost, with 'trickle-down' social benefits to follow. This study examines the role of one transnational corporation called the Alliance, in the promised development of Bohol in the Philippines, as a by-product of a water treatment and supply proposal linking the island provinces of Bohol and Cebu. The findings suggest that economic objectives tend to take priority over social development. The Alliance seemed to expound its economic and technical ability, with less effort given to involving and consulting with affected communities. This resulted in residents being disenfranchised from the development process, and gave rise to a feeling of mistrust and resentment.     

Sovereignty,Bargaining, and the International Regulation of Foreign Direct Investment

While developing countries have undergone a remarkable transformation in their attitudes toward foreign direct investment (FDI) during the past decade, they still resist the establishment of a multilateral regime governing FDI. This is puzzling, first, because these states are liberalising their policies anyway, and second, because a multilateral regime offers several advantages over the patchwork of unilateral and bilateral arrangements that currently exist (for instance, by contributing to increasing FDI flows). What explains this paradoxical attitude? This paper critically examines a number of potential explanations. Concerns about losing sovereignty, lack of knowledge about the costs of FDI restrictions, or lingering suspicions of multinational corporations may play some role, but cannot account for unilateral and bilateral liberalisation. Another approach highlights the role of domestic groups in supporting or opposing a multilateral agreement. Yet the pattern of variation among the attitudes of developing countries casts doubt on this explanation as well. Finally, the paper puts forth an argument that focuses on how bargaining power affects the trade-off between economic gains and the loss of sovereignty. The host state's perceived attractiveness to multinational investors conditions whether or not the government resolves this trade-off in favour of supporting a multilateral regime.     

Foreign aid,democracy, and gender quota laws

Why do so many developing countries have gender quota policies? This article argues that foreign aid programmes influence developing countries to adopt policies aimed at fulfilling international norms regarding gender equality. This relationship is driven by two causal mechanisms. On the one hand, countries may use gender quotas as a signal to improve their standing in the international hierarchy, possibly as an end unto itself, but more likely as a means towards ensuring future aid flows. On the other, countries may adopt gender quotas as a result of successful foreign aid interventions specifically designed to promote women’s empowerment. I test these two causal mechanisms using data on foreign aid commitments to 173 non-OECD countries from 1974 to 2012. The results suggest that while programmes targeting women’s empowerment may have some influence on quota adoption, developing countries dependent on United States foreign aid are also likely to use gender quotas as signalling devices rather than as a result of ongoing liberalization efforts.     

东北亚各国对俄罗斯远东地区的投资问题

俄罗斯远东地区地域辽阔，自然资源极其丰富，因此拥有吸引外资的资源优势，但由于存在不利于外商投资的诸多因素．吸引外资工作遇到困难。对俄罗斯远东地区进行投资的主要是东北亚各国。从投资规模、投资项目来看，日本在远东地区的投资堪称第一。韩国同俄罗斯的经贸合作Ｍ１９９１年起一直呈上升态势，两国计划在纳霍德卡自由经济区建Ｌ业园区。中国在远东地区有很多中资企业。但规模都比较小，且大多从事贸易。对世纪由于远东地区的自然资源具有独特的价值。东北亚各国将会以更高的热情开发它。     

Improving Reputation BIT by BIT: Bilateral Investment Treaties and Foreign Accountability

The literature on foreign direct investment (FDI) has paid an increasing interest to international institutions such as bilateral investment treaties (BITs), but whether BITs help attract FDI is an unsettled question. Building on the existing literature, this article argues that BITs can change investors’ perceptions and the corresponding investment they make because signing BITs signals the involvement of another powerful country that is able to compel the host government to comply. This implies that the effect of BITs is not constant across signatory countries: BITs are more effective when they are signed with rich and influential countries. Using monadic and dyadic FDI data, this article finds that BITs signed with powerful countries (defined as the top six largest economies) lead to an increase in FDI inflows (both from these signatory countries and from other countries). BITs signed with other countries, despite in a larger quantity, have little influence on FDI inflows.     

Contracting with Whom? The Differential Effects of Investment Treaties on FDI

Under what conditions can governments use international commitments such as Bilateral Investment Treaties (BITs) to attract foreign direct investment (FDI)? Although numerous studies have attempted to answer this question, none considers how investment treaties may have heterogeneous affects across industry. I argue BIT effect is strongest when the obsolescing bargaining problem between firms and governments is most protracted, namely, when FDI relies on strong contracts between firms and states. Using a time series cross-sectional data set of 114 developing countries from 1985 to 2011, I find BITs are associated with increases in infrastructure investment, an industry particularly reliant on the sanctity of government contracts, but not with total FDI inflows. Moreover, BITs with strong arbitration provisions display the strongest statistical effect on infrastructure investment, while BITs that do not provide investors with such protections are not associated with increased investment. My results have implications for both scholarship on the relationship between governments and multinational firms as well as for the study of international institutions more broadly. To properly ascertain the effects of international treaties and institutions, scholars should consider not just whether institutions constrain or inform—or matter at all—but also the extent to which the targets of institutions have heterogeneous responses to them.     

Money with a Mean Streak? Foreign Economic Penetration and Government Respect for Human Rights in Developing Countries

This study examines the relationship between foreign economic capital and the level of government respect for two types of human rights in developing countries. Two opposing schools of thought offer explanations as to what this relationship might be like. According to the liberal neoclassical school, the acceptance of liberal economic doctrine will provide positive political benefits to developing countries. The "dependency" school, on the other hand, argues that because ties between core and periphery elites give governments in developing nations an incentive to repress, human rights conditions will worsen as foreign economic penetration increases. The results of previous empirical queries into this matter have been mixed. In contrast to most studies, we focus on a broader measure of foreign economic capital, including foreign direct investment, portfolio investment, debt, and official development assistance. Using ordered logit analysis on a cross-national sample of forty-three developing countries from 1981 to 1995, we discover systematic evidence of an association between foreign economic penetration and government respect for two types of human rights, physical integrity rights and political rights and civil liberties. Of particular interest is the finding that both foreign direct investment and portfolio investment are reliably associated with increased government respect for human rights.     

Developing leaders? developing countries?

A visit to Ghana, with the hosts interested in developing leaders and the guest interested in developing countries, led to a questioning of both. Three approaches to development are discussed. The top-down government planning approach, discredited with the fall of communism, has been replaced by an outside-in ‘globalisation’ approach, which is now promoted as the way to develop an economy. But has any nation ever developed by throwing itself open to foreign companies, capital, experts and beliefs? The notable success stories, including the USA, point to a third approach, inside-up indigenous development, which has worked in concert with state intervention. Globalisation thus denies developing countries the very basis by which other countries developed. This argument is woven together with a corresponding one about the development of leaders, which must also happen indigenously, from the life experiences of individuals, not programmes that purport to create leaders. We have had enough of hubris in the name of heroic leadership, much as we have had enough of foreign experts pretending to develop the ‘developing’ countries.     

1990年代以来中印对外直接投资探析

中印正逐渐成为世界经济领域中日趋活跃的对外直接投资者。比较两国1990年代以来对外直接投资的现状及特点，分析两国在投资行业、区位选择、投资方式和投资主体等方面的差异，有利于我国企业在进行对外直接投资时做出更趋理性的判断。     

Time for a haircut: political regimes and sovereign debt restructurings

ABSTRACT

Conventional wisdom claims that reputation leads sovereign states to full debt repayment. However, defaults are recurrent, some debtor countries take a lot of time to end them, and some extract costly concessions from investors. This article argues that these differences are largely explained by the political regimes in the borrowing countries. While previous research examines whether democracies make more credible commitments, we analyze how democracies affect bargaining with foreign investors after a default occurs. Democracies, with their institutional checks, electoral uncertainty, greater transparency, and public deliberation, make swift decision-making harder, create incentives to pander and posture, and give leverage to minimize the win set of viable agreements. We test our theory on a comprehensive dataset of debt restructurings with private creditors in the period 1975–2017. The event history analysis indicates that democracies experience longer restructurings and the double-hurdle regression analysis shows that democracies obtain larger creditor losses. Further, there is interesting variation among democracies and autocracies. Our findings suggest that political regimes are crucial to explaining why cooperation fails in international debt markets.     

The political economy of exchange rate regimes in transition economies

We show that political economy factors play an important role in shaping the exchange rate policies of transition economies. We argue that tradables producers prefer a floating rate to allow active exchange rate policy to affect their competitiveness, while internationally exposed sectors prefer a fixed rate to provide currency stability. We find support for that argument using data on de facto and de jure exchange rate behavior for 21 countries during the period from 1992 to 2004. Our empirical results serve as the basis for predictions regarding the adoption of the euro in the EU accession countries and other countries in Central and Eastern Europe.     

利用外资调整辽宁产业结构效应及对策

许多国家尤其是日本、新兴工业化国家和地区,利用外资推进产业结构升级,并实现经济高速增长的经验表明:后起国家调整产业结构,实现产业结构的升级演进离不开外国资本和先进技术的有效运用。在辽宁老工业基地振兴及产业结构调整中,外资不仅提高了对工业总产值、工业增加值的贡献、促进了产品结构和产业结构优化、还加大了产业带动作用;同时,外资对辽宁省产业结构也不可避免地造成了一些消极影响。因此,在利用外资过程中,依据辽宁产业结构调整的方向以及产业结构演进的规律,采取引导外资投向优势主导产业、第三产业,利用外资嫁接国有企业,盘活国有资产的战略措施来优化产业结构是振兴辽宁老工业基地的关键。     

有关中国与发展中国家关系的几点思考

冷战后，“和平与发展”已经成为国际关系的新主题。巩固并推进我同发展中国家的关系是我国外交全局的基础。在新的国际形势下，发展中国家面临的国际环境和要完成的基本任务都发生了重大变化。因此，我国对发展中国家的外交需要有新思路。包括利用好新的技术成果、寻找新的经济增长点、重视新机制的作用和清醒认识中国新的定位。对发展中国家的外交应注意不同情况具体分析，也应强调“韬光养晦”的政策。     

俄罗斯FDI区位选择影响因素实证分析

近年来,俄罗斯由于能源贸易蓬勃发展以及产业结构的调整优化,吸引FD I流入的能力也不断增强。2007年俄罗斯更是以同比增长70.3%的成绩在所有吸引外国直接投资的国家中名列第七。从FD I的区域流向来看,出现了FD I集中于制造业、采掘业和加工业等行业的现象。对当前俄罗斯FD I区位流向进行实证研究,可以发现产业集聚程度和创新能力是影响俄罗斯FD I区位选择的主要因素。     

Brazil as ‘Southern donor’: beyond hierarchy and national interests in development cooperation?

This article analyses Brazil's growing role in external development assistance. During Lula da Silva's presidency, cooperation with developing countries grew dramatically. While the official position is that Brazilian development assistance is moved not by national economic or political interests, but by international ‘solidarity’, and does not reproduce the North–South traditional aid relations, we suggest that it is not completely divorced from national, sub-national or sectoral interests and cannot be viewed apart from Brazil's broader foreign policy objectives. Brazil does pursue political, economic and commercial interests and, concomitantly, has made a positive difference in the recipient countries. However, more empirical research and field investigation are needed to better gauge the impact of Brazil's assistance initiatives and their contributions to South–South cooperation more broadly. During Lula's terms (2003–2010), Brazil could be classified as a ‘Southern donor’, which expresses the country's own novelties, and tensions, of simultaneously being a donor and a developing country.     

中国东北地区与周边国家的贸易和投资关系

与日本、韩国、朝鲜、俄罗斯等东北亚国家的进出口贸易,在中国东北地区的对外贸易中一直占有较高的比重。日本、韩国还是东北地区最主要的外商直接投资来源国。当然,目前也存在着东北地区与主要周边国家贸易关系总体发展水平不高,利用日本和韩国直接投资地区分布严重不均衡、单个项目规模较小等问题。目前,既存在着东北地区加快发展与周边国家贸易和投资关系的机遇,同时也存在许多短时间内尚难以克服的障碍。因此,促进东北地区与周边国家发展贸易和投资关系既需要抱有合理的预期,更需要采取可行的对策。