The Effect of Treaties on Foreign Direct Investment

Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows

Karl P Sauvant and Lisa E Sachs

Examines how BIT and DTT networks have accelerated the rapid growth of FDI flows by looking at the regulatory framework, economic factors, and investment strategies
A comprehensive assessment of the performance of these treaties, and presents the most recent literature on BITs and DTTs and their impact on foreign investments.
Analyzes overseas economic results by looking at the actions and treaties signed by many governments in order to attract foreign investors
Provides an overview of the trends and characteristics of foreign direct investments

The Effect of Treaties on Foreign Direct Investment

Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows

Karl P Sauvant and Lisa E Sachs

Description

In recent years, the treaties and strategies promoting global investment have changed dramatically. The widespread liberalization of economic policy has effectively spurred an increase in foreign direct investment (FDI). By encouraging foreign investors to enter international markets, many countries are witnessing exponential growth within their economies and local industries. The surge of FDI not only brings capital for emerging or growing industries, but it is also capable of boosting the country's economy by creating greater access to financing, more job opportunities, and potential knowledge and technology spillovers.

The basic purpose of concluding bilateral investment treaties (BITs) and double taxation treaties (DTTs) is to signal to investors that investments will be legally protected under international law in case of political turmoil and to mitigate the possibility of double taxation of foreign entities. But the actual effect of BITs and DTTs on the flows of foreign direct investment is debatable.

The Effect of Treaties on Foreign Direct Investment: Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows is a comprehensive assessment of the performance of these treaties, and presents the most recent literature on BITs and DTTs and their impact on foreign investments.

The Effect of Treaties on Foreign Direct Investment

Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows

Karl P Sauvant and Lisa E Sachs

Contributors
Foreword: Andreas F. Lowenfeld
Preface: John H. Dunning
BITs, DTTs and FDI flows: an Overview: Lisa E. Sachs and Karl P. Sauvant
PART I: Introduction
A Brief History of International Investment Agreements
Kenneth J. Vandevelde
The Framework of Investment Protection: The Content of BITs
Peter Muchlinski
Explaining the Popularity of Bilateral Investment Treaties, Andrew T. Guzman
Double Tax Treaties: An Introduction
Reuven S. Avi-Yonah
PART II: Exploring the Impact of Bilateral Investment Treaties on Foreign Direct Investment Flows
Do BITs Really Work: An Evaluation of Bilateral Investment Treaties and Their Grand Bargain
Jeswald W. Salacuse and Nicholas P. Sullivan
Bilateral Investment Treaties and Foreign Direct Investment: A Political Analysis
Tim Büthe and Helen V. Milner
Do Bilateral Investment Treaties Increase Foreign Direct Investment to Developing Countries?
Eric Neumayer and Laura Spess
The Impact of Bilateral Investment Treaties on Foreign Direct Investment
Peter Egger and Michael Pfaffermayr
New Institutional Economics and FDI Location in Central and Eastern Europe
Robert Grosse and Len J. Trevino
Do Investment Agreements Attract Investment? Evidence from Latin America
Kevin P. Gallagher and Melissa B.L. Birch
The Global BITs Regime and the Domestic Environment for Investment
Susan Rose-Ackerman
The Impact on Foreign Direct Investment of BITs
UNCTAD
Do Bilateral Investment Treaties Attract FDI? Only a Bit And They Could Bite
Mary Hallward-Driemeier
Do BITs Really Work? Revisiting the Empirical Link between Investment Treaties and Foreign Direct Investment
Jason Yackee
Bilateral Investment Treaties and Foreign Direct Investment: Correlation Versus Causation
Emma Aisbett
Why Do Developing Countries Sign BITs?
Deborah L. Swenson
PART III: Exploring the Impact of Double Taxation Treaties on Foreign Direct Investment Flows
Do Bilateral Tax Treaties Promote Foreign Direct Investment?
Bruce A. Blonigen and Ronald B. Davies
The Effects of Bilateral Tax Treaties on U.S. FDI Activity
Bruce A. Blonigen and Ronald B. Davies
The Impact of Endogenous Tax Treaties on Foreign Direct Investment: Theory and Empirical Evidence
Peter Egger, Mario Larch, Michael Pfaffermayr and Hannes Winner
Host-Country Governance, Tax Treaties and U.S. Direct Investment Abroad
Henry J. Louie and Donald J. Rousslang
Tax Treaties for Investment and Aid to Sub-Saharan Africa: A Case Study
Allison D. Christians
It's All in the Timing: Assessing the Impact of Bilateral Tax Treaties on U.S. FDI Activity
Daniel L. Millimet and Abdullah Kumas
Do Double Taxation Treaties Increase Foreign Direct Investment to Developing Countries?
Eric Neumayer
PART IV: Exploring the Impact of Tax and Investment Treaties on Foreign Direct Investment Flows
The Effect of Tax and Investment Treaties on Bilateral FDI Flows to Transition Economies
Tom Coupé, Irina Orlova and Alexandre Skiba
Selected Bibliography on Bilateral Investment Treaties and Double Taxation Treaties
Lisa E. Sachs

The Effect of Treaties on Foreign Direct Investment

Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows

Karl P Sauvant and Lisa E Sachs

Author Information

Dr. Karl P. Sauvant is Resident Senior Fellow and Founding Executive Director of the Vale Columbia Center on Sustainable International Investment, Senior Research Scholar and Lecturer in Law at Columbia Law School, and Guest Professor at Nankai University, China. Before that, he was Director of UNCTAD's Investment Division. Dr. Sauvant has published extensively on issues related to economic development and FDI. His name is associated with some 150 United Nations publications on FDI over the past three decades.

Lisa E. Sachs is Director of the Vale Columbia Center on Sustainable International Investment at Columbia University. She received a J.D. and a Master of International Affairs from Columbia in May 2008. Her academic research has focused on foreign investment, corporate responsibility, human rights, and economic development.

The Effect of Treaties on Foreign Direct Investment

Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows

Karl P Sauvant and Lisa E Sachs

Reviews and Awards

"A comprehensive overview of the state-of-the-art within the literature on IIAs and FDI. Irrespective of methodological challenges, the volume is a valuable point of reference for scholars and practitioners alike." --Lauge Skovgaard Poulsen, London School of Economics European Journal of International Law

"The surge of FDI, through widepread economic liberalization of economic policy, not only brings capital for emerging or growing industries, but it is also capable of boosting the country's economy by creating greater access to financing, more job opportunities, and potential knowledge and technology spillovers. Bilateral investment treaties (BIT's) and double taxation treaties(DTT's) signal to investors that investments will be legally protected under international law in case of political turmoil and mitigate the possibility of double taxation of foreign entities. But their actual effect on the flows of foreign direct investment is debatable. This book is a comprehensive assesment of the performance of these treaties, and presents the most recent literature on BIT's and DDT'S and their impact on foreign investments." --Tatiana Kostova, AIB Newsletter

"This volume constitutes an important contribution to the literature on the increasing relevance of policy for FDI decisions." --Judith Clifton, University of Cantabria, Cantabria, Spain International Business Review

"Built around the valuable insight that BITs and DDTS serve as the two principal forms of international investment agreements, Sachs and Sauvant have established a collection of rigorous, and at times competing, studies on a timely and challenging subject. The book provides an exceptionally close look at the relationship between treaties and foreign direct investment-an important issue of great interest to practitioners, scholars and policymakers alike." --Mark E. Feldman, Chief, NAFTA/CAFTA-DR Arbitration, Office of the Legal Adviser, U.S. Department of State Foreign Investment Law Journal