More Stringent BITs, Less Ambiguous Effects on FDI? Not a Bit!

We focus on investor-state dispute settlement provisions contained in various, though far from all, bilateral investment treaties as a possible determinant of BIT-related effects on bilateral FDI flows.

Our estimation results prove to be sensitive to the specification of these provisions as well as the inclusion of transition countries in the sample. Stricter dispute settlement provisions do not necessarily result in higher FDI inflows so that the effectiveness of BITs as a credible commitment device remains elusive.

No: ERSD-2010-10

Axel Berger — German Development Institute, Bonn, Germany
Matthias Busse — Ruhr-University of Bochum, Germany
Peter Nunnenkamp — Kiel Institute for the World Economy, Germany
Martin Roy — World Trade Organization, Geneva, Switzerland

Manuscript date: May 2010

Key Words:

Dispute Settlement, BITs, FDI flows

JEL classification numbers:

F21, F23, K33


back to top


This is a working paper, and hence it represents research in progress. This paper represents the opinions of the author, and is the product of professional research. It is not meant to represent the position or opinions of the WTO or its Members, nor the official position of any staff members. Any errors are the fault of the author. Copies of working papers can be requested from the divisional secretariat by writing to: Economic Research and Statistics Division, World Trade Organization, Rue de Lausanne 154, CH 1211 Geneva 21, Switzerland. Please request papers by number and title.

Download paper in pdf format (14 pages, 167KB)