IDEAS home Printed from https://ideas.repec.org/a/beo/journl/v68y2023i237p37-68.html
   My bibliography  Save this article

The Effectiveness Of Bilateral Investment Treaties In Attracting Foreign Direct Investment: The Case Of Serbia

Author

Listed:
  • Radovan Kastratović
  • Predrag Bjelić

Abstract

Over the past several decades there has been increasing competition among countries to attract foreign direct investment, which is often hypothesised to positively affect the development of host countries. Bilateral investment treaties are one of the policy instruments the host countries often use as a means to encourage foreign direct investment inflows. In this study, we aim to explore the effectiveness of bilateral investment treaties in achieving these goals in the case of Serbia. Using the panel data on Serbia and its 198 partner economies observed in the period 2010–2019, we estimate a gravity model of foreign direct investment inflows by applying the Poisson pseudo-maximum likelihood method. We found that ratified bilateral investment treaties have a statistically significant positive effect on foreign direct investment inflows in Serbia. Furthermore, the quality of the treaties was found to positively affect the inflows, whereby the anti-discriminatory provisions seem to be the most important. The results imply that Serbia could attract more foreign direct investment by concluding new bilateral investment treaties and improving the quality of the existing ones.

Suggested Citation

  • Radovan Kastratović & Predrag Bjelić, 2023. "The Effectiveness Of Bilateral Investment Treaties In Attracting Foreign Direct Investment: The Case Of Serbia," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 68(237), pages 37-68, April – J.
    • Handle: RePEc:beo:journl:v:68:y:2023:i:237:p:37-68
    as

    Download full text from publisher

    File URL: http://www.ekof.bg.ac.rs/wp-content/uploads/2015/12/237-02.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Henk L. M. Kox & Hugo Rojas‐Romagosa, 2020. "How trade and investment agreements affect bilateral foreign direct investment: Results from a structural gravity model," The World Economy, Wiley Blackwell, vol. 43(12), December.
    2. Bhagwat, Vineet & Brogaard, Jonathan & Julio, Brandon, 2021. "A BIT goes a long way: Bilateral investment treaties and cross-border mergers," Journal of Financial Economics, Elsevier, vol. 140(2), pages 514-538.
    3. S. Prehn & B. Brümmer & T. Glauben, 2016. "Gravity model estimation: fixed effects vs. random intercept Poisson pseudo-maximum likelihood," Applied Economics Letters, Taylor & Francis Journals, vol. 23(11), pages 761-764, July.
    4. Michael Frenkel & Benedikt Walter, 2019. "Do bilateral investment treaties attract foreign direct investment? The role of international dispute settlement provisions," The World Economy, Wiley Blackwell, vol. 42(5), pages 1316-1342, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gómez-Mera, Laura & Varela, Gonzalo, 2024. "Emerging market multinationals and international investment agreements," International Business Review, Elsevier, vol. 33(3).
    2. Eichler, Stefan & Nauerth, Jannik A., 2024. "Bilateral investment treaties and portfolio investment," CEPIE Working Papers 01/24, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    3. Eichler, Stefan & Nauerth, Jannik André, 2024. "Bilateral investment treaties and portfolio investment," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 91(C).
    4. Peter Egger & Alain Pirotte & Catharine Titi, 2023. "International investment agreements and foreign direct investment: A survey," The World Economy, Wiley Blackwell, vol. 46(6), pages 1524-1565, June.
    5. Federico Carril-Caccia & Juliette Milgram Baleix & Jordi Paniagua, 2022. "Does terrorism affect greenfield investment? A structural gravity approach," ThE Papers 22/06, Department of Economic Theory and Economic History of the University of Granada..
    6. Kox, Henk L.M. & Rojas Romasgosa, Hugo, 2019. "Gravity estimations with FDI bilateral data: Potential FDI effects of deep preferential trade agreements," MPRA Paper 96318, University Library of Munich, Germany.
    7. Wen Yue & Qingxia Lin & Siyu Xu, 2023. "Investment effect of regional trade agreements: an analysis from the perspective of heterogeneous agreement provisions," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-13, December.
    8. Gopalakrishnan, Balagopal & Jacob, Joshy & Srivastava, Jagriti, 2022. "Fishing in muddy waters: Mergers and acquisitions during uncertainty," IIMA Working Papers WP 2022-09-02, Indian Institute of Management Ahmedabad, Research and Publication Department.
    9. Kox, Henk L.M., 2022. "A micro-macro model of foreign direct investment: knowledge-based gravity forces, self-selection and third-country effects," MPRA Paper 115542, University Library of Munich, Germany.
    10. Koutchogna Kokou Edem Assogbavi & Stéphane Dées, 2023. "Environmental Policy and the CO2 Emissions Embodied in International Trade," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(2), pages 507-527, February.
    11. Makram El-Shagi & Bashir Muhammad, 2024. "Institutional Similarity and Bilateral FDI," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 4605-4638, March.
    12. Saima Nawaz, 2020. "Institutions, Regional Integration and Bilateral Trade in South Asia: PPML Based Evidence," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 59(2), pages 221-242.
    13. Kox, Henk L.M., 2022. "Explaining foreign direct investment patterns: a testable micro-macro gravity model for FDI," MPRA Paper 115273, University Library of Munich, Germany.
    14. Li, Shi & Urata, Shujiro & Zhao, Long, 2024. "Does the quality of bilateral investment treaties matter for outward foreign direct investment?," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 207-218.
    15. Shujiro Urata & Youngmin Baek, 2023. "Impact of International Investment Agreements on Japanese FDI: A firm‐level analysis," The World Economy, Wiley Blackwell, vol. 46(8), pages 2306-2334, August.
    16. Stender, Frederik & Vogel, Tim, 2023. "What role for aid for trade in (deep) PTA relations? Empirical evidence from gravity model estimations," IDOS Discussion Papers 13/2023, German Institute of Development and Sustainability (IDOS).
    17. Lay, Jann & Tafese, Tevin, 2020. "Promoting private investment to create jobs: A review of the evidence," PEGNet Policy Studies 02/2020, PEGNet - Poverty Reduction, Equity and Growth Network, Kiel Institute for the World Economy (IfW Kiel).
    18. Fabio Gaetano Santeramo & Emilia Lamonaca, 2022. "On the trade effects of bilateral SPS measures in developed and developing countries," The World Economy, Wiley Blackwell, vol. 45(10), pages 3109-3145, October.
    19. Di Ubaldo, Mattia & Gasiorek, Michael, 2022. "Non-trade provisions in trade agreements and FDI," European Journal of Political Economy, Elsevier, vol. 75(C).
    20. Larch, Mario & Yotov, Yoto, 2022. "Deep Trade Agreements and FDI in Partial and General Equilibrium: A Structural Estimation Framework," School of Economics Working Paper Series 2022-7, LeBow College of Business, Drexel University.

    More about this item

    Keywords

    : bilateral investment treaties (BIT); foreign direct investment (FDI); investment promotion; Serbia;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:beo:journl:v:68:y:2023:i:237:p:37-68. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Goran Petrić (email available below). General contact details of provider: https://edirc.repec.org/data/efbeoyu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.