IDEAS home Printed from https://ideas.repec.org/a/kap/iecepo/v21y2024i2d10.1007_s10368-024-00589-w.html
   My bibliography  Save this article

Bilateral investment treaty, technological intensity, and international trade

Author

Listed:
  • Tingting Xiong

    (Howard University)

Abstract

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 $$18.6\mathrm{\%}$$ 18.6 % , while in sectors with the highest average technological intensity, the increase is estimated to be only $$8.1\mathrm{\%}$$ 8.1 % .

Suggested Citation

  • Tingting Xiong, 2024. "Bilateral investment treaty, technological intensity, and international trade," International Economics and Economic Policy, Springer, vol. 21(2), pages 411-434, May.
  • Handle: RePEc:kap:iecepo:v:21:y:2024:i:2:d:10.1007_s10368-024-00589-w
    DOI: 10.1007/s10368-024-00589-w
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10368-024-00589-w
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1007/s10368-024-00589-w?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kalina Manova, 2013. "Credit Constraints, Heterogeneous Firms, and International Trade," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(2), pages 711-744.
    2. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
    3. Egger, Peter & Pfaffermayr, Michael, 2004. "The impact of bilateral investment treaties on foreign direct investment," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 788-804, December.
    4. Rishav Bista, 2015. "Reconciling the WTO Effects on Trade at the Extensive and Intensive Margins," International Economic Journal, Taylor & Francis Journals, vol. 29(2), pages 231-257, June.
    5. Head, Keith & Mayer, Thierry & Ries, John, 2010. "The erosion of colonial trade linkages after independence," Journal of International Economics, Elsevier, vol. 81(1), pages 1-14, May.
    6. Yoto V. Yotov, 2022. "On the role of domestic trade flows for estimating the gravity model of trade," Contemporary Economic Policy, Western Economic Association International, vol. 40(3), pages 526-540, July.
    7. Egger, Peter & Larch, Mario, 2008. "Interdependent preferential trade agreement memberships: An empirical analysis," Journal of International Economics, Elsevier, vol. 76(2), pages 384-399, December.
    8. Richard Kneller & Mauro Pisu & Zhihong Yu, 2008. "Overseas business costs and firm export performance," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(2), pages 639-669, May.
    9. Tingting Xiong & Hao Sun, 2021. "Investment Liberalization, Credit Constraints, And International Trade," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 21(01), pages 1-46, March.
    10. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    11. Xiong, Tingting, 2023. "The effect of technological intensity on international trade," International Economics, Elsevier, vol. 176(C).
    12. Axel Berger & Matthias Busse & Peter Nunnenkamp & Martin Roy, 2013. "Do trade and investment agreements lead to more FDI? Accounting for key provisions inside the black box," International Economics and Economic Policy, Springer, vol. 10(2), pages 247-275, June.
    13. Peter Egger & Valeria Merlo, 2012. "BITs Bite: An Anatomy of the Impact of Bilateral Investment Treaties on Multinational Firms," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(4), pages 1240-1266, December.
    14. Linghui Tang, 2006. "Communication Costs and Trade of Differentiated Goods," Review of International Economics, Wiley Blackwell, vol. 14(1), pages 54-68, February.
    15. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    16. Xiong, Tingting, 2022. "The Effect of Bilateral Investment Treaties (BITs) on the extensive and intensive margins of exports," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 68-79.
    17. Caroline Freund & Diana Weinhold, 2002. "The Internet and International Trade in Services," American Economic Review, American Economic Association, vol. 92(2), pages 236-240, May.
    18. Peter Egger & Valeria Merlo, 2007. "The Impact of Bilateral Investment Treaties on FDI Dynamics," The World Economy, Wiley Blackwell, vol. 30(10), pages 1536-1549, October.
    19. George R. G. Clarke & Scott J. Wallsten, 2006. "Has the Internet Increased Trade? Developed and Developing Country Evidence," Economic Inquiry, Western Economic Association International, vol. 44(3), pages 465-484, July.
    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. Xiong, Tingting, 2022. "The Effect of Bilateral Investment Treaties (BITs) on the extensive and intensive margins of exports," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 68-79.
    2. Xiong, Tingting, 2023. "The effect of technological intensity on international trade," International Economics, Elsevier, vol. 176(C).
    3. Maria Borga & Perla Ibarlucea Flores & Monika Sztajerowska, 2020. "Drivers of divestment decisions of multinational enterprises - A cross-country firm-level perspective," OECD Working Papers on International Investment 2019/03, OECD Publishing.
    4. Eichler, Stefan & Nauerth, Jannik André, 2024. "Bilateral investment treaties and portfolio investment," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 91(C).
    5. Monika Sztajerowska, 2021. "International Investment Agreements, Double-Taxation Treaties and Multinational Activity: The (Heterogeneous) Effects of Binding," PSE Working Papers halshs-03265057, HAL.
    6. Monika Sztajerowska, 2021. "International Investment Agreements, Double-Taxation Treaties and Multinational Activity: The (Heterogeneous) Effects of Binding," Working Papers halshs-03265057, HAL.
    7. Katharina Längle, 2020. "Upgrading of Exports: Does the Integration into Trade Agreements Pave the Way to Product Upgrading?," Documents de travail du Centre d'Economie de la Sorbonne 20006, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    8. Joël Cariolle & Michele Imbruno & Jaime de Melo, 2020. "Bilateral digital connectivity and firm participation in export markets," Working Papers hal-03182438, HAL.
    9. Sauvé, Pierre & Shingal, Anirudh, 2014. "Why do Countries enter into Preferential Agreements on Trade in Services? Assessing the Potential for Negotiated Regulatory Convergence in Asian Services Markets," Working Papers on Regional Economic Integration 129, Asian Development Bank.
    10. 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.
    11. Pierre Sauvé & Anirudh Shingal, 2016. "Why Do Economies Enter into Preferential Agreements on Trade in Services? Assessing the Potential for Negotiated Regulatory Convergence in Asian Services Markets," Asian Development Review, MIT Press, vol. 33(1), pages 56-73, March.
    12. Peter Egger & Anirudh Shingal, 2021. "Determinants of services trade agreement membership," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(1), pages 21-64, February.
    13. Visser, Robin, 2019. "The effect of the internet on the margins of trade," Information Economics and Policy, Elsevier, vol. 46(C), pages 41-54.
    14. Gnangnon, Sèna Kimm, 2022. "Internet, Participation in International Trade, and Tax Revenue Instability," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 37(2), pages 267-315.
    15. Peter H. Egger & Filip Tarlea, 2021. "Comparing Apples to Apples: Estimating Consistent Partial Effects of Preferential Economic Integration Agreements," Economica, London School of Economics and Political Science, vol. 88(350), pages 456-473, April.
    16. 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).
    17. Josef C. Brada & Zdenek Drabek & Ichiro Iwasaki, 2021. "Does Investor Protection Increase Foreign Direct Investment? A Meta‐Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 35(1), pages 34-70, February.
    18. Egger Peter & Wamser Georg, 2013. "Effects of the Endogenous Scope of Preferentialism on International Goods Trade," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 13(2), pages 709-731, July.
    19. Naoto Jinji & Xingyuan Zhang & Shoji Haruna, 2022. "Deep Integration, Global Firms, and Technology Spillovers," Advances in Japanese Business and Economics, Springer, number 978-981-16-5210-3, February.
    20. Fabien Candau & Geoffroy Guepie & Reine Kouakou, 2018. "In Gravity no Veritas: Dubious Trade Elasticiy and Weak Effects of Regional Trade Agreements in Africa," Working Papers hal-02625930, HAL.

    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:kap:iecepo:v:21:y:2024:i:2:d:10.1007_s10368-024-00589-w. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.