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Role of Bilateral Investment Treaties (BITs) in Promoting FDI: A Critical Review of Literature with Special Reference to Developing Economies

Vol 8 , Issue 2 , July - December 2021 | Pages: 129-149 | Review paper  

 
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https://doi.org/10.17492/jpi.focus.v8i2.822106


Author Details ( * ) denotes Corresponding author

1. * Surbhi Gupta, Ph.D scholar, Department of Commerce, Delhi School of Economics, New Delhi, Delhi, India (surbhi08gpt@gmail.com)
2. Niti Bhasin, Professor, Department of Commerce, Delhi University, Delhi, India (nitisurydse@gmail.com)

The past three decades have witnessed a rapid increase in FDI inflows into developing countries which has been accompanied by a proliferation of bilateral investment treaties (BITs) concluded by these economies to signal their commitment to favourable treatment of foreign investors. However, whether BITs are major contributors towards increasing FDI in developing countries is still debatable because of the diverse results reported by different studies. The main objective of this paper is to critically review the existing studies available in this field so as to understand the role of BITs in attracting FDI into developing countries. This can provide useful insights to policymakers regarding the efficacy of BITs and to researchers for understanding existing research gaps. We find that the evidence on the impact of BITs on developing economies is inconclusive. While some of the early studies have shown weak impact of BITs, more recent studies indicate BITs having a strong impact on FDI inflows into developing countries.

Keywords

Bilateral investment treaties; Developing economies; Foreign direct investment.

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