Do Investment Agreements Matter?

The study estimates the impact of bilateral investment agreements (BITs) on FDI inflows into fifteen Asian developing countries for the period 1980-81 to 1999-2000 and examines whether signing an investment agreement with a developed country or a developing country matters. It also examines the impact of regional investment agreements, namely between APEC and ASEAN countries on FDI inflows. Panel data estimations are undertaken and the results show that signing BITs attracts FDI inflows. However, it is BITs with developed countries that increase FDI inflows as compared to BITs with developing countries. Results indicate that investment agreement between APEC countries has increased FDI inflows but that amongst ASEAN countries has had no impact.