Institutional Policy of Foreign Investment in the Framework of Multilateral and Regional Investment Treaties

Document Type : Original Article

Authors
Mostafa Heidari Haratemeh 1
Vahid Araei 2
seyed mahmod eslami 2
1 Department of Economics, Naragh Branch, Islamic Azad University, Naragh, Iran
2 Department of Public Administration and Public Policy, Central Tehran Branch, Islamic Azad University, Tehran, Iran
10.30495/jik.2024.23252
Abstract
The present study, using the data of 22 countries in the period from 2011 to 2021, examined the approach of multilateral and regional investment treaties and its effect on foreign investment through an Gravity model. It also assesses the interaction between bilateral investment treaties and host country institutions and how this relationship differs between developed-developing partners and developing-developing partners. The results showed: a) The effect of control variables of large market and common language in all models is positive and significant, but the effect of distance variable is negative and significant. The population variables of the host country and the neighborhood, except for the pair of developing countries, are not significant determinants for the flow of foreign direct investment. Bilateral investment treaties are positive and significant in all models, but between developing countries, they have a greater impact on foreign direct investment. b) By adding the variables of institutional quality, the colonial relationship and the dummy variable free trade agreement, to the model, by Conclusion a bilateral investment treaty, the host country provides foreign investors with a foreign institutional framework that reliably commits to protect their investment better than domestic institutions can. In this case, they are substitutes and a negative relationship is expected.
Keywords
" Investment Treaty"
"Foreign Investment"
"Gravity Model"
" Institutional Policy "
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