6 Investment Treaties, Foreign Investment, and Development

Subject(s):

Definition of investment — Investor — Treaties, interpretation — Treaty provisions

This chapter examines the aggregate economic effects of investment treaties, focusing on their impact on investment flows and economic development. The first section reviews studies of investment treaties’ investment protection provisions on foreign investment. The second section examines the impact of investment treaties on governance. Both sections outline the findings of existing empirical studies, assess the relevance of these findings, and discuss the methodological and measurement challenges that make it difficult to draw strong conclusions from the existing literature. The third section examines the impact of the investment liberalization provisions of investment treaties on foreign investment and development. These provisions, which are increasingly common, could have important, yet largely unexplored, macroeconomic effects.