From Jason Yackee, on SSRN, a new paper entitled "Do Bilateral Investment Treaties Promote Foreign Direct Investment? Some Hints from Alternative Evidence":
In this article I present a multi-method examination of whether bilateral investment treaties, or BITs, are likely to promote inflows of foreign direct investment. Using regression analysis I show that BITs are not meaningfully correlated with measures of political risk, and using survey evidence I show that providers of political risk insurance do not reliably take BITs into account when deciding the terms of insurance. Nor do in-house counsel in large U.S. corporations view BITs as playing a major role in their companies' foreign investment decisions. In contrast to existing empirical studies, which claim to prove that BITs can have massive positive impacts on FDI, my results suggest that such results are probably spurious. BITs are unlikely to be a significant driver of foreign investment.
I was particularly interested in the following sentence: "Nor do in-house counsel in large U.S. corporations view BITs as playing a major role in their companies' foreign investment decisions." My question is, who is pressing for BITs (or investment chapters of FTAs)? Clearly, somebody thinks they are important. But if the lawyers at "large U.S. corporations" don't care all that much, where does the push come from?
