Bilateral Investment Treaties and Foreign Direct Investment: A Political Analysis

Tim Büthe, Helen V. Milner

Research output: Chapter in Book/Report/Conference proceedingChapter

80 Scopus citations


This chapter examines the effect of bilateral investment treaties (BITs) on inward foreign direct investment flows (FDI) into least developed countries (LDCs). It suggests that BITs should not only boost FDI between the signatory states but more broadly increase inward FDI into the developing country signatory. The chapter begins with a discussion of the often narrow, legalistic conceptualization of BITs in previous studies, as well as previous dyadic and monadic empirical findings. It presents a statistical analysis of inward FDI flows into 122 developing countries with a population of more than 1 million from 1970 to 2000, and a qualitative analysis of the hypothesized causal mechanisms. It shows that the positive correlation between BITs and subsequent FDI is driven by the hypothesized causal mechanisms.

Original languageEnglish (US)
Title of host publicationThe Effect of Treaties on Foreign Direct Investment
Subtitle of host publicationBilateral Investment Treaties, Double Taxation Treaties, and Investment Flows
PublisherOxford University Press
ISBN (Electronic)9780199855322
ISBN (Print)9780195388534
StatePublished - May 1 2009

All Science Journal Classification (ASJC) codes

  • General Social Sciences


  • BIT
  • Developing countries
  • FDI
  • Investment flows
  • LDC
  • Least developed countries


Dive into the research topics of 'Bilateral Investment Treaties and Foreign Direct Investment: A Political Analysis'. Together they form a unique fingerprint.

Cite this