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Islamic Azad University, Naraq Branch, Naraq, Iran , heidarimu@yahoo.com
Abstract:   (1668 Views)
In recent decades, bilateral/multilateral investment treaties have become the most important international legal mechanism to encourage foreign investors to attract foreign direct investment. Therefore, developing countries conclude bilateral investment treaties to attract foreign direct investments. In this regard, the present study was considered with the aim of investigating the impact of investment treaties on foreign direct investment in developing countries. Therefore, using the economic data of 21 developing countries in the period 2007 to 2022, the impact of investment treaties on foreign direct investment was investigated through an attraction model. The results showed: Bilateral investment treaties are positive and significant in all models, but between developing countries, they have a greater impact on foreign direct investment. By adding the variables of institutional quality, colonial relationship and the dummy variable of free trade agreement to the model, by concluding a bilateral investment treaty, the host country provides foreign investors with a foreign institutional framework that reliably commits them to their investment. protect better than the ability of domestic institutions. In this case, they are substitutes and a negative relationship is expected. On the other hand, concluding a bilateral investment treaty may act as a signaling device and announce to foreign investors that the country is serious about protecting their investment, so an interaction factor between bilateral investment treaty and institutional quality was added to the developed model. The interaction variable is negative in all groups of country pairs, indicating substitutability. But this result is positive and significant for the pair of developing countries.
     
Type of Study: Research | Subject: business and international finance
Received: Jun 19 2024 | Accepted: Sep 11 2024

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