Abstract
The 2009 recession stiffened economic, financial, and business
environment in the developed economies. This caused scarcity
of funds available for investment abroad. The ensuing financial
chaos also increased the skepticism of the multinationals
concerning the loss of property in the developing nations. A
Bilateral Investment Treaty (BIT) by imposing reciprocal
protection of investment among the signatories shall reduce this
uncertainty and encourage Foreign Direct Investment (FDI).
The current research analyses BITs influence on inward FDI to
the Middle East and North African (MENA) developing states.
Multinational investment into a host developing economy is
determined by the general FDI theoretical framework. Hence,
BITs alone cannot be sufficient for attracting overseas
investors. Thus, size of the host market, human capital and
infrastructure availability, business facilitation, the openness of
the economy, its economic/financial development,
macroeconomic stability, and trade agreements etcetera are also
considered. Exploiting annual observations for a panel of ten
MENA nations from 1990 to 2016 the results through random
effect panel method clearly manifest the importance of market
size, level of economic and financial development,
macroeconomic stability and bilateral investment treaties for
overseas investors. The sway of a ratified BIT is found to be
greater in comparison to just a signed BIT. On the contrary,
trade agreements, availability of infrastructure and human
capital, economic liberalization of the host etc. fails to
significantly influence investors from abroad. A time trend
employed to cover for any time increasing unobserved
phenomenon equally affecting all the countries was also
insignificant.
Mumtaz Hussain Shah. (2018) Bilateral Investment Treaties and Multinational Investors: Evidence from FDI in the MENA States, Paradigms , Vol 12, Issue 1.
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