High-Income Developing Countries, FDI Outflows and the International Investment Agreement Regime

Yoram Z. Haftel*, Soo Yeon Kim, Lotem Bassan-Nygate

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

7 Scopus citations

Abstract

The international investment agreement regime (IIA Regime) is composed of thousands of IIAs and a system of investor–state dispute settlement. Historically, high-income developing countries (HIDCs) were part of the global South and thus ‘hosts’ of foreign direct investment (FDI). Increasingly, however, these countries have become ‘home’ to investors who are hosted and exposed to political risk abroad. Representing both home and host country interests simultaneously, how do HIDCs balance these crosscutting pressures? We argue that as the position of an HIDC shifts from mostly a recipient towards a sender of significant amounts of FDI, it will be more willing to provide protection to foreign investors at the expense of state regulatory space in its IIAs, thereby increasing its exposure to the IIA Regime. Employing an original data set that measures this exposure for sixty-four HIDCs over six decades, we first show that the degree of HIDC exposure to the IIA Regime varies a great deal. Using a general method of moments (GMM) analysis and controlling for a host of confounding factors, we demonstrate that, indeed, higher levels of FDI outflows as a share of the national economy result in greater exposure to the IIA Regime.

Original languageAmerican English
Pages (from-to)1-17
Number of pages17
JournalWorld Trade Review
Volume21
Issue number1
DOIs
StatePublished - 25 Feb 2022

Bibliographical note

Publisher Copyright:
Copyright © The Author(s), 2021. Published by Cambridge University Press

Keywords

  • The IIA regime
  • high income developing countries
  • outwards FDI

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