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Does investor protection increase foreign direct investment? A meta‐analysis

Journal of Economic Surveys | 30 September 2020

Does investor protection increase foreign direct investment? A meta‐analysis

par Josef C. Brada, Zdenek Drabek, Ichiro Iwasaki

- Abstract

We undertake a meta‐analysis of the effects of international investment agreements for the protection of foreign investors on foreign direct investment using 2107 estimates drawn from 74 studies. Our meta‐analysis finds robust evidence that effect of international investment agreements is so small as to be considered zero. However, our results do not rule out the possibility that the effect of these agreements is, in fact, positive and that current research methods are insufficiently powerful or precise to identify the underlying genuine effect. FDI from developed countries appears to be more responsive to the existence of investment protection, and there is evidence of publication–selection bias in favour of studies that find a positive effect for investor protection.

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 source: Journal of Economic Surveys