Bilateral investment treaties and foreign direct investment: Evidence from emerging market firms

Bilateral investment treaties (BITs) help developing countries attract foreign direct investment (FDI) from developed countries. However, whether BITs matter for emerging market firms’ (EMFs) FDI is unclear. This paper investigates how BITs affect EMFs’ FDI locations using conditional logit models with firm-level panel data from 2003 to 2015. The results show that BITs can help host countries attract FDI from emerging market countries. BITs work alongside good institutions to increase the attractiveness of FDI, irrespective of a host country being developed or not.