Beyond FDI: The Influence of Bilateral Investment Treaties on Debt
37 Pages Posted: 5 Dec 2013
Date Written: October 4, 2012
Abstract
This paper examines theoretically and empirically the role of political risk guarantees, which bilateral investment treaties serve, in debt accumulation in low and middle income countries. The paper empirically finds that signed bilateral investment treaties with OECD countries have a positive influence on total and guaranteed debt accumulation, under system GMM and OLS estimation methodologies. Results suggest that the role of bilateral investment treaties extends beyond attracting FDI to international lending.
Keywords: debt, debt guarantees, political risk, default risk, bilateral investment treaties
JEL Classification: F34, G15, K33
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