The Effect of Treaties on Foreign Direct Investment: Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows

An Analysis of Double Taxation Treaties and their Effect on Foreign Direct Investment

Double taxation treaties are intended to eliminate double taxation, thereby encouraging FDI, and prevent tax evasion, which previous literature argues will have a negative effect on FDI. Using a segmented data set and matching econometrics, I show that double taxation treaties have no effect on FDI from developed to less developed countries and substantiate why: Developed countries unilaterally...

The Impact of Double Taxation Treaties on Foreign Direct Investment: Evidence from Large Dyadic Panel Data

To increase inward foreign direct investment (FDI), policy makers increasingly resort to the ratification of double taxation treaties (DTTs). However, the effectiveness of DTTs in inducing higher FDI is still open to debate, as the empirical evidence of existing studies is anything but conclusive. In contrast to earlier approaches, we use a largely unpublished dataset on bilateral FDI stocks, c...

Bilateral Investment Treaties and Domestic Institutions

Bilateral Investment Treaties and International Integration

This paper studies how bilateral investment treaties (BITs) affect the trade integration between partner countries. While the overall results from the full sample show that BIT signing is associated with an increase in overall imports that is generally smaller than the effect of WTO membership, BIT signing is found to have a considerable effect on capital goods imports and on imports of differe...

Tax Treaties and Foreign Direct Investment: A Network Approach

Multinational investors often reduce tax on dividends by using indirect investment routes. This paper constructs a tax rate matrix to represent a real-world network of tax treaties between 70 countries and develops network algorithms to study the structure of tax-minimizing (direct or indirect) investment routes in the tax treaty network. The treaty shopping arbitrage rate, defined as the diffe...