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Working paper

Влияние расторжения двусторонних инвестиционных соглашений Индии на привлекаемые прямые иностранные инвестиции

Do bilateral investment treaties (BIT) stimulate foreign direct investment (FDI) to a developing country? There is no clear answer to this question. We consider the consequences of BITs mass unilateral termination by India using the difference-in-difference (DD) method and the synthetic control method (SCM). The obtained estimates indicate that India’s BITs termination led to a significant decrease (by 46.1% per quarter on average) in attracting investment from countries with which the agreement was terminated. However, most of the decline in FDI inflows is due to the termination of the BITs with developed countries (-50.5% per quarter on average), but not with developing ones. SCM allows concluding that BITs termination did not affect Mauritius’s FDI, the largest investor to India. Using SCM, we establish no spillover effect for Singapore, the largest investor to India without BIT. It did not benefit from India’s BITs’ mass termination.