Bilateral Investment Treaties，Institutional Environment and Outward FDI Location Choices of Firms
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| Title | Bilateral Investment Treaties，Institutional Environment and Outward FDI Location Choices of Firms
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| Author | Fangyu Zong, Jiangyong Lu and Changqi Wu |
| Organization | Guanghua School of Management, Peking University |
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| Key Words | Bilateral Investment Treaties; Institutional Environment; Outward FDI; Location Choice |
| Abstract | Bilateral Investment Treaty（BIT）is a bilateral agreement signed by two countries and aims to promote and protect investments between them. As an institutional link of two countries, BIT provides different protections from that of institutional environment of the two countries, thus it may shape the FDI location decisions of the multinational firms. This study builds a framework of bilateral investment treaties, institutional environment and outward FDI location choices of firms. Using data of Chinese listed firms during 2003 to 2009, this paper shows that the influence of BITs depends on the institutional environment of signatory countries. First, BITs can substitute institutions in the host country and have more effect in promoting firms to invest in signatory countries with a worse institutional environment. Second, BITs can overcome the drawbacks of the institutions of home country. So compared with SOEs, non SOEs will prefer to invest in host countries which have signed BITs with their home country. |
| Serial Number | WP135 |
| Time | 2011-10-27 |
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