City University of New York and Open Political Economy Network London
Marta Bengoa (Colin Powell School at City University of New York and Open Political Economy Network London) presented the highlights of the paper "Back to BITs and bites: Do trade and investment agreements promote Foreign Direct Investment within Latin America?" co-written in December 2017 with Blanca Sanchez-Robles (Universidad Nacional de Educación a Distancia) and Yochanan Shachmurove (City University of New York, University of Pennsylvania).
In this paper we investigate the differential impact of regional trade agreements (RTAs) and bilateral investment treaties (BITs) on intra-regional foreign direct investment (FDI) across Latin American countries from 1995 to 2012. We use an augmented gravity model in which we control for cross-country heterogeneity, multilateral resistances and endogeneity of RTAs/BITs. This study empirically reveals that belonging to a well-established RTAs, such as MERCOSUR, is significantly more effective than the enforcement of BITs, in fostering intra-regional FDI. We observe heterogeneous impacts within the bloc: BITs exert a positive but small effect, with an estimated increase in FDI stocks betwe 4-7.25%, for middle income countries such as Argentina, Brazil, Chile, Costa Rica, Mexico and Uruguay. However, we observe a non-significant effect on middle-low income countries as Bolivia, Colombia, Ecuador, Peru and Paraguay.
Our results suggest that political risk and the level of institutional development in the host country act as strong determinants of BITs effectiveness. Furthermore, we find that the main determinants affecting intra-bloc FDI are factor endowments and market potential. These findings shed clarity into the current debate on the effectiveness of BITs versus RTAs as an adequate mechanism to attract foreign investment.
Marta Bengoa is an Associate Professor of International Economics at the Colin Powell School at City University of New York (CUNY-CCNY). She is the former Chief of the Department of Economics and Business and the former Director of the M.A program in Economics, position that she held for six years at the Colin Powell School. She also serves as a senior fellow at the Open Political Economy Network in London and as an external research fellow at the Institute of International Economics in the University Jaume I and University of Valencia in Spain. She has been visiting scholar and visiting professor at the Department of Economics at Columbia University, University of California at Berkeley, the University of The Republic in Uruguay, University of Costa Rica, the University Federico Santa María (Chile) and Universidad of Azuay (Ecuador). She has also collaborated with the World Bank and United Nations on projects about economic growth in Latin America and has conducted fieldwork for the AECI (Spanish International Cooperation Agency).
Dr. Bengoa is an economist with wide-ranging research interests that span migration, trade, productivity growth and its link to R&D, foreign direct investment determinants, the computation of home bias in trade and its impact on foreign direct investment patterns. She has been quoted in media outlets as the Washington Post, Los Angeles Times, Politico, BBC etc. Dr. Bengoa has published widely on the interaction between openness and growth, productivity and development. She is currently focusing on the impact of bilateral investment agreements on Latin American foreign direct investment (FDI), and the trade diversion effects of non-tariff measures for Trans Pacific Partnership (TPP) countries and drivers of firm innovation and their effect on productivity growth. In parallel, she is studying the effects of hukou policy on the health outcomes of rural-to-urban migrants in China.
Dr. Bengoa is from Spain and lives in New York. She tutors, pro bono, immigrants who lack the resources to go to school in math and economics. She is a mentor to many women on a diverse array of issues. She is also a yogi and art lover who supports young local artists.
When: Monday, November 12, 2018, 12:30 pm - 2:00 pm
Where: Center for Interuniversity Research and Analysis of Organizations