Do the New Brazilian Agreements on Cooperation and Facilitation of Investment Promote Outward Foreign Direct Investment?
Year: 2024
Type: article
Abstract: Brazil has recently adopted a novel approach in investment protection, the Agreements on Cooperation and Facilitation of Investment (ACFIs) which aim inter alia at promoting Brazil’s rising outward FDI. Motivated by claims that ACFIs will not achieve this goal – while otherwise tying the hands of policy makers – we use data over the years 2001 to 2022 and apply a Synthetic Control approach to study whether outward Foreign Direct Investment Stock of Brazil in Mexico is spurred by the ratification of the Mexico–Brazil ACFI. The concerns about ACFIs cannot be dismissed as our evidence shows that the ACFI does not promote outward foreign direct investment (FDI), at least for the post-treatment years used in our analysis. The absence of an impact is most likely driven by the omission of substantive provisions and, most notably, of Investor-State Dispute Settlement, which would address the hold-up problem in international investment.
Authors: Christian Bellak, Markus Leibrecht
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4402158568