The effects of preferential trading agreements on bilateral foreign direct investment

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The Effects of Preferential Trading Agreements on

Bilateral Foreign Direct Investment

Bachelor Thesis in Economics and Finance

University of Amsterdam

Faculty of Economics and Business

Author:

Andrius Vainilavicius

Student number:

10618635

Date:

July 15, 2016

Field:

Macroeconomics, Trading Agreements

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Statement of Originality

This document is written by Andrius Vainilavicius who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document are original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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1 Abstract: Academic literature associates preferential trading agreement formation with positive effects on foreign

direct investment flows. This paper analyses the effects that engaging in preferential trading has on bilateral FDI inflows in the period of 2001-2012. In order to do so an extensive dataset of bilateral FDI and a list of PTAs are examined in a panel data setting. To determine what the drivers of this relationship are, the countries examined are divided into developed and developing countries. Four different country pair groups, namely developed-developed; developed-developing; developing-developing and developing-developed, are investigated. The research finds that bilateral FDI is positively affected by PTA participants’ GDP and negatively affected by the host country’s population. Furthermore, a positive relationship is identified between two developing countries starting preferential trading and FDI flows. However, no statistically significant effect is identified for other country pair types.

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Introduction

The phenomenon of the exponentially growing number of preferential trade agreements

(PTAs) is known as ‘regionalism’ and has for two decades represented an ongoing social scientific puzzle for scholars in international economics (Buge, 2014). However, while the PTA impacts on trade have received considerable attention, the effects they have on foreign direct investment (FDI) are understood less well. The aim of this paper is to test the empirical relationship between entering a PTA and bilateral FDI flows. In order to do so, an extensive dataset of bilateral FDI flows and PTAs will be compiled. Afterwards, a panel data with fixed effects will be employed to test the effects that starting preferential trading has on FDI. The research finds positive effects of PTAs on FDI flows for developing country pairs, but no statistically significant effects for other country pairs. The contribution of this paper is that it specifically focuses on bilateral FDI and attempts to differentiate the effects of PTAs for developing and developed countries.

The central research question of thesis is: how did preferential trading agreements affect

bilateral foreign direct investment in the period of 2001-2012?

In order to provide an answer for this question, the thesis will be structured as follows: the next section is literature review in which, firstly, FDI, PTAs and their development will be defined and, secondly, the researches already done on this topic will be discussed. This section is followed by the methodology where the model, its specifications and data used for the empirical research will be introduced. Then, the results obtained will be presented together with limitations, where the reasons affecting the results will be explained. The last section of the paper will conclude the research and suggest possible future topics of interest.

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Literature review

This section of the paper attempts to introduce the background information on PTAs and their increasing popularity, ties with FDI using studies done on the subject.

PTAs, FDI and Regionalism

Preferential Trade Agreements (PTAs) are preferential trade liberalization agreements among a group of countries involving favourable conduct of trade relative to the rest of the world. It is worthwhile noting that PTAs do not have to focus only on trade, but can, and increasingly do, have non-trade provisions covering investment, services, competition policy, government procurement, e-commerce, labour and environmental standards (Adams, Dee & Gali, 2003). Most PTAs are established as multilateral agreements between countries from the same geographical area; therefore, they are called regional trade agreements (RTA) (Srinivasan, 2012). Examples of such RTAs include European Union (EU), Mercado Común del Sur (Mercosur) and North American Free Trade Area (NAFTA). It is not uncommon for regional trade agreement participants to grant each other tariff-free market access making it a free trade agreement (FTA). What is more, some FTAs grow into Customs Unions (CU). That is, they enter into a free trade agreement and apply a common set of external tariffs to imports from the rest of the world (Andriamananjara, 2011).

Defined by the OECD (2008), foreign direct investment reflects the objective of establishing a lasting interest by an enterprise (direct investor) in an enterprise (direct investment enterprise) that is resident in an economy other than that of the direct investor. The lasting interest implies the existence of a long-term relationship between the direct investor and the direct investment enterprise and a significant degree of influence on the management of the enterprise. FDI is categorized into two types, namely - horizontal and vertical. According to the theory defined by Yeyati, Stein and Daude (2003) horizontal FDI arises when a market is defined by significant barriers to trade, but also presence of economies of scale. In cases like that, companies find it attractive to expand internationally by replicating their home country business model abroad.

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Such investments are considered to be ‘tariff-jumping’ and they are substitutes for trade since they serve their respective domestic markets with the foreign establishments. On the contrary, vertical FDI is explained by cross-country differences in relative factor endowment and the resulting factor price differentials (Grossman & Helpman, 1991). In their empirical research, Grossman and Helpman (1991) explain that vertical FDI occurs when multinational companies are taking advantage of the most cost efficient factor inputs by fragmenting the production process. Labour intensive stage of production is outsourced to the most cost-efficient country and then final goods are re-exported back to the home country.

According to Ethier (1998b), the first regional initiatives began in 1950s and 1960s, but they were not long lived, except in Western Europe with the establishment of the European Community. Such initiatives are referred to as the ‘old regionalism’. However, since the end of the cold war in the late 1980s, subregional organizations have become more common. This trend is, in part, a response to the fragmentation of great-power blocs, especially in Eastern Europe and Central Asia, but it also reflects the need to react to the pressures created by economic globalization through local means (Vayrynen, 2003). To defend the point made in his theoretical research, Vayrynen uses the examples of Visegrad Group, Shanghai Group and Mercosur. He continues by explaining that this ‘new regionalism’ is characterized by an exponentially growing number of PTAs and FDI amount. In addition, in his theoretical article Ethier (1998a) argues that, formerly, direct investment was mostly US manufacturing companies expanding horizontally into other developed markets, but now other developed countries have increasingly started investing in US and into one another. Therefore, the simultaneous trends of growing preferential trading agreements and foreign direct investment have left some researchers wondering if there is causality beyond correlation and speculate whether PTAs are merely economical instruments designed to attract FDI (Yeyati et al. 2003; Buthe & Milner 2010). The main intent of this paper is to test whether a PTA entering into force can increase foreign direct investment into the country.

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6 Previous research

Although preferential trading agreements have been examined quite extensively with respect to the benefits they bring to trade liberalisation and increase in volume of trade, the effect it has on FDI is less clear. According to the empirical research on bilateral trade done by Eicher and Henn (2011), the answer of whether a PTA increases bilateral trade is positive and unambiguous. However, recent trade agreements seem to be not that much about trade. One of the possible explanations for the popularity of PTAs is suggested in the empirical research done by Buthe and Milner (2008). After a statistical analysis they concluded that PTAs provide mechanisms for making commitments to foreign investors about the treatment of their assets and countries use them as an instrument to compete for FDI. Such views are also supported by a research conducted by Medvedev (2010). In his paper, he states that by the middle of 2004, 229 preferential trading agreements were in effect between 174 countries with an average country having signed at least five agreements. However, trade flows between PTA members accounted only for one-third of the world total trade. Therefore, Medvedev (2010) comes to a conclusion that the spur of new PTAs must have come from reasons beyond pure market access and attracting foreign investment might have been one of those reasons.

First attempts of studying the link between PTAs and FDI were centered on deeply integrated PTAs, namely EU, NAFTA and Mercosur. One of the first studies to do so was conducted by Pain (1996). Pain (1996) attempts to quantify the impact of the European Internal Market programme on the sectoral and geographical pattern of FDI by UK corporations. The results obtained by the author suggest that there was a significant increase in the intra-EU investments by UK companies and some weak evidence of investment diversion from US since 1990. Similar conclusions were found by Lim (2001). The researcher found that in the four year period after regional integration arrangements Portugal, Spain (EU), Brazil (Mercosur) and Mexico (NAFTA) experienced two times higher FDI inflows (measured in FDI to GDP ratio). Whereas for Argentina (Mercosur) it increased by 70%. Two years later, Yeyati, Stein and Daude (2003) published a paper in which they discussed the effect of regional integration agreements on the FDI stock. In order to quantify this effect, the authors used a panel data analysis with

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pair fixed effects. Observations of 20 FDI source countries and 60 host countries from 1982 through 1998 were used. Yeyati et al. (2003) finds that, on average, joining a PTA with the FDI source country increased bilateral FDI stocks by 27%. On the contrary, literature review carried out by Lederman, Maloney and Serven (2005) finds that FDI inflow rate into Mexico increased in the first two years after joining NAFTA, however, it leveled off shortly afterwards. In the case of EU accession, the researchers inferred Lim’s (2001) conclusions about Spain and Portugal, but found no change in FDI inflows for Greece. Lederman et al. (2005) compared Greece to Chile, a country with an absence of a FTA which, nonetheless, experienced persistently large FDI inflows in the same period, and deduced that a FTA is a compliment, rather than a substitute, for an investment-friendly policy and institutional environment.

Buthe and Milner (2008) examine the influence of international trading agreements on foreign direct investment. They conducted a panel analysis consisting 122 developing countries in the sample and found strong empirical evidence to support the statement that the greater the number PTAs a country is a party, the higher FDI inflows into the country are. Similar results were also obtained by Medvedev (2012). After investigating a wide sample of PTAs the study established a positive relationship between preferential trade liberalisation and FDI inflows. Medvedev made some noteworthy remarks about the outcome of his research. He concluded that FDI benefits from PTAs are increasing with the size and proximity to the preferential trading partners. However, this relationship was driven by the presence of developing countries in the sample. Such conclusions suggest that gains, in terms of FDI, are not equal for preferential partners. Yeyati et al. (2003) confirms this by explaining that countries with higher openness and different factor endowments than their PTA partners benefit more, as they tend to receive vertical FDI which responds more favourably to integration. Similarly, in the research focusing on Europe Agreement ratification in 1990s carried out by Baltagi, Egger and Pfaffermayr (2008), it is verified that preferential trade liberalization has caused a strong FDI reallocation from Western Europe to Central and Eastern Europe. Therefore, in order to understand FDI gains better, the aim of this paper is to compare the benefits in terms of foreign direct investment countries receive by engaging in preferential trading with either developing or developed preferential trading partner. In order to determine these effects, this research will employ 3-dimensional

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gravity model in fixed effects panel data setting. In the following section the model will be described in greater detail.

Methodology

In order to test the effects of engaging in preferential trading on FDI inflows a gravity model will be used. The gravity model is the key econometric technique used to examine the determinants of bilateral trade flows (Adams et al., 2003). Fortunately, according to book written by Navaretti, Venables & Barry (2004), the cross-country pattern of FDI is successfully approximated by the gravity model as well. The model has been developed as an analogy of the law of gravity in physics and first used by Tinbergen in 1962. Just as gravity in physics, the model states that FDI between two countries is positively related to the size of their economies and inversely related to the geographical distance between them (Adams et al. 2003). Since then, the model has been model has been widely used and augmented by adding extra explanatory variables to account for country specific factors such as population, common language, colonial history, openness for trade, etc.

Due to longitudinal origin of the data the standard Ordinary Least Squares (OLS) estimator is a poor econometric approach as it does not deal with the heterogeneous issue of time and space. Therefore, a panel data analysis is an appropriate tool of research.

Random vs. Fixed effects

There are two alternative ways of accounting for unobserved heterogeneity, namely, fixed effects and random effects. The random effects model requires an impractical orthogonality assumption - that is, it requires that the unobserved effects be uncorrelated with the included explanatory variables (Adams et al., 2003). As this assumption is highly unlikely to be realistic given that unobserved effects such as colonial links or whether a country is in an island are likely to affect the explanatory variables used in this research, fixed effects approach will be used. Fixed effects

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allow time-invariant pair-specific variables such as distance, borders, common language, or colonial links to be automatically included, in order to isolate the dynamic effects (Yeyati et al., 2003). This will allow testing the effects that entering a PTA has on bilateral FDI in a modified version of the gravity model as all the time-invariant country-specific effects will be captured by a fixed effect term.

Regression

The basic specification of the regression is as follows:

FDIij,t=β1GDPi,t+ β2GDPj,t+ β3Popi,t+ β4PTA*Type1+

+β5PTA*Type2+β6PTA*Type3+β7PTA*Type4+ β8BIT+Fij,t+ε

Where the dependant variable is FDIij,t. It is bilateral FDI inflow at time t into the country i and j

denotes country of origin. This is the variable that will be regressed in panel data setting in order to determine the effects that explanatory variables have on it.

GDP is the first explanatory variable denoting gross domestic product (i - home country, j -

country of FDI origin) indicating the size of the economies. A research done by Chakrabarti (2001) cites 15 past researches that find a positive relationship between FDI and market size. He also concluded that “market size has, by far, been the single most widely accepted … significant determinant of FDI flows.” Therefore, this paper will use GDP as a proxy of market size and expect the sign of the coefficient to be positive.

The next explanatory variable in the equation is Pop. It denotes population of the home country. According to Kien (2009), a large population may indicate a big domestic market and large resource endowments, which could translate into less reliance on the international market and a negative effect on FDI. On the other hand, he also argues that a large domestic market has more potential for economies of scale and this feature could attract more FDI of vertical type. Hence, the sign of the coefficient β3 could be either negative or positive.

PTA is a dummy variable constructed to capture the event of starting a preferential trading

agreement. The variable takes up values of either 0 or 1. It is 0 up to the year when the PTA enters into force and then is recorded as 1. Past researches done by Yeyati, et al. (2003) and

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Buge (2014) suggest that PTAs have positive effect on bilateral FDI flows and in this paper it is expected to have similar results.

Type1, Type2, Type3 and Type4 are dummy variables as well. They are constructed to capture

the type of countries engaging in preferential trading. Blonigen and Wang (2004) in their statistical analysis argue that there are structural and systemic differences regarding FDI in developed and developing countries and pooling of both country types in the empirical analysis of FDI may misrepresent the true relationship for both sets of countries if the underlying relationships are indeed different. Therefore, this research will attempt to differentiate between the two types of countries. Type1 indicates two developed countries, Type2 - a developed country engaging in preferential trading with a developing one; Type3 - two developing countries; Type4 – a developing country entering a PTA with a developed one. Each country is assigned a developed or developing status based on United Nations report on World Economic Situation and Prospects. 2007 year report is chosen as it is the median year of the research. Since the report divides countries into three categories – developed, transitioning and developing – transitioning countries were included to the group of developed countries due to simplicity.

Since the Type dummy variable is in multiplication with the dummy variable PTA and the panel analysis is 3-dimensional, estimation will provide separate coefficient estimations for different possible country pair types. Although most of the previous empirical analysis such as Buge’s (2014) or Buthe’s and Milner’s (2008) support that developing countries gain more from PTAs than developed ones, based on econometric estimation Yose (2009) claims that negotiation process of a PTA tend to give more bargaining position to the more powerful economies in order to pursue their interests and put pressure on the less powerful ones. In the empirical analysis of this paper it is expected that the developing countries would gain more from PTAs in terms of FDI due to different factor endowments than developed countries which would incentivise FDI of the vertical nature.

The next variable in the regression is BIT. It is a control dummy variable denoting bilateral investment treaties. Such treaties are thought to affect foreign direct investment positively; therefore, it is included in the analysis to isolate the effect of PTA. According to Buge (2014), BITs provide a legal framework for bilateral investment regulation and serve a dual function. Firstly, they reduce risk and uncertainty from the perspective of the investing country and,

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secondly, it serves as a signalling device for credibility and commitment to protect foreign investors.

Fij,t is a variable capturing time-invariant pair-specific effects between the countries originating

from the fixed effects method of analysis.

εij,t is an error term.

Data

In the research carried out by Buge (2014), the author states that FDI data is considerably more incomplete and more highly aggregated than, for instance, data on international trade. Panel data disaggregated into ‘country-of-origin’ and ‘country-of-destination’ is the exception rather than the norm. The data on bilateral FDI used in this research was obtained from UNCTAD database. According to the report provided by UNCTAD the data are collected from national sources and in cases where data is not available from national sources, data from partner countries (mirror data) as well as from other international organizations is used. Some FDI inflows have a negative sign (disinvestment) due to the fact that it is provided on net basis. It means that at least one of the three components of FDI, namely equity capital, reinvested earnings or intra-company loans, is negative and not offset by the amounts of the remaining components. Since the data is provided at the country-level, an extensive panel dataset with all possible country pairs covering the period from 2001 to 2012 is formed. Due to the fact that countries mainly report only non-zero flows, this research follows Buge’s (2014) approach and interpret missing values as non-zeros. He explains that it is not surprising that most of the world’s countries do not have outward FDI flows into most other countries. Consequently, the investment flow panel is characterized by a significant amount of zeros.

However, the dataset has some shortcomings. One of them is that the data provided for some countries is sporadic. Some countries, namely Hong Kong, Ireland, Norway, Saint Kitts and Nevis, Switzerland, United Arab Emirates and United Kingdom, only report large inflows. To deal with this, only country pairs with the reported inflows were used in the research, while other country pairs were removed. Due to this, the panel is unbalanced. Furthermore, some developing countries do not provide bilateral data on FDI inflows. That is, the country of origin is unspecified. To deal with this shortcoming such countries were excluded from the panel. A

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significant amount of countries also have up to 10% of FDI with unspecified country-of-origin. Therefore, the unspecified FDI is not included in the panel, as there is no way of determining it’s source. Despite these flaws in the dataset, it is the most complete source available for bilateral FDI.

The PTAs used in this research were obtained from the WorldBank Global Preferential Trade Agreements Database. Agreements prior to 2001 are considered as well. In situations where a country was a part of some RTA, but entered a new agreement with the country which was also part of that RTA, the more recent PTA was recorded as ‘1’ in the dataset (E.g. EU accession of Poland (2004), Romania (2007), etc.). Besides, once a country joins an RTA, it also starts preferential trading with the RTA’s preferential trading partners; hence ‘1’ was recorded for such country pairs as well on the year that the RTA agreement entered into force. The BITs for the research were obtained from UNCTAD Investment Policy Hub database. The BITs that entered into force from 2001 and 2012 are included in the research.

All the PTAs used in the research can be found in Appendix B, the list of BITs in the Appendix C and the data sources in Appendix D. The following section of the paper is where the results found in the empirical analysis are presented and the research question: how did preferential trading agreements affect bilateral foreign direct investment in the period of 2001-2012 is attempted to answer.

Results

To begin with, a Durbin-Wu-Hausman test is performed. It tests for the orthogonality of the random effects and the regressors, and is thus a test for misspecification (Adams, et al. 2003). After running the test, a chi2(5) value of 356.13 is obtained, which is more than the critical value of 11.07 (5% significance level). This gives the p-value equal to 0.0000. Therefore, the test statistic is deemed significant, revealing a high importance of individual specific effects and their correlation with the regressor. Consequently, it is concluded that random effects estimator is inconsistent given our data and fixed effects specification of the panel is indeed the appropriate one. The test can be found in the Appendix E. Then we plot the yearly FDI data to check for any

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irregularities (Graph 1). The summarized statistics for FDI provide a maximum value of 117617.9 and a minimum value of -59599.37. The maximum value is from the year 2011 FDI flowing from the United States to Luxembourg. In 2009 this FDI direction was also the highest with the value of 108697.3. The minimum value is inflows into Luxembourg from the United Kingdom. Therefore, the FDI inflows into Luxembourg might be more volatile, but not irregular.

Graph 1. Scatter plot of bilateral FDI inflows over the years.

Afterwards, the regression specified in the theoretical framework is run. The results obtained from it are presented in the table below:

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14 Independent variable: Coefficient: Standard Error: T - value: P - value:

GDP host .0001021 0.00000661 15.45 0.000 Population -.0007941 0.0003076 -2.58 0.010 GDP source .0001131 0.0000059 19.18 0.000 PTA*Type1 -10.7104 21.35935 -0.50 0.616 PTA*Type2 -11.79104 23.40991 -0.50 0.614 PTA*Type3 221.3114 40.42998 5.47 0.000 PTA*Type4 -15.93717 23.08322 -0.69 0.490 BIT -23.82044 16.71852 -1.42 0.154 Intercept -13.19235 11.61111 -1.14 0.256 F(25391, 274298) = 7.27 Prob > F = 0.0000

Number of observations = 299698 Number of groups = 25392

According to Stata Manual, using xtreg command provides R2 which is obtained by only fitting a mean deviated model where the effects of the groups (all of the dummy variables) are assumed to be fixed quantities. So, all of the effects for the groups are simply subtracted out of the model, and no attempt is made to quantify their overall effect on the fit of the model. Therefore, in order to see a more clear R2 for goodness of fit of the model, areg command is performed and the value of 0.4189 is received for R2 (adjusted R2 = 0.3651).F (25391, 274298) tests the joint significance of the fixed effects intercepts. Given the p-value of 0.0000 the test is statistically significant and it means that the fixed effects are non-zero and the pooled OLS or random effects models would provide biased results.

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The regression provided statistically significant coefficients for GDP of the FDI host country, Population of the host country, GDP of the FDI source country and PTA*Type3 dummy variable. Given our data, it found that on average 1 additional million of the host country in GDP (measured in US dollars) increased the yearly bilateral FDI inflows by 102.1$. Simultaneously, 1 additional million of the source country in GDP amplified FDI inflows on average by 113.1$. Both of these coefficients are found to be statistically significant (p-values = 0.000) and in accordance with the theoretical research of Chakrabarti (2001). The independent variable ‘population’ was determined to have a negative effect on FDI flows: coefficient of -.0007941 means that each additional million of population in the country reduces bilateral FDI flows on average by 794.1$. The coefficient was found to be statistically significant at 1% significance level (value = 0.01). The only statistically significant dummy variable was PTA*Type3 with p-value of 0.000. This variable indicated two developing countries entering into preferential trading. The research found that on average bilateral FDI flows increased by 221.31 million dollars. The dummy variables PTA*Type1, PTA*Type2, PTA*Type4 and BIT, counter intuitively to the expectations and previous studies, were found to be negative. However, none of them are statistically significant with p values above 0.1. Therefore, answering the research question of how preferential trading agreements affected bilateral foreign direct investment in the period of 2001-2012 this research concludes that only developing countries entering a PTA with other developing countries were better off, while other types of PTAs had no statistically significant effects on FDI flows. The possible reasons for getting such results will be covered in the following section ‘Limitations’.

Limitations

To begin with, there were downward pressures from PTAs which entered into force before 2001. In such cases, the dummy variable PTA was defined by a value of ‘1’ in the whole timeframe considered in this research. Therefore, the regression would not be able to identify the effect that entering into preferential trading would have on the FDI flows. Not considering these PTAs would affect other coefficients as the FDI flows would be attributed to other variables. What is more, similar pressures arise due to countries that enter PTAs with countries even though they were already part of some RTA. In such cases the more recent PTAs were considered and this

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should create downward pressure for the PTA coefficients. Furthermore, possibly the greatest limitation of this research is the timeframe considered since the data on bilateral FDI flows was only available for the period from 2001-2012. The timeframe considered is characterized by global four year upward trend in FDI flows reaching the peak of 2 trillion US dollars in 2007 followed by the most severe crisis since the Great Depression. During the crisis FDI flows began contracting and during 2010 global FDI levels stagnated just above 1 trillion US dollars - a 40% drop comparing it with 2007 (Poulsen & Hufbauer, 2011). It seems consistent with this research’s data as well presented below (Graph 2). Therefore, maybe the levels of FDI themselves dropped, but it was not due to PTAs. This would explain why the regression provided, although insignificant, but negative coefficients for 3 out of 4 PTA groups. Poulsen & Hufbauer (2011) also specify that FDI flows to and from developed countries experienced higher declines than developing economies. This might explain why the regression provided positive results for PTA contracts entered by developing countries. Last but not least, since in the dataset for this research the PTA dummy variable obtained a value of ‘1’ on the date that the PTA entered into force, the problem arises as the FDI flows might be affected already on the date of signing the PTA. Buge (2014) argues that signing a PTA might already be a credible signalling device for foreign investors that the host country is committed to protecting their investments. Consequently, this would increase the bilateral FDI flows before the agreement comes into force and would affect the PTA coefficients obtained by this research by applying more downward pressure.

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Graph 2. Scatter plot of average yearly bilateral FDI inflows.

Conclusions

This paper attempted to answer how preferential trading agreements affected bilateral FDI in the period of 2001-2012 using a panel data regression with fixed effects. While the timeframe considered is rather volatile for FDI flows, a positive relationship between starting preferential trading and bilateral FDI is found for two developing countries group. Other country pairs, namely developed - developing; developed - developed and developing - developed, have no statistically significant effects for entering a PTA and FDI flows. The research also confirmed the theoretical study by Chakrabarti (2001) and found a positive relationship for the GDP of the countries and the GDP of their PTA partners and bilateral FDI flows. Whereas the population of the country was found to have negative effects for the FDI flows, possibly verifying the point raised by Kien (2009).

For future researches it would be worthwhile to replicate the regressions using FDI stocks instead of flows as they are less volatile and examine a longer time period, especially the 90s

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when a lot of PTAs took place. What is more, examining the effects that signing a PTA might have on FDI and comparing them to when the PTAs enter force might also lead to insightful conclusions. Answering these questions will likely shed additional light on the empirical relationship between PTAs and FDI.

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Appendix A: The list of countries included in the research

Afghanistan Albania Algeria Angola Anguilla

Antigua and Barbuda Argentina Armenia Aruba Australia Austria Azerbaijan Bahamas Bahrain Bangladesh Barbados Belarus Belgium Belize Benin Bermuda Bhutan Bolivia

Bosnia and Herzegovina Botswana Brazil Brunei Bulgaria Burkina Faso Burundi Cambodia Cameroon Canada Cape Verde Cayman Islands Central African Republic Chad Chile China Colombia Comoros Congo

Congo, The Democratic Republic of Costa Rica Cote D’Ivoire Croatia Cyprus Czech Republic Denmark Djibouti Dominica Dominican Republic Ecuador El Salvador Equatorial Guinea Eritrea Estonia Ethiopia Fiji Finland France French Polynesia Gabon Gambia Georgia Germany Ghana Greece Guatemala Guinea Guinea – Bissau Haiti Honduras Hong Kong Hungary Iceland India Indonesia Iran Iraq Ireland Italy Jamaica Japan Jordan Kazakhstan Kenya Korea, Republic of Kuwait Kyrgyzstan Latvia Lebanon Liberia Libya Lithuania Luxembourg Macao Macedonia, FYR Madagascar Malaysia Maldives Mali Malta Marshall Islands Mauritania Mauritius Mexico Mongolia Morocco Mozambique Myanmar Namibia Nepal Netherlands Netherlands Antilles New Caledonia New Zealand Nicaragua Norway Oman Pakistan Panama

Papua New Guinea Paraguay Peru Poland Portugal Romania Russian Federation Saint Kitts and Nevis Samoa Saudi Arabia Senegal Seychelles Sierra Leone Singapore Slovakia Slovenia South Africa Spain Sri Lanka Sudan Swaziland Sweden Switzerland Syria Taiwan Tajikistan Tanzania Thailand Togo

Trinidad and Tobago Tunisia

Turkey Uganda Ukraine

United Arab Emirates United Kingdom United States Virgin Islands, British Yemen

Zambia Zimbabwe

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22

Appendix B: The list of PTAs included in the research

Name/Country-Country (Year came into force)

AEC 1991

Afghanistan - India 2003 Agadir (Egypt - Jordan - Morocco - Tunisia) 2004 Albania - Turkey 2008 Andean Community (CAN) 1996

Arab Maghreb Union 1989 Armenia - Georgia 1998 Armenia - Kazakhstan 2001 Armenia - Kyrgyz 1995 Armenia - Russia 1993 Armenia - Ukraine 1996 Armenia-Iran 1997 ASEAN - Australia - New Zealand 2009 ASEAN - China 2003 ASEAN - India 2003 ASEAN - Korea 2006 ASEAN (AFTA) 1992 ASEAN-Japan 2003 Australia - Chile 2009 Australia - New Zealand (ANZCERTA) 1983 Australia - Papua New Guinea (PATCRA) 1977 Australia - Thailand 2005 Azerbaijan - Georgia 1996 Azerbaijan - Ukraine 1996 Bahrain - Jordan 2001 Bangladesh - India 2006 Belarus - Ukraine 2006 Bhutan-India 2006 Bolivia - Chile 1995 Brunei - Japan 2008 Canada - Chile 1997 Canada - Costa Rica 2002 Canada - EFTA 2009 Canada - Peru 2009

CARICOM - Colombia 1994 CARICOM - Costa Rica 2004 CARICOM - Dominican Republic 1999 CARICOM 1973 CEFTA 2006 2007 CEMAC 1999

Central America - Mexico 2001

Central American Common Market (CACM) 1961 Chile - China 1997 Chile - Costa Rica (Central America) 2002

Chile - El Salvador (Central America) 2002 Chile - India 2007 Chile - Japan 2007 Chile - Korea 2004 Chile - Mexico 1999 Chile - Panama 2008 Chile - Peru 1998 China – Costa Rica 2011 China - Hong Kong (CEPA) 2004

China - India 1984 China - Macao 2004 China - New Zealand 2008 China - Pakistan 2007 China - Peru 2010 China - Singapore 2009 Common Economic Zone 2004

Common Market for Eastern and Southern Africa (COMESA) 1994 Costa Rica - Mexico 1995 Croatia - Turkey 2003 EC - Bosnia and Herzegovina 2008 EC - Cameroon 2009 EC - CARIFORUM States EPA 2008 EC - Chile 2003 EC - Cote d'Ivoire 2009 EC - Croatia 2002 EC - FYROM 2001 EC - Iceland 1973 EC - Jordan 2002 EC - Lebanon 1977 EC - Mexico 2000 EC - Morocco 2000 EC - Norway 1973 EC - South Africa 2000 EC - Switzerland 1973 EC - Syria 1977 EC - Tunisia 1998 EC - Turkey 1996 EC (25) Enlargement 2004 EC (27) Enlargement 2007 EC with Enlargments (prior to 2001) EEA 1994 EFTA - Chile 2004 EFTA - Colombia 2008 EFTA - Croatia 2002 EFTA - Jordan 2002 EFTA - Korea 2006 EFTA - Lebanon 2007 EFTA - Mexico 2001 EFTA - Morocco 1999 EFTA - Singapore 2003 EFTA - The Former Yugoslav Republic of Macedonia 2001 EFTA - Tunisia 2005 EFTA - Turkey 1992 EFTA-SACU 2006 Estonia - Ukraine 1998 EU - Algeria 2005 FYROM - Turkey 2000 FYROM - Ukraine 2001 GCC 1982 Georgia - Kazakhstan 1999 Georgia - Russia 1994 Georgia - Turkey 2008 Georgia - Ukraine 1996 GSTP 1989 India - Korea 2010 India - Nepal 1991 India - Singapore 2005 India - Sri Lanka 2001 Iran - Pakistan 2004 Japan - Indonesia 2008 Japan - Mexico 2005 Japan - Singapore 2002 Japan - Switzerland 2009 Japan - Thailand 2007 Jordan - Singapore 2005 Jordan - Syria 2001 Jordan - United Arab Emirates (UAE) 2000 Kazakhstan - Kyrgyzstan 1995 Kyrgyzstan - Russia 1993 Kyrgyzstan - Ukraine 1998 Malaysia - Pakistan 2008 Mauritius - Pakistan 2007 MERCOSUR - Bolivia 1997 MERCOSUR - Chile 2000 MERCOSUR - India 2009 MERCOSUR 1991 Mexico - Nicaragua 1998 Morocco - Turkey 2006 New Zealand -Thailand 2005 New Zealand-Singapore 2001 North American Free Trade Agreement (NAFTA) 1994 Pacific Island Countries Trade Agreement (PICTA) 2003

PAFTA 1998

Pakistan - Sri Lanka 2005 Panama – Costa Rica 2008

Panama – El Salvador 2003 Panama - Guatemala 2009 Panama – Honduras 2009 Panama – Nicaragua 2009 Panama - Taiwan 2004 Peru - Singapore 2009 SAFTA 2006 Singapore - Australia 2003 Singapore - Korea 2006 Singapore - Panama 2006 Southern African Customs Union (SACU) 2004 SPARTECA 1981 Syria - Turkey 2007 Taiwan - Nicaragua 2006 Tunisia - Turkey 2005 Turkey - Bosnia and Herzegovina 2003

United States - Albania 1998 United States - Australia 2005

United States - Bahrain 2006 United States - CAFTA 2004 United States - Chile 2004 United States - Jordan 2001 United States - Morocco 2006 United States - Oman 2009 United States – Panama 2012 United States - Peru 2009 United States - Singapore 2004

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23

Appendix C: The list of BITs included in the research

Parties Year it came into force

Afghanistan - Germany Afghanistan - Iran Afghanistan - Turkey

Albania - BLEU (Belgium-Luxembourg Economic Union) Albania - Bosnia and Herzegovina

Albania - Cyprus Albania - Korea Albania - Lithuania Albania - Portugal Albania - Serbia Albania - Spain Algeria - Argentina Algeria - Austria Algeria - Bahrain

Algeria - BLEU (Belgium-Luxembourg Economic Union) Algeria - Bulgaria Algeria - China Algeria - Denmark Algeria - Ethiopia Algeria - Finland Algeria - Germany Algeria - Greece Algeria - Iran Algeria - Korea Algeria - Netherlands Algeria - Oman Algeria - Portugal Algeria - Sweden Algeria - Switzerland

Algeria - United Arab Emirates Angola - Germany

Angola - Italy

Angola - Russian Federation Antigua and Barbuda -Germany Argentina - Costa Rica Argentina - Guatemala Argentina - Indonesia Argentina - Nicaragua Argentina - Senegal Argentina - South Africa Argentina - Thailand Armenia - Austria Armenia - Belarus

Armenia - BLEU (Belgium-Luxembourg Economic Union) Armenia - Finland Armenia - India Armenia - Italy Armenia - Latvia Armenia - Lithuania Armenia - Netherlands Armenia - Russian Federation Armenia - Sweden

Armenia - Switzerland

Armenia - Syrian Arab Republic Australia - Lithuania

Australia - Mexico Australia - Sri Lanka

2007 2008 2005 2002 2009 2011 2004 2007 2007 2004 2004 2002 2006 2008 2002 2002 2003 2005 2005 2007 2002 2007 2005 2001 2008 2002 2005 2005 2005 2002 2007 2007 2011 2001 2001 2002 2001 2001 2010 2001 2002 2003 2002 2003 2007 2006 2003 2007 2007 2006 2006 2008 2002 2010 2002 2007 2007

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24 Australia - Turkey Austria - Azerbaijan Austria - Bangladesh Austria - Belarus Austria - Belize

Austria - Bosnia and Herzegovina Austria - Ethiopia Austria - Georgia Austria - Guatemala Austria - India Austria - Iran Austria - Jordan Austria - Kazakhstan Austria - Lebanon Austria - Libya Austria - Macedonia Austria - Malta Austria - Mexico Austria - Mongolia Austria - Namibia Austria - Oman Austria - Saudi Arabia Austria - Slovenia Austria - Tajikistan

Austria - United Arab Emirates Austria - Yemen

Azerbaijan - BLEU (Belgium-Luxembourg Economic Union) Azerbaijan - Croatia

Azerbaijan - Czech Republic Azerbaijan - Finland Azerbaijan - Greece Azerbaijan - Hungary Azerbaijan - Iran Azerbaijan - Korea Azerbaijan - Latvia Azerbaijan - Lithuania Azerbaijan - Romania Azerbaijan - Switzerland

Azerbaijan - Syrian Arab Republic Azerbaijan - Tajikistan

Azerbaijan - United Arab Emirates Azerbaijan - United States of America Bahrain - Belarus

Bahrain - Brunei Darussalam Bahrain - Czech Republic Bahrain - France Bahrain - Germany Bahrain - India Bahrain - Iran Bahrain - Italy Bahrain - Lebanon Bahrain - Morocco Bahrain - Netherlands Bahrain - Singapore

Bahrain - Syrian Arab Republic Bahrain - Thailand

Bahrain - United States of America Bangladesh - India Bangladesh - Iran Bangladesh - Singapore Bangladesh - Switzerland Bangladesh - Thailand 2009 2001 2001 2002 2002 2002 2005 2004 2012 2001 2004 2001 2012 2002 2004 2002 2004 2001 2002 2008 2003 2003 2002 2012 2003 2004 2009 2008 2012 2004 2006 2008 2002 2008 2006 2007 2004 2007 2010 2008 2007 2001 2008 2009 2009 2005 2010 2007 2004 2009 2005 2001 2009 2004 2001 2002 2001 2011 2002 2004 2001 2003

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25

Barbados - Germany Barbados - Mauritius

Belarus - Bosnia and Herzegovina Belarus - Croatia Belarus - Denmark Belarus - Finland Belarus - India Belarus - Jordan Belarus - Kuwait Belarus - Kyrgyzstan Belarus - Lebanon Belarus - Libya Belarus - Lithuania Belarus - Mexico Belarus - Mongolia Belarus - Oman Belarus - Saudi Arabia Belarus - Singapore Belarus - Slovakia

Belarus - United Arab Emirates Belize - Netherlands

Benin - Netherlands

Benin - BLEU (Belgium-Luxembourg Economic Union)

BLEU (Belgium-Luxembourg Economic Union) - Bosnia and Herzegovina BLEU (Belgium-Luxembourg Economic Union) - Burkina Faso

BLEU (Belgium-Luxembourg Economic Union) - China BLEU (Belgium-Luxembourg Economic Union) - Croatia BLEU (Belgium-Luxembourg Economic Union) - El Salvador BLEU (Belgium-Luxembourg Economic Union) - Gabon BLEU (Belgium-Luxembourg Economic Union) - Guatemala

BLEU (Belgium-Luxembourg Economic Union) - Hong Kong - China SAR BLEU (Belgium-Luxembourg Economic Union) - India

BLEU (Belgium-Luxembourg Economic Union) - Kazakhstan BLEU (Belgium-Luxembourg Economic Union) - Korea BLEU (Belgium-Luxembourg Economic Union) - Kuwait BLEU (Belgium-Luxembourg Economic Union) - Lebanon BLEU (Belgium-Luxembourg Economic Union) - Libya BLEU (Belgium-Luxembourg Economic Union) - Macedonia BLEU (Belgium-Luxembourg Economic Union) - Madagascar BLEU (Belgium-Luxembourg Economic Union) - Mauritius BLEU (Belgium-Luxembourg Economic Union) - Mexico BLEU (Belgium-Luxembourg Economic Union) - Morocco BLEU (Belgium-Luxembourg Economic Union) - Mozambique BLEU (Belgium-Luxembourg Economic Union) - Paraguay BLEU (Belgium-Luxembourg Economic Union) - Peru BLEU (Belgium-Luxembourg Economic Union) - Romania BLEU (Belgium-Luxembourg Economic Union) - Saudi Arabia BLEU (Belgium-Luxembourg Economic Union) - Slovenia BLEU (Belgium-Luxembourg Economic Union) - Thailand BLEU (Belgium-Luxembourg Economic Union) - Tunisia BLEU (Belgium-Luxembourg Economic Union) - Ukraine

BLEU (Belgium-Luxembourg Economic Union) - United Arab Emirates BLEU (Belgium-Luxembourg Economic Union) - Yemen

Bosnia and Herzegovina - China

Bosnia and Herzegovina - Czech Republic Bosnia and Herzegovina -Denmark Bosnia and Herzegovina -Finland Bosnia and Herzegovina -France Bosnia and Herzegovina -Germany Bosnia and Herzegovina -Greece Bosnia and Herzegovina -Hungary Bosnia and Herzegovina - India

2002 2005 2006 2005 2005 2008 2003 2005 2003 2001 2002 2002 2002 2009 2001 2005 2010 2001 2006 2001 2004 2007 2007 2010 2004 2009 2003 2002 2005 2007 2001 2001 2001 2011 2003 2004 2007 2002 2008 2010 2003 2002 2009 2004 2008 2001 2004 2002 2004 2002 2001 2007 2003 2005 2004 2008 2001 2007 2007 2007 2005 2008

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26

Bosnia and Herzegovina - Iran Bosnia and Herzegovina - Italy Bosnia and Herzegovina -Jordan Bosnia and Herzegovina -Kuwait Bosnia and Herzegovina -Lithuania Bosnia and Herzegovina -Macedonia Bosnia and Herzegovina -Netherlands Bosnia and Herzegovina -Pakistan Bosnia and Herzegovina -Portugal Bosnia and Herzegovina -Romania Bosnia and Herzegovina -Slovakia Bosnia and Herzegovina -Slovenia Bosnia and Herzegovina - Spain Bosnia and Herzegovina -Sweden Bosnia and Herzegovina -Switzerland Bosnia and Herzegovina -Turkey Bosnia and Herzegovina -Ukraine Bosnia and Herzegovina -United Kingdom Botswana - Germany

Brunei Darussalam - Germany Brunei Darussalam - India Brunei Darussalam - Korea Brunei Darussalam - Ukraine Bulgaria - Iran Bulgaria - Jordan Bulgaria - Kazakhstan Bulgaria - Korea Bulgaria - Latvia Bulgaria - Libya Bulgaria - Lithuania Bulgaria - Netherlands Bulgaria - Russian Federation Bulgaria - Singapore

Bulgaria - Syrian Arab Republic Bulgaria - Thailand

Bulgaria - Tunisia Bulgaria - Yemen Burkina Faso - Germany Burkina Faso - Guinea Burkina Faso - Korea Burkina Faso - Malaysia Burkina Faso - Netherlands Burundi - Mauritius Burundi - Netherlands Cambodia - Croatia Cambodia - Czech Republic Cambodia - France Cambodia - Germany Cambodia - Japan Cambodia - Netherlands Cameroon - Italy Canada - Croatia Canada - Czech Republic Canada - Jordan Canada - Latvia Canada - Peru Canada - Romania Canada - Slovakia Cape Verde - China Chile - Dominican Republic Chile - Greece Chile - Guatemala 2009 2005 2011 2002 2009 2004 2002 2010 2009 2001 2009 2002 2003 2002 2005 2009 2004 2003 2007 2004 2009 2003 2006 2003 2003 2001 2006 2004 2004 2006 2001 2005 2006 2001 2004 2003 2003 2009 2004 2010 2003 2004 2009 2009 2002 2009 2002 2002 2008 2006 2004 2001 2012 2009 2011 2007 2011 2012 2001 2002 2002 2001

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27 Chile - Honduras Chile - Iceland Chile - Nicaragua Chile - Switzerland China - Cyprus China - Czech Republic China - Equatorial Guinea China - Finland China - France China - Gabon China - Germany China - Guyana China - India China - Iran China - Korea China - Korea China - Latvia China - Madagascar China - Mali China - Malta China - Mexico China - Mozambique China - Myanmar China - Netherlands China - Portugal

China - Russian Federation China - Spain

China - Switzerland

China - Syrian Arab Republic China - Trinidad and Tobago China - Tunisia China - Yemen Colombia - Peru Colombia - Spain Colombia - Switzerland Congo - Italy Congo - Korea

Costa Rica - Czech Republic Costa Rica - Korea Costa Rica - Netherlands Costa Rica - Paraguay Costa Rica - Switzerland

Costa Rica - Taiwan Province of China Croatia - Denmark Croatia - Finland Croatia - Hungary Croatia - India Croatia - Iran Croatia - Korea Croatia - Latvia Croatia - Libya Croatia - Lithuania Croatia - Malta Croatia - Slovenia Croatia - Sweden Croatia - Thailand Croatia - Ukraine

Croatia - United States of America Cyprus - Czech Republic

Cyprus - India Cyprus - Iran Cyprus - Jordan 2002 2006 2001 2002 2002 2006 2006 2006 2010 2009 2005 2004 2007 2005 2005 2007 2006 2007 2009 2009 2009 2002 2002 2004 2008 2009 2008 2010 2001 2004 2006 2002 2010 2007 2009 2003 2011 2001 2002 2001 2001 2002 2004 2002 2002 2002 2002 2005 2006 2005 2006 2009 2002 2002 2002 2005 2001 2001 2002 2004 2009 2010

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28

Cyprus - Lebanon Cyprus - Libya Cyprus - Malta

Cyprus - Syrian Arab Republic Czech Republic - El Salvador Czech Republic - Georgia Czech Republic - Guatemala Czech Republic - Jordan Czech Republic - Macedonia Czech Republic - Mexico Czech Republic - Morocco Czech Republic - Nicaragua Czech Republic - Saudi Arabia Czech Republic - Syrian Arab Republic Czech Republic - Turkey

Czech Republic - Yemen Denmark - Ethiopia Denmark - Kuwait Denmark - Mozambique Denmark - Nicaragua Denmark - Slovenia Denmark - Uganda Denmark - Tanzania Djibouti - France Djibouti - Italy Djibouti - Switzerland Dominican Republic - Finland Dominican Republic - France Dominican Republic - Italy Dominican Republic - Korea Dominican Republic - Morocco Dominican Republic -Netherlands Dominican Republic - Panama Dominican Republic -Switzerland

Dominican Republic - Taiwan Province of China Ecuador - Italy Ecuador - Netherlands Ecuador - Sweden El Salvador - Finland El Salvador - Germany El Salvador - Korea El Salvador - Morocco El Salvador - Netherlands Equatorial Guinea - Spain Eritrea - Italy Estonia - Morocco Ethiopia - Finland Ethiopia - France Ethiopia - Germany Ethiopia - Iran Ethiopia - Libya Ethiopia - Netherlands Ethiopia - Sudan Ethiopia - Sweden Ethiopia - Tunisia Ethiopia - Turkey Finland - Georgia Finland - Guatemala Finland - India Finland - Indonesia Finland - Iran Finland - Jordan 2003 2005 2003 2007 2001 2011 2005 2001 2002 2004 2003 2004 2011 2009 2012 2009 2005 2002 2002 2005 2002 2005 2005 2010 2006 2001 2007 2003 2009 2008 2007 2007 2006 2006 2001 2005 2001 2002 2003 2001 2002 2002 2001 2009 2003 2012 2007 2004 2006 2004 2004 2005 2001 2005 2004 2005 2007 2007 2003 2008 2004 2007

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29 Finland - Kyrgyzstan Finland - Macedonia Finland - Mauritius Finland - Mongolia Finland - Morocco Finland - Mozambique Finland - Namibia Finland - Nepal Finland - Panama Finland - Tunisia Finland - Ukraine Finland - Tanzania France - Guatemala France - Honduras France - Iran France - Kenya France - Libya France - Madagascar France - Mozambique France - Namibia France - Saudi Arabia France - Senegal France - Tajikistan France - Turkey France - Uganda Gabon - Germany Gabon - Italy Gabon - Morocco Gabon - Spain Gambia - Morocco Gambia - Netherlands

Gambia - Taiwan Province of China Gambia - United Kingdom

Georgia - Iran Georgia - Latvia Georgia - Lithuania Georgia - Sweden Germany - Guatemala Germany - Indonesia Germany - Iran Germany - Jordan Germany - Kyrgyzstan Germany - Libya Germany - Mexico Germany - Morocco Germany - Mozambique Germany - Nicaragua Germany - Oman Germany - Sri Lanka Germany - Tajikistan Germany - Thailand

Germany - Trinidad and Tobago Germany - Yemen

Greece - India Greece - Iran Greece - Jordan Greece - Mexico Greece - South Africa Greece - Syrian Arab Republic Greece - Turkey Guatemala - Italy Guatemala - Korea 2004 2002 2008 2008 2003 2005 2005 2011 2010 2003 2005 2002 2001 2001 2004 2009 2006 2005 2006 2006 2004 2010 2004 2009 2004 2007 2006 2009 2001 2011 2007 2010 2003 2005 2006 2006 2009 2006 2007 2005 2010 2006 2010 2001 2008 2007 2001 2010 2004 2006 2004 2010 2008 2008 2009 2007 2002 2001 2004 2001 2008 2002

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Guatemala - Netherlands Guatemala - Spain Guatemala - Sweden Guatemala - Switzerland

Guatemala - Taiwan Province of China Guyana - Korea

Honduras - Korea Honduras - Netherlands

Honduras - United States of America Hong Kong - China SAR -Thailand Hungary - India Hungary - Jordan Hungary - Lebanon Hungary - Lithuania Hungary - Macedonia Hungary - Yemen Iceland - India Iceland - Lithuania Iceland - Mexico India - Jordan India - Kazakhstan India - Kuwait India - Latvia India - Libya India - Lithuania India - Macedonia India - Mexico India - Mongolia India - Morocco India - Mozambique India - Myanmar India - Portugal India - Saudi Arabia India - Senegal India - Slovakia India - Sudan India - Sweden

India - Syrian Arab Republic India - Taiwan Province of China India - Tajikistan

India - Thailand

India - Trinidad and Tobago India - Turkey

India - Ukraine India - Yemen Indonesia - Iran Indonesia - Morocco

Indonesia - Russian Federation Indonesia - Saudi Arabia Indonesia - Singapore Iran - Italy Iran - Korea Iran -Kuwait Iran -Kyrgyzstan Iran - Libya Iran -Malaysia Iran -Morocco Iran - Oman Iran -Poland Iran -Romania Iran - South Africa Iran - Spain 2002 2004 2005 2005 2001 2006 2001 2002 2001 2006 2006 2008 2002 2003 2002 2006 2008 2003 2006 2009 2001 2003 2010 2009 2011 2008 2008 2002 2001 2009 2009 2002 2008 2009 2007 2010 2001 2009 2002 2003 2001 2007 2007 2003 2004 2009 2002 2009 2004 2006 2003 2006 2011 2005 2010 2006 2003 2003 2001 2005 2002 2004

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Iran - Sudan Iran -Sweden Iran -Switzerland

Iran - Syrian Arab Republic Iran -Tajikistan Iran -Tunisia Iran -Turkey Iran -Ukraine Italy - Libya Italy - Mauritania Italy - Mexico Italy - Mozambique Italy - Namibia Italy - Nicaragua Italy - Pakistan Italy - Panama Italy - Senegal

Italy - Syrian Arab Republic Italy - Turkey Italy - Tanzania Italy - Yemen Jamaica - Korea Jamaica - Spain Japan - Korea Japan - Mongolia Japan - Pakistan Japan - Peru Jordan - Korea Jordan - Lebanon Jordan - Lithuania

Jordan - Russian Federation Jordan - Singapore Jordan - Slovakia Jordan - Sudan Jordan - Switzerland

Jordan - Syrian Arab Republic Jordan - Thailand

Jordan - Turkey

Jordan - United Arab Emirates Jordan - United States of America Kazakhstan - Latvia

Kazakhstan - Netherlands Kazakhstan - Sweden Kenya - Switzerland Korea -Romania

Korea -Russian Federation Korea -Singapore Korea -Thailand Korea - Kuwait Korea - Kyrgyzstan Korea - Lebanon Korea - Libya Korea - Mauritania Korea - Mauritius Korea - Mexico Korea - Morocco Korea -Netherlands Korea - Nicaragua Korea - Oman Korea - Panama Korea - Saudi Arabia Korea - Slovakia 2001 2008 2001 2005 2004 2003 2005 2003 2004 2009 2002 2003 2006 2006 2001 2010 2008 2003 2004 2003 2008 2007 2002 2003 2002 2002 2009 2004 2003 2003 2009 2005 2010 2001 2001 2002 2012 2006 2010 2003 2006 2007 2006 2009 2001 2006 2009 2002 2007 2008 2006 2007 2006 2008 2002 2001 2005 2001 2004 2002 2003 2006

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Korea - Trinidad and Tobago Korea - United Arab Emirates Kuwait - Latvia Kuwait - Lebanon Kuwait - Lithuania Kuwait - Macedonia Kuwait - Morocco Kuwait - Netherlands Kuwait - Portugal Kuwait - Serbia Kuwait - Slovenia Kuwait - Spain Kuwait - Sweden

Kuwait - Syrian Arab Republic Kyrgyzstan - Latvia Kyrgyzstan - Lithuania Kyrgyzstan - Sweden Kyrgyzstan - Switzerland Latvia - Romania Lebanon - Malaysia Lebanon - Mauritania Lebanon - Netherlands Lebanon - Oman Lebanon - Pakistan

Lebanon - Russian Federation Lebanon - Sudan

Lebanon - Sweden Lebanon - Switzerland Lebanon - Turkey

Lebanon - United Kingdom Lebanon - Yemen

Libya - Morocco Libya - Portugal

Libya - Russian Federation Libya - Singapore Libya - Spain Libya - Switzerland Libya - Turkey Lithuania - Macedonia Lithuania - Mongolia Lithuania - Portugal

Lithuania - Russian Federation Lithuania - Slovenia

Lithuania - Tajikistan

Lithuania - United States of America Macao - China SAR - Netherlands Macao - China SAR - Portugal Macedonia - Morocco Macedonia - Romania Macedonia - Slovakia Macedonia - Spain Madagascar - Mauritius Malaysia - Morocco Malaysia - Saudi Arabia Malaysia - Syrian Arab Republic Mali - Netherlands Malta - Slovenia Malta - Tunisia Malta - Turkey Mauritania - Morocco Mauritius - Mozambique Mauritius - Senegal 2003 2004 2004 2002 2003 2011 2001 2002 2011 2005 2004 2008 2002 2004 2009 2009 2003 2003 2002 2002 2006 2004 2008 2003 2003 2007 2001 2001 2006 2001 2002 2001 2005 2010 2011 2009 2004 2011 2012 2004 2003 2004 2002 2010 2004 2009 2002 2012 2002 2011 2007 2005 2009 2001 2009 2005 2001 2002 2004 2003 2003 2009

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33 Mauritius - Sweden Mexico - Panama Mexico - Singapore Mexico - Slovakia Mexico - Spain Mexico - Sweden

Mexico - Trinidad and Tobago Mexico - United Kingdom Mongolia - Russian Federation Mongolia - Sweden Mongolia - Tajikistan Montenegro - Netherlands Montenegro - Spain Montenegro - Switzerland Morocco - Oman Morocco - Spain Morocco - Sudan Morocco - Sweden

Morocco - Syrian Arab Republic Morocco - Turkey

Morocco - Ukraine

Morocco - United Arab Emirates Morocco - United Kingdom Mozambique - Netherlands Mozambique - Sweden Mozambique - Switzerland Mozambique - United Kingdom Mozambique - United States of America Myanmar - Thailand Namibia - Netherlands Namibia - Spain Netherlands - Nicaragua Netherlands - Panama Netherlands - Tajikistan Netherlands - Uganda Netherlands - Tanzania Nicaragua - United Kingdom Oman - Singapore Oman - Sudan Oman - Switzerland Oman - Turkey Panama - Sweden Paraguay - Portugal Portugal - Tunisia Portugal - Turkey Portugal - Ukraine

Portugal - United Arab Emirates Romania - Sweden

Romania - Syrian Arab Republic Romania - Turkey

Russian Federation - Singapore

Russian Federation - Syrian Arab Republic Russian Federation - Yemen

Saudi Arabia - Singapore Saudi Arabia - Sweden Saudi Arabia - Switzerland Saudi Arabia - Turkey Senegal - Spain Senegal - Turkey

Sierra Leone - United Kingdom Singapore - Slovakia Singapore - Turkey 2005 2006 2011 2009 2008 2001 2007 2007 2006 2004 2009 2004 2004 2007 2003 2005 2002 2008 2003 2004 2009 2002 2002 2004 2007 2004 2004 2005 2012 2004 2004 2003 2001 2004 2003 2004 2001 2008 2002 2005 2010 2008 2001 2006 2004 2003 2012 2003 2009 2010 2012 2007 2005 2007 2009 2008 2009 2011 2012 2001 2007 2010

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Slovakia - Syrian Arab Republic Slovenia - Sweden

Slovenia - Thailand Slovenia - Turkey

Spain - Syrian Arab Republic Spain - Trinidad and Tobago Sudan - Syrian Arab Republic Sweden - Tanzania

Switzerland - Syrian Arab Republic Switzerland - Tajikistan

Switzerland - Trinidad and Tobago Switzerland - Tanzania

Switzerland - Zimbabwe Syrian Arab Republic - Tunisia Syrian Arab Republic - Turkey

Syrian Arab Republic - United Arab Emirates Syrian Arab Republic - Yemen

Thailand - Turkey

Turkey - United Arab Emirates Turkey - Yemen

Ukraine - United Arab Emirates United Arab Emirates - Yemen

2009 2001 2002 2006 2004 2004 2001 2002 2008 2011 2012 2006 2001 2003 2006 2001 2005 2010 2011 2011 2004 2001

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Appendix D: The list of Data sources

Name of data Source

Country GDP UNCTAD database

Population UNCTAD database

Bilateral FDI flows UNCTAD database

PTAs TheWorldBank. Global Preferential Trade

Agreements Database

BITs UNCTAD. Investment Policy Hub

Country development UN report. World Economic Situation and

Prospects 2007

Appendix E: Stata output tables

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The effects of preferential trading agreements on bilateral foreign direct investment