Non-trade provisions in trade agreements and FDI

Preferential trade agreements increasingly feature a variety of provisions related to economic and social rights , environmental protection, and civil and political rights. This paper estimates the effect of the degree of legalization of PTAs in these non-trade provisions on the flow of bilateral greenfield FDI. The authors explore this relation in a structural gravity setting and find that all three types of non-trade provisions affect the flow of FDI negatively. This effect is driven by investments directed to middle- and low-income countries.

View Academic Paper