The Effect of Bilateral Investment Treaties (BITs) on the extensive and intensive margins of exports
Tingting Xiong
The Quarterly Review of Economics and Finance, 2022, vol. 84, issue C, 68-79
Abstract:
This paper investigates the effect of BITs on the extensive and intensive product margins of exports, utilizing ordinary least squares (OLS) and Poisson pseudo-maximum-likelihood (PPML) estimator with fixed effects approaches to estimate the gravity equations. The model in this paper theoretically demonstrates that investment liberalization increases the extensive margin by lowering the variable costs of selling abroad, but decreases the intensive margin by lowering both the fixed investment costs and the variable costs. Using a detailed dataset of 210 countries/regions from 1988 to 2006, this paper provides empirical evidence that BITs promote exports. This paper also empirically supports the theoretical propositions that BITs increase the extensive margin of exports from developed countries while decreasing the intensive margin of exports.
Keywords: Bilateral Investment Treaties (BITs); Extensive margin of trade; Intensive margin of trade; Poisson pseudo-maximum-likelihood (PPML) (search for similar items in EconPapers)
JEL-codes: F12 F14 F21 F23 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:84:y:2022:i:c:p:68-79
DOI: 10.1016/j.qref.2022.01.003
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