Most new evidence tries to address one or more of these concerns, and suggests that IIAs can be important mechanisms in attracting investors. Table 4 summarizes these studies. In this regard, the modalities that maximize their effects—including effects on the prevention of FDI outflows from host countries—remain unclear.

Table 4. Effects of bilateral investment agreements, and preferential trade agreements on foreign direct investment and other variables

|**Country**|**Study**|**Investor Protection Measure**<br>**Studied**|**Effect**|
|---|---|---|---|
|**Cross‐country**|Berger and others<br>(2013)|Ratification of bilateral investment<br>agreements and preferential trade<br>agreements with all source countries (83<br>developing host countries and 28 source<br>countries)|In the short term, a host country could increase its<br>share of FDI flows from all source countries by 17<br>percent through bilateral agreements and by 23<br>percent through preferential trade agreements. The<br>long‐term effect increases to 37 percent for bilateral<br>agreements and to 50 percent for preferential trade<br>agreements. The long‐term impact of switching from<br>preferential trade agreements without national<br>treatment provisions to agreements with them (with<br>all source countries) is about 29 percent.|
|**Cross‐country**|Busse, Koniger,<br>and Nunnenkamp<br>(2010)|Ratification of bilateral investment<br>agreements (83 developing host countries<br>and 28 source countries)|<br>A nearly 25 percent increase in host country share of<br>FDI flows from all source countries. The long‐term<br>effect is about 31 percent.|
|**Cross‐country**|Buthe and Milner<br>(2008)|Ratification of a preferential trade<br>agreement; moving from a preferential<br>trade agreement without an investment<br>clause to one with a strict investment<br>clause; moving from an agreement<br>without any dispute settlement<br>mechanism to one with such a<br>mechanism (122 developing and<br>transition economies)|It increases FDI by an equivalent of 0.274 percent of<br>GDP. No effect for signed preferential trade<br>agreements; increases FDI by an equivalent of 0.316<br>percent of GDP; increases FDI by an equivalent of<br>0.252 percent of GDP, respectively.<br>All results reported over five‐year period.|
|**Cross‐country**|Colen, Persyn, and<br>Guariso (2014)|<br>Ratification of a bilateral investment<br>agreements (13 countries in the former<br>Soviet Union and Central and Eastern<br>Europe)|It increases the stock of FDI by 1‐ 2 percent.<br>Investments are highest for utilities and real estate<br>and, to a lesser extent, banking and mining. No effect<br>was found for manufacturing and services.|
|**Cross‐country**|Egger and Merlo<br>(2012)|Ratification of a bilateral investment<br>agreement (Germany and 86 host<br>countries)|A 12.6 percent increase in the number of affiliates, a<br>45 percent increase in FDI flows, a 25 percent increase<br>in employment, and a 49 percent increase in assets.<br>The FDI generated by signing and ratifying a bilateral<br>agreement averages about €5 million per firm and<br>€130 million per host country.|
|**Cross‐country**|Haftel (2008)|Ratification of a bilateral investment<br>agreement relative to its signing (U.S. and<br>120 host countries)|<br>FDI to host country increases from 0.07 to 0.24<br>percent of GDP. There are no effects for signed<br>bilateral agreements.|
|**Cross‐country**|Lesher and<br>Miroudot (2006)|Ratification of a preferential trade<br>agreement with substantive investment<br>provisions (177 countries)|It is associated with a 57.1 percent increase in FDI<br>flows and a 20.8 percent increase in exports.|
|**Cross‐country**|Paniagua and<br>Myburgh<br>(forthcoming)|<br>Ratification of New York International<br>Convention on the Recognition and<br>Enforcement of Foreign Arbitral awards|It increases host country greenfield FDI flows by an<br>average of 40 percent.|
|**Cross‐country**|Yackee (2009)|Signing of bilateral investment<br>agreements between the top 18 FDI<br>source countries and the rest of the world|There was no effect on FDI flows.|

Busse, Koniger, and Nunnenkamp (2010) use extensive FDI flow data from the United Nations Conference on Trade and Development (UNCTAD) for the years 1978‐2004. They find that bilateral investment agreements have a particularly strong impact in developing countries. The authors estimate that 22