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Investment discrimination and the proliferation of preferential trade agreements

Baccini, Leonardo and Dür, Andreas (2015) Investment discrimination and the proliferation of preferential trade agreements. Journal of Conflict Resolution, 59 (4). pp. 617-644. ISSN 0022-0027

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Identification Number: 10.1177/0022002713516844

Abstract

The proliferation of bilateral and regional trade agreements has arguably been the main change to the international trading system since the end of the Uruguay Round in the mid-1990s. We argue that investment discrimination plays a major role in this development. Preferential trade agreements can lead to investment discrimination because of tariff differentials on intermediary products and as a result of provisions that relax investment rules for the parties to the agreement. Excluded countries are sensitive to the costs that this investment discrimination imposes on domestic firms and react by signing a trade agreement that aims at leveling the playing field. We test our argument using a spatial econometric model and a newly compiled data set that includes 166 countries and covers a period of eighteen years (1990–2007). Our findings strongly support the argument that investment discrimination is a major driver of the proliferation of trade agreements.

Item Type: Article
Official URL: http://jcr.sagepub.com/
Additional Information: © 2013 The Authors
Subjects: H Social Sciences > HF Commerce
J Political Science > JZ International relations
Sets: Departments > International Relations
Date Deposited: 12 Jun 2015 09:33
Last Modified: 15 Jun 2015 10:50
URI: http://eprints.lse.ac.uk/id/eprint/62305

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