Developing Countries International Investment Policies: Unveiling Pakistan Paradoxes

Abstract

As a part of International Investment Agreements, Bilateral Investment Treaties and their impact on Foreign Direct investment inflows to a country have been taken into consideration by different authors. A lot of studies and surveys have been done before, but for a developing country like Pakistan, no previous research is available. I tried to narrow this gap by investigating the relation between BITs and FDI inflows to Pakistan. I, at the very first hand, build up the BIT index for Pakistan by using the methodology raised by Bellak and Chaisse (2011). The index itself provides comprehensive information for the development of Pakistan’s investment policy over the last years. Through empirical analysis of BITs and FDI, the study concluded that BITs have a little but positive impact on FDI. Besides, the study stress on the role of political stability, Regulatory Quality and control of corruption as essential factors of attracting FDI. So the betterment of political situation could give BITs their full power.