international investment agreements and their impact on foreign - Tel

424 Pages·2015·1.93 MB·English

International Investment Agreements and Their Impact
on Foreign Direct Investment: Evidence from Four
Emerging Central European Countries
Annie Tortian
To cite this version:
Annie Tortian. International Investment Agreements and Their Impact on Foreign Direct Investment:
Evidence from Four Emerging Central European Countries. Economics and Finance. Université
Panthéon-Sorbonne - Paris I, 2007. English. ￿NNT: ￿. ￿tel-00165194￿
HAL Id: tel-00165194
https://theses.hal.science/tel-00165194
Submitted on 25 Jul 2007
HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est
archive for the deposit and dissemination of sci- destinée au dépôt et à la diffusion de documents
entific research documents, whether they are pub- scientifiques de niveau recherche, publiés ou non,
lished or not. The documents may come from émanant des établissements d’enseignement et de
teaching and research institutions in France or recherche français ou étrangers, des laboratoires
abroad, or from public or private research centers. publics ou privés.
UNIVERSITE PARIS I – PANTHEON - SORBONNE
U.F.R. DE SCIENCES ECONOMIQUES

Année 2007 N° attribué par la bibliothèque |2007| |

THESE
Pour le
DOCTORAT EN SCIENCES ECONOMIQUES
Présentée et soutenue publiquement le 18 Juin 2007 par
Annie Zaven TORTIAN

INTERNATIONAL INVESTMENT AGREEMENTS
AND THEIR IMPACT ON
FOREIGN DIRECT INVESTMENT:
EVIDENCE FROM FOUR EMERGING CENTRAL EUROPEAN COUNTRIES

Directeur de thèse:
M. Christian de BOISSIEU, Professeur a l’Université de Paris I

JURY:

M. Christian de Boissieu (Directeur), Professeur à l’Université de Paris 1
M. Wladimir Andreff (Président du jury), Professeur à l’Université de Paris 1
M. Ali Fatemi (Rapporteur), Professeur à American University of Paris
M. Pierre-Bruno Ruffini (Rapporteur), Professeur à l’Université du Havre
The opinions expressed in this dissertation are those of the author and do not
necessary reflect the views of the University of Paris 1 Panthéon-Sorbonne.
i i
In memory of my father Zaven Tortian
i ii
Acknowledgements

I wish to express my sincere thanks and appreciation to my professor Christian de
Boissieu who has extended to me all the help, guidance and support throughout the
preparation of this thesis. Without his help the completion of this thesis would not have
been possible. I am so proud of being a student of Professor de Boissieu being one of
the most recognised experts in the field of Money, Banking and Finance worldwide. It
has been certainly an honour to have completed this dissertation under his direct
guidance and supervision.

I wish to extend my sincere thanks and appreciation to Professor Wladimir Andreff
for his valuable advice and suggestions during the preparation of the dissertation. I
owe him a lot of improvements in my study, especially the part concerning the
elaboration of the different theories of FDI, and the idea of introducing outward FDI
from CEC4 to my study.

I wish also to express my sincere thanks to Professor Patrick Sevestre for his
valuable advice, suggestions and the time he devoted to me during the preparation of
the dissertation. I am very grateful and owe him a lot. The empirical analysis of this
study would not have been improved without his help and orientation.

I wish to express my thanks and appreciation to the members of the jury,
Professors Pierre-Bruno Ruffini and Ali Fatemi for accepting to participate in the jury
which examines this dissertation. I am confident that I will benefit a great deal from
their comments and suggestions.

I also wish to express my thanks and appreciation to both Ms. Hana Heidlerova,
economic and financial counsellor of the permanent delegation of the Czech Republic
at the OECD, and Dr. Sebastien Miroudot, at the Trade Department, OECD, Paris, for
the valuable discussions we held together.

i v
Special thanks must go to HE Georges Corm, ex-Minister of Finance, Lebanon,
HE Ambassador Saad Zakhia, Ministery of Foreign Affairs, Lebanon, and Ms. Lama
Ouijan, Ministry of Trade and Economy, Lebanon, for their constructive advice and
guidance.

I am deeply indebted to Professor Suheil Kawar, economic advisor, Ministry of
Finance, Lebanon, ex-Deputy Division Chief, International Monetary Fund (IMF)
Institute, and ex-Director, Africa/Middle East Department, Institute of International
Finance (IIF).

I wish also to extend my thanks to Mrs. Elda André, secretary at the University of
Paris 1 Panthéon-Sorbonne, and Mrs. Georgia Dimopoulos, secretay of Prof. de
Boissieu for all the assistance and help they extended to me.

I must express also my satisfaction with all the services of the University of Paris 1
Panthéon- Sorbonne for the help and assistance I received from the various categories
of staff working in this outstanding institution of higher education.

I am also indebted to my sisters Hassmik Tortian, Arpie Kouyoumjian and my
brother in law Levon, for hosting me during my sejour in France and for the
encouragement and support they extended to me throughout the preparation of this
dissertation.

A very deep, special thanks and appreciation must go to my mother Sossie Tortian
for her continuous support, encouragement and for her prayers which gave me the
strength and persistence to complete this study.
v
Contents

List of Tables...............................................................................................................xiv
List of Figures.............................................................................................................xvi
List of Charts..............................................................................................................xvii
List of Abbreviations.................................................................................................xviii

Preface..........................................................................................................................xx

General Introduction....................................................................................................1

1 The Concept of FDI and Role in International Capital Flows.........................18
1.1 Introduction....................................................................................................18
1.2 The Concept of FDI: Definitions...................................................................19
1.3 Role of FDI in International Capital Flows...................................................23
1.4 Types of FDI..................................................................................................26
1.4.1 FDI from Source Country Perspective...............................................26
1.4.2 FDI from Host Country Perspective..................................................26
1.5 Globalization and FDI...................................................................................27
1.6 Trends in Global FDI Inflows........................................................................29
1.7 Conclusion.....................................................................................................30
v i
2 Capital Flows to CEC4: Structure and Trends..................................................31
2.1 Introduction....................................................................................................31
2.2 Structure of Capital Inflows to CEC4............................................................31
2.2.1 Portfolio Investments in CEC4..........................................................40
2.2.2 “Other” Investments in CEC4............................................................41
2.2.3 “Use of IMF Financing” and “Exceptional Financing”.....................42
2.3 Evolution of FDI in CEC4.............................................................................42
2.3.1 FDI in CEC4......................................................................................43
2.3.2 Regional Comparison: CEC4 versus CEEC......................................48
2.3.3 International Comparison: CEC4 versus World FDI.........................50
2.4 Indicators of FDI Penetration: Relative Indices of FDI.................................52
2.4.1 FDI Inward Stock...............................................................................52
2.4.2 FDI Inward Stock/GDP.....................................................................53
2.4.3 FDI Stock per Capita.........................................................................55
2.4.4 FDI Inflows/Gross Fixed Capital Formation.....................................57
2.5 Origins of FDI in CEC4.................................................................................59
2.5.1 The Czech Republic...........................................................................60
2.5.2 Hungary.............................................................................................62
2.5.3 Poland................................................................................................64
2.5.4 The Slovak Republic..........................................................................66
2.6 Outward FDI from CEC4..............................................................................70
2.6.1 The Czech Republic...........................................................................72
2.6.2 Hungary.............................................................................................73
2.6.3 Poland................................................................................................74
2.6.4 The Slovak Republic..........................................................................75
2.7 Conclusion.....................................................................................................76
v ii
3 International Investment Agreements................................................................77
3.1 Introduction....................................................................................................77
3.2 The International Legal Framework for FDI.................................................79
3.2.1 Sources and Principles.......................................................................79
3.2.1.1 Sources of International Investment Law...........................79
3.2.1.2 Reasons Countries Sign IIAs..............................................80
3.2.1.3 Nature and Content of International Investment Law........80
3.2.1.4 Impact of International Law on International Investment..80
3.2.2 Historical Overview...........................................................................81
3.2.2.1 The Legal Situation up to the Second World War..............81
3.2.2.2 Developments since 1945: The Early Years.......................81
3.2.2.3 The Decade of the 1970s....................................................83
3.2.2.4 The Decades of the 1980s and 1990s..................................85
3.3 Instruments in Use: IIAs................................................................................88
3.3.1 Bilateral Investment Treaties (BITs).................................................89
3.3.1.1 What are BITs?...................................................................89
3.3.1.2 Trends in BITs....................................................................90
3.3.1.3 The Entry into Force of BITs..............................................94
3.3.2 Regional Agreements.........................................................................97
3.3.3 Multilateral Investment Agreements...............................................101
3.4 Key Issues in IIAs........................................................................................104
3.4.1 Scope and Definition of Foreign Investment...................................105
3.4.2 Admission and Establishment..........................................................105
3.4.3 National Treatment..........................................................................109
3.4.4 Most-Favoured-Nation Treatment...................................................112
v iii
3.4.5 Fair and Equitable Treatment..........................................................113
3.4.6 Expropriation and Nationalization...................................................114
3.4.7 Compensation for Losses.................................................................116
3.4.8 Transfer of Funds.............................................................................116
3.4.9 Dispute Settlement...........................................................................122
3.4.10 Transparency....................................................................................125
3.5 Characteristcs of IIAs at Different Levels...................................................126
3.5.1 Advantages of BITs over other Investment Laws...........................127
3.5.2 Advantages of Regional Agreements..............................................127
3.5.3 Advantages of Multilateral Approaches..........................................128
3.6 BITs Concluded by CEC4...........................................................................129
3.7 Conclusion...................................................................................................135
4 Theories of Foreign Direct Investment.............................................................136
4.1 Introduction..................................................................................................136
4.2 Theories Assuming Perfect Markets............................................................138
4.2.1 The Differential Rates of Return Theory.........................................138
4.2.2 The Portfolio Diversification Theory..............................................139
4.2.3 The Market Size Theory..................................................................141
4.2.4 The Growth Prospects Theory.........................................................143
4.3 Theories Assuming Imperfect Markets........................................................143
4.3.1 The Industrial Organization Theory................................................144
4.3.2 The Internalisation Theory...............................................................148
4.3.3 The Location Theory.......................................................................150
4.3.4 The Eclectic Theory (OLI Paradigm)..............................................152
4.3.5 The Investment Development Path (IDP)........................................156
4.3.6 The Product Life Cycle Theory.......................................................159
4.3.7 The Oligopolistic Reaction Theory..................................................161
i x