The Impact of Bilateral Investment Agreements on Attracting Foreign Direct Investments

Abstract

Foreign investors' fear of expropriation led to the emergence of the idea of new ways of protection and adequate treatment of foreign investments on the international level. Primarily, the home countries wanted to protect their interests and became the main proponents of the creation of bilateral investment agreements. Developing countries that aspire to become and remain part of international economic flows, had to provide additional protection to investors, as investment host countries. They saw bilateral investment agreements as an opportunity to attract foreign direct investment. They provide a certain standard in the treatment and protection of investments and thus influence the creation of an environment that favors the transfer of capital from one country to another. In modern economic conditions, there are almost no entities that are absolutely risk-averse. For this reason, bilateral investment agreements are counted on to play one of the key roles in minimizing the risks of investing in developing countries.