On January 26, 2024, Faculty of Finance at City University of Macau organized the thirteenth Finance Salon (2023-2024) at the Taipa campus. The salon was e-hosted by Dr. Markus Leibrecht from Shanghai Ocean University. Dr. Markus Leibrecht delivered his research paper titled "Do BITs Bite? Fresh Evidence from Two Policy Reforms". The article is based on two policy reforms in Brazil and China, focusing on the benefits of bilateral investment treaties (BITs). Brazil recently introduced a new type of BITs that explicitly excludes ISDS (Investor-State Dispute Settlement) provisions. Foreign direct investment (FDI) is often regarded as an engine of economic development, and BITs are a policy tool to attract and promote FDI. However, BITs have faced considerable criticism recently. Specifically, policymakers worry that their benefits (impact on FDI) are not enough to cover their costs (limited policy space due to investor-state dispute settlement (ISDS)). By applying a comprehensive control approach, the article finds that these new BITs are unable to promote FDI in Brazil. Instead, China has made its BITs more investor-friendly by including extensive ISDS provisions. Through the difference-in-difference method, this article proves that these new BITs attract FDI to China. These results are consistent with the view that BITs are capable of attracting and promoting FDI when they include ISDS provisions that ensure the enforceability of property rights. From a policy perspective, the findings suggest that emerging countries should follow China's lead and make BITs more investor-friendly, rather than terminating BITs. To reduce potential costs, clear emergency provisions need to be included to protect policy space in the event of an economic crisis.
Dr. Markus Leibrecht is currently a professor of applied economics at Shanghai Ocean University and MBA Center of Shanghai University. His current research focuses on International Investment Agreements, Investor-State Dispute Settlement, and their impact on Multinational Enterprises’ decisions and government’s economic policies. He has published articles in journals such as European Journal of Political Economy, Journal of Development Studies, Journal of Economic Surveys, Journal of Institutional Economics, Journal of International Economic Law, Marine Policy, Public Choice, and The World Economy.
At this Salon, Dr. Markus Leibrecht conducted in-depth exchanges with teachers and students of Faculty of Finance, deepening their understanding of bilateral investment treaties. The Finance Salon organized by Faculty of Finance at City University of Macau serves as a platform for exchanging academic ideas and fostering academic awareness. With finance as the main focus, we invite senior scholars/experts from academia and the financial industry to engage in research discussions on cutting-edge topics and share industry development trends, aiming to provide a fresh academic experience and thinking model for CityU students and members of the faculty. Through activities like the Finance Salon, we hope to offer graduate students a better academic platform, encouraging further exploration and research on academic issues.