Annex Table 1: List of 133 Recipient Countries Included in the Study

Bilateral Investment Treaties

Annex Table 1: List of 133 Recipient Countries included in the study

Annex Table 2:

List of Source Countries and the number of BITs signed by them

Country Number of BITs

1. Germany 103

1. United Kingdom85

1. Switzerland 75

1. France 73

1. Netherlands 56

1. Italy 45

1. Belgium and Luxembourg39

1. United States of America37

1. Denmark36

1. Sweden33

1. Finland29

1. Austria18

1. Norway15

1. Australia14

1. Canada10

16. Japan 4

Annex 3

Definition of Variables - Country Investment Ratings

The ICRG Risk Rating criteria developed by PRS(Political Risk Services) Group. The ICRG Risk Rating System rates political, economic, and financial risks, breaking each are down into its key components, as well as compiling composite ratings and forecasts.

Annex Table 3 : Criteria Underlying Country Investment Risk Indicators

The highest overall rating (100 points) indicates the best investment climate and the lowest risk, and the lowest rating (1) indicates the highest risk and poorest environment.

Source: PRS Group

Table IV. 7Comparison of Before and After Means for FDI/Inflow Variable

**. Significant at the level .05 (one-tailed), *. Significant at the level .10 (one-tailed)

Annex 4

Details on Regression Runs Carried Out In Cross-Sectional Stage 1 Analysis

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The body of the report shows only nine of the most significant regression equations using the stepwise forward inclusion technique in SPSS (Statistical Package for the Social Sciences), for three dependent variables, each for three years.

However, a total of 264 regression runs were undertaken in a comprehensive search for determinants of FDI, including BITs. The results for 192 are summarized in Annex Table 4. The results for a further 60 are summarized in Annex Table 5. The remaining 12 are not shown.

192 Regressions : Annex Table 4

The 192 regressions result from the combination of

• Eight Dependent Variables (Flow(95), Fper(95), Fgdp$(95), Fgrow(95), Stock(95), Sper(95), Sgdp$(95), Sgrow(95))
• Two Loading Methods (Total = All independent variables entered together; Stepwise = Stepwise forward inclusion)
• Three Years (1995, 1994,1993)
• Countries Excluded/Included (All = All 133 countries; Without = Without China, Singapore, Hong Kong)
• Transformation of Independent Variables (Normal = Untransformed; Log = Log transformed)

Annex Table 4 does not show the actual statistics relating to each equation, but only summarizes which independent variable achieved at least a 0.05 significance level. In this way, an overall picture or pattern emerges as to which of the independent variables, including BITs, emerge as possible determinants of FDI. Many of the regression runs, indicated by blanks, failed to have even one of the independent variables achieve significance. This was more so in the case of log transformed variables. Apparently, the data did not need transformation in the first place. At any rate, for a priori reasons explained in Chapter IV, the main focus in Annex Table 4 ought to be on section V. Stepwise/All/Normal, where all variables, on a normal untransformed basis, are entered stepwise. These indeed yielded the best results. Detailed statistics for the equations in the shaded boxes in Annex Table 4 are shown in the body of the chapter in Table IV.5.

60 Regressions : Annex Table 5

These 60 regressions resulted from a combination of

• Four Dependent Variables (Flow(95), Fper(95), Fgdp$(95), Fgrow(95))
• Five Regions (Africa; Central and Eastern Europe; East and Southeast Asia; Latin America and Caribbean; West Asia)
• Three Years (1995;1994;1993)

BIT-related independent variables (Nos. 1 and 2) are frequently included in runs involving the dependent variable Flow(’95) for all regions except West Asia. Because the division of data into regions resulted in few complete data, a mean value substitution procedure had to be instituted, without which no statistically significant results would have been obtained. Having done so however, we cannot place too much reliance in the results.

Annex Table 4 and Annex Table 5 are shown on the next page.

Annex Table 5

SUMMARY OF INDEPENDENT VARIABLES LOADEDa IN 60 STEPWISE REGRESSIONS FOR SEPARATE REGIONS