Event: The Dawn of International Arbitration in the South Pacific: Regional International Arbitration Conference

FDI Promotion and Arbitration

12 February 2018
Author / Speaker: 
Jordi Paniagua, University of Valencia
Email the author | Other materials by the author

View Slides


Prof. Dr. Paniagua discussed the effects of international arbitration reform on a country’s foreign direct investment (FDI) and trade. He said that international commercial arbitration is a system of private commercial law that enables firms to more effectively enforce contracts by allowing them to avoid inefficiencies that arise from domestic courts. As a result, access to international arbitration should foster FDI. To explain the effect of international arbitration on FDI, Myburgh and Paniagua (Journal of Law and Economics, 2016) developed a model to explain the use and effect on FDI of resolving international disputes through arbitration. The predictions of the model are tested empirically in a gravity framework with a large panel of contries during the last decade. The results of this analysis suggest that access to arbitration through the New York Convention on arbitration leads to an increase in new FDI flows. This increase largely occurs through a change in volume of investment with a much smaller effect on the number of investment projects. The effect of arbitration is greater for countries with transitioning institutions and for larger investment projects.

Geographical Focus: 
Subregional- Pacific
Type of Content: 
Learning Event


The views expressed on this website are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area.