The importance of agreements on the promotion and reciprocal protection of investments for foreign direct investment on the example of selected Western Balkan countries




agreement on promotion and reciprocal protection of investment, BITs, foreign direct investment, FDI, Western Balkans, Bosnia and Herzegovina, Croatia, North Macedonia, Serbia


Background: The subject of the study is the dependence of foreign direct investment (FDI) and the macroeconomic situation in economies in transition, as well as the assessment of the importance of Bilateral Investment Treaties (BITs) concluded by these countries, for the inflow of foreign direct investment. The research was conducted in four countries in the Western Balkans: Bosnia and Herzegovina, Croatia, North Macedonia, and Serbia in the years between 2001 and 2019.

Research purpose: The aim of the article is to assess the dependence of foreign direct investments (FDI) and the macroeconomic situation in economies in the transition period, and to assess the significance of Bilateral Investment Treaties concluded by these countries for the inflow of foreign direct investments. The research fills the knowledge gap on both the importance of BITs for FDI and the importance of FDI for the macroeconomic situation.

Methods: In order to assess the importance of foreign direct investments for the economy, the correlation between FDI and indicators describing the macroeconomic situation was estimated, including GDP growth, GDP per capita and macroeconomic stability. Later, the focus is on BITs as potential tools influencing the willingness of foreign investors to invest in a developing country, providing protection for foreign investments based on BITs. Therefore, it was investigated whether an increased inflow of FDI occurred after the conclusion of the BITs. The data was obtained from World Bank sources, UNCTAD and EBRD databases, as well as databases of local institutions in each of the surveyed countries.

Conclusions: The conclusions of the research suggest that, on the one hand, the inflow of FDI was not a significant factor in economic development in the analyzed region, and on the other hand, BITs did not constitute a significant tool influencing the investment decisions of foreign investors


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How to Cite

Horodyski, D., & Kubiszewska, K. (2021). The importance of agreements on the promotion and reciprocal protection of investments for foreign direct investment on the example of selected Western Balkan countries. Studia Prawno-Ekonomiczne, 118, 203–226.