芬兰经济研究所-一口咬一口？中欧双边投资条约对欧盟国内投资的影响（英）-2021.8-36页_1mb

Summary of "BITs with a Bite? EU Home Investment Effects of EU-China Bilateral Investment Treaties"

Core Content

This paper investigates the impact of EU-China Bilateral Investment Treaties (BITs) on EU home investments, focusing on how these treaties affect the integration of EU industries into global value chains (GVCs). The authors use BITs as a policy treatment to analyze how changes in access to GVCs influence domestic capital growth, value-added (VA) growth, and productivity dynamics.

The study argues that BITs can be used as a quasi-experimental tool to identify causal effects because they introduce exogenous variation in the exposure to Chinese value chains. By using pre-treaty exposure to Chinese production as an instrument, the authors isolate the impact of BITs from other endogenous factors that might influence investment decisions.

Main Findings

• BITs and GVC Integration: BITs have strengthened the EU's integration into Chinese GVCs, particularly in upstream activities, leading to increased reliance on Chinese intermediate production.

• Impact on Domestic Capital Growth: The signing of BITs has been associated with a decrease in domestic capital growth in EU countries that had a high pre-treaty exposure to Chinese value chains. This effect is more pronounced in low-productivity industries.

• Heterogeneous Effects: The impact of BITs is heterogeneous across industries. It is most significant in:

  • High-growth industries such as the manufacture of computer, electronic, and optical products, and pharmaceuticals.
  • Low-growth industries such as the textile sector.

• Productivity and R&D Intensity:

  • High-productivity industries show increased relative labor productivity growth and VA growth after BITs.
  • Low R&D intensity industries experience a decline in VA and labor productivity growth.

• China as a Unique Partner: China is identified as an exceptional BIT partner for the EU. Unlike other BITs, those with China have a negative effect on domestic capital growth, especially in low-productivity sectors. In contrast, BITs with other non-EU countries often have positive or insignificant effects.

Key Methodology

• The authors use upstream VA fractions from the World Input-Output Database (WIOD) to measure exposure to Chinese value chains.
• They employ a difference-in-differences (DiD) approach, using pre-treaty exposure as an instrument to address endogeneity.
• The Bartik instruments are constructed based on the pre-treaty exposure of EU countries to other BIT partners, allowing the authors to predict the exposure to China and control for exogenous variation.
• The analysis accounts for fixed effects at both the industry and country levels, as well as time trends, to ensure robustness.

Robustness and Context

• The results are robust to different specifications and are consistent across extra-EU countries.
• The study also considers the broader context of BITs, including:
  • Downstream effects: Exposure to downstream Chinese production (e.g., EU producing intermediate goods for Chinese final products) does not show the same negative impact as upstream exposure.
  • BITs with non-EU countries: These BITs have less negative or even positive effects on domestic capital growth compared to BITs with China.
  • EU's investment strategy: BITs with China are part of a broader effort by the EU to deepen its integration into global value chains and improve its investment environment post-2008.

Conclusion

The paper concludes that BITs with China have had a differentiated impact on EU home investments, primarily by increasing the depth of upstream linkages with China and reducing domestic capital growth in certain industries. The effects are heterogeneous, being most pronounced in low-productivity sectors and highly exposed industries. The study highlights the importance of using exogenous variation in GVC exposure to accurately estimate the causal impact of BITs on domestic investment dynamics.

Key Points in List Form

• BITs as Treatments: BITs are treated as policy interventions that enhance access to GVCs.
• Exogenous Variation: Pre-treaty exposure to Chinese value chains is used to identify the causal impact of BITs.
• Negative Impact on Capital Growth: BITs with China are associated with lower domestic capital growth, especially in low-productivity industries.
• Positive Effects on Productivity: High-productivity industries show increased labor productivity and VA growth after BITs.
• China's Unique Role: China is the only BIT partner for which the capital growth effect is negative in exposed industries.
• Robustness: The results are robust to alternative specifications and endogeneity controls.
• Methodology: Uses WIOD data, Bartik instruments, and DiD regression to isolate the impact of BITs.

Keywords

• Domestic investments
• Foreign investments
• Investment treaty
• Global value chain
• Bilateral treaties
• Value-added growth
• Productivity
• Exogenous variation
• Endogeneity

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