Investment Facilitation for Development Agreement: potential gains

Balistreri, Edward J. / Zoryana Olekseyuk
External Publications (2024)

in: Yeutter Institute Working Paper, Lincoln/USA: University of Nebraska

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We investigate the potential effects of the newly negotiated WTO Investment Facilitation for Development (IFD) Agreement depending on the coverage of implemented provisions. The analysis is methodologically based on a multi-region general equilibrium simulation model including bilateral representative firms, foreign direct investment (FDI) and monopolistic competition. The results suggest substantial global welfare gains ranging between 0.63% for the IFD binding provisions and 1.73% for all IFD provisions. Countries in the group of Friends of Investment Facilitation for Development (FIFD) as well as low and middle-income countries gain the most. The benefits for all regions increase together with the coverage of the implemented IFD provisions as well as with the rising number of participating countries. This provides a strong incentive for non-participating developing countries to join the IFD, reform their investment frameworks in line with the IFD agenda, and use the support structure contained in the section on special and differential treatment.

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