The Impact of Bilateral Investment Treaties on Foreign Investment in Iran: Gravity Model Approach

Foreign investment has many positive effects on the host countries. Attracting foreign investment through technology transfer and increasing competitiveness in the business environment probably lead to increasing economic growth and reducing poverty. Developing countries have always been trying to attract more foreign investment by providing the necessary conditions and increasing their competitiveness. In this regard, the governments of these countries have used various initiatives such as signing bilateral investment treaties as a reliable tool to encourage and promote foreign investment. This study has been compiled with the aim of investigating the impact of bilateral investment treaties on foreign investment in Iran. To achieve this purpose, the gravity model approach and the panel data model in the period of 2002 to 2020 have been used. The results show that there is a positive and significant relationship between signing bilateral investment treaties and the attraction of foreign investment in Iran. Because the sanctions imposed against Iran foreign investment inflows to Iran have significantly reduced. In addition, there is a positive and statistically significant relationship between the variables of the existence of common language, as well as the real GDP of the home countries and the attraction of foreign investment in Iran