Why do states participate in bilateral investment treaties (BITs)? In this article, I examine the role of indirect investment on BIT formation. Indirect investment flows are an important aspect of the global investment regime that are underexamined by research focused on direct flows only. Indirect flows play an important role in affecting incentives for BIT participation because firms channel investment through intermediary destinations to take advantage of existing BITs. I argue that governments are more likely to participate in BITs when states expect to access groups of capital exporting states through second order links. When selecting BIT partners, states evaluate expected indirect foreign direct investment (FDI) flows by considering characteristics of a potential partner's second order FDI partners. States are thus more likely to participate in BITs when expectations for indirect flows are high. I use a variety of analyses to demonstrate evidence in favor of my hypotheses. I find evidence that indirect flows affect the likelihood of BIT formation and increase dyadic FDI flows. This research provides a novel explanation for BIT formation and contributes to research on indirect capital flows, treaty shopping and BIT formation.

中文翻译：

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网络资本：间接投资和BIT形成

为什么国家要参加双边投资条约（BITs）？在本文中，我研究了间接投资对 BIT 形成的作用。间接投资流动是全球投资制度的一个重要方面，仅针对直接流动的研究并未对其进行充分检验。间接流量在影响参与 BIT 的激励方面发挥着重要作用，因为公司通过中介目的地引导投资以利用现有的 BITs。我认为，当各州希望通过二级链接访问资本输出国集团时，政府更有可能参与双边投资条约。在选择 BIT 合作伙伴时，各州通过考虑潜在合作伙伴的二级 FDI 合作伙伴的特征来评估预期的间接外国直接投资 (FDI) 流量。因此，当对间接流量的期望很高时，各国更有可能参与双边投资条约。我使用各种分析来证明支持我的假设的证据。我发现有证据表明间接流量会影响 BIT 形成的可能性并增加二元 FDI 流量。这项研究为 BIT 的形成提供了一种新颖的解释，并有助于对间接资本流动、条约购买和 BIT 形成的研究。