Center for Agricultural and Rural Development/Iowa State University, Working Paper Series (21-WP 615)
We quantify the impacts of a potential Investment Facilitation Agreement (IFA) given the outcomes of the structured discussions. The analysis is based on an innovative multi-region general equilibrium simulation model including bilateral representative firms. Consideration is given to Foreign Direct Investment (FDI) and monopolistic competition. The model shows empirically relevant gains associatedwith removal of investment barriers. The expected global welfare gains range between 0.56% and 1.74% depending on the depth of a potential IFA. The benefits are concentrated among the members with the highest welfare increase for the low and middle income countries. Notable spillovers accrue to non-participants, which can be increased by joining the agreement. Our results contribute to the relatively scarceresearch on investment facilitation and provide policy makers with information onthe potential effects of an IFA.