The Impact of Investment Treaty Violations on Foreign Direct Investment 405 in-depth,credibility-based theoretical accounts,either through the development of formal models or lengthy discussions that draw on numerous scholarly traditions. A sizeable number of the aforementioned studies provide evidence that BITs are associated with greater levels of FDI.2 Perhaps the most robust finding is that the number of BITs a country signs is positively correlated with inward FDI.3 The validity of this finding is enhanced by that fact that these studies examine a wide range of countries over a long time-series and utilize more reliable country- level FDI data.Several others also find that BITs stimulate greater FDI more nar- rowly among the pair of treaty signatories.4Because these latter studies rely on dyadic FDI data,which is more incomplete,this more specific positive finding is less robust and somewhat more contested.5 Therefore,although mounting evi- dence shows that BITs in the aggregate are associated with greater inward FDI, particularly at the country level,more research is needed to illuminate precisely how,and under what conditions,BITs should produce the desired investment benefits. A limitation of existing empirical approaches is the inability to parse out the precise mechanisms by which BITs increase FDI.Although many studies advance nuanced theoretical arguments,they typically utilize a common,undifferentiated empirical strategy.Regardless of the logic posited,the default measurement approach is to tally each country's number of BITs(for those that use a country- level research design)or to assign to all pairs of countries a zero or one for a BIT dummy variable(for those that employ a dyadic design).The validity of the resulting empirical findings is not in question,yet it is difficult to ascertain the causal mechanism at work or to pinpoint the conditions under which BITs will increase FDI.Indeed,studies that employ nearly identical research designs and generate similar results sometimes attribute their positive findings to very differ- ent logics.6 Neumayer and Spess,in fact,acknowledge this empirical limitation: "How important is the signaling effect,which benefits investors from all coun- tries,compared to the commitment effect,which only relates to investors from BIT partner countries,is difficult to say."7 10.See,for example,Aisbett 2009;and Bubb and Rose-Ackerman 2007. 11.See,for example,Buthe and Milner 2009. 12.See Buthe and Milner 2009;Egger and Pfaffermayr 2004;Haftel 2010;Neumayer and Spess 2005;and Salacuse and Sullivan 2005. 13.See Buithe and Milner 2009:and Neumayer and Spess 2005 14.See Egger and Pfaffermayr 2004;Haftel 2010;Kerner 2009;and Salacuse and Sullivan 2005. 15.Hallward-Driemeier 2003:Tobin and Rose-Ackerman 2005;and UNCTAD 1998 fail to find a consistent relationship between BITs and FDI,and Peinhardt and Allee forthcoming uncover little evi- dence that U.S.preferential economic agreements increase U.S.FDI to partner countries.Also see Aisbett 2009;and Yackee 2009 for arguments about possible reverse causality,model misspecification, and measurement error. 16.Neumayer and Spess 2005;and Buthe and Milner 2009 both employ country-level research designs,measure BITs similarly,and uncover positive relationships between BITs and FDI.Yet the former attributes this to signaling whereas the latter espouses a more credibility-based logic. 17.Neumayer and Spess 2005,1571.in-depth, credibility-based theoretical accounts, either through the development of formal models10 or lengthy discussions that draw on numerous scholarly traditions+ 11 A sizeable number of the aforementioned studies provide evidence that BITs are associated with greater levels of FDI+ 12 Perhaps the most robust finding is that the number of BITs a country signs is positively correlated with inward FDI+ 13 The validity of this finding is enhanced by that fact that these studies examine a wide range of countries over a long time-series and utilize more reliable country￾level FDI data+ Several others also find that BITs stimulate greater FDI more nar￾rowly among the pair of treaty signatories+ 14 Because these latter studies rely on dyadic FDI data, which is more incomplete, this more specific positive finding is less robust and somewhat more contested+ 15 Therefore, although mounting evi￾dence shows that BITs in the aggregate are associated with greater inward FDI, particularly at the country level, more research is needed to illuminate precisely how, and under what conditions, BITs should produce the desired investment benefits+ A limitation of existing empirical approaches is the inability to parse out the precise mechanisms by which BITs increase FDI+ Although many studies advance nuanced theoretical arguments, they typically utilize a common, undifferentiated empirical strategy+ Regardless of the logic posited, the default measurement approach is to tally each country’s number of BITs ~for those that use a country￾level research design! or to assign to all pairs of countries a zero or one for a BIT dummy variable ~for those that employ a dyadic design!+ The validity of the resulting empirical findings is not in question, yet it is difficult to ascertain the causal mechanism at work or to pinpoint the conditions under which BITs will increase FDI+ Indeed, studies that employ nearly identical research designs and generate similar results sometimes attribute their positive findings to very differ￾ent logics+ 16 Neumayer and Spess, in fact, acknowledge this empirical limitation: “How important is the signaling effect, which benefits investors from all coun￾tries, compared to the commitment effect, which only relates to investors from BIT partner countries, is difficult to say+”17 10+ See, for example, Aisbett 2009; and Bubb and Rose-Ackerman 2007+ 11+ See, for example, Büthe and Milner 2009+ 12+ See Büthe and Milner 2009; Egger and Pfaffermayr 2004; Haftel 2010; Neumayer and Spess 2005; and Salacuse and Sullivan 2005+ 13+ See Büthe and Milner 2009; and Neumayer and Spess 2005+ 14+ See Egger and Pfaffermayr 2004; Haftel 2010; Kerner 2009; and Salacuse and Sullivan 2005+ 15+ Hallward-Driemeier 2003; Tobin and Rose-Ackerman 2005; and UNCTAD 1998 fail to find a consistent relationship between BITs and FDI, and Peinhardt and Allee forthcoming uncover little evi￾dence that U+S+ preferential economic agreements increase U+S+ FDI to partner countries+ Also see Aisbett 2009; and Yackee 2009 for arguments about possible reverse causality, model misspecification, and measurement error+ 16+ Neumayer and Spess 2005; and Büthe and Milner 2009 both employ country-level research designs, measure BITs similarly, and uncover positive relationships between BITs and FDI+ Yet the former attributes this to signaling whereas the latter espouses a more credibility-based logic+ 17+ Neumayer and Spess 2005, 1571+ The Impact of Investment Treaty Violations on Foreign Direct Investment 405