Table of Contents

International Investment Law and Development

International Investment Law and Development

Bridging the Gap

Frankfurt Investment and Economic Law series

Edited by Stephan W. Schill, Christian J. Tams and Rainer Hofmann

Foreign investment is meant to contribute to the host country’s development, and yet international investment law has often been seen as an obstacle to (sustainable) development. So are investment and development friends or foes? Combining critical reflection and detailed analysis, this timely volume explores the relationship between the two concepts and explores options of harnessing investment for development.

Chapter 10: Democracy, development and compensation under investment treaties: The case of transition from authoritarian rule

Jonathan Bonnitcha

Subjects: development studies, law and development, law - academic, international economic law, trade law, international investment law, law and development


Over the past decades both scholars and practitioners have paid greater attention to the role of governance in development. One issue that has proven particularly controversial is the relationship between the form of government within a state and its development. The rise of China has raised questions about whether non-democratic forms of government can be more successful in mobilising resources for economic growth. At the same time, countries with democratic forms of government continue to achieve better outcomes for a range of other dimensions of development. For example, famines are much less likely in democratic countries and, in general, economic resources are shared more equally in democracies than in authoritarian regimes. There is, however, a more fundamental link between democratic governance and development. In order to identify and select their own development priorities, the people of a state must be able to participate in the government of their own country. This link between the possibility of political participation and development is recognised by Common Article 1(1) of the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights: All peoples have the right of self-determination. By virtue of that right they freely determine their political status and freely pursue their economic, social and cultural development. Article 8 of the Vienna Declaration on Human Rights is more specific in linking democratic government to development: Democracy, development and respect for human rights and fundamental freedoms are interdependent and mutually reinforcing.

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