Chapter 14: Political Economy and International Investment Law: The Conclusion of IIAs by Developing Countries during the Twentieth Century
This Chapter has argued that within international investment law, a non-unitary State perspective is preferable to a unitary State perspective. By proposing a ‘selectorate theory’ of State decision-making in the context of the conclusion of IIAs, this Chapter showed that a non-unitary State perspective: (i) can be tractable despite being less parsimonious, and therefore remain fairly easy to understand and to use by a wide audience; (ii) makes predictions about the overall evolution of developing countries’ IIAs that are empirically consistent; (iii) allows explaining certain State decision-making in the context of the conclusion of IIAs which a unitary State theory has a difficult time fully explaining (see the case studies of Brazil and South Africa); and (iv) makes it clear that the widespread competition-for-capital interpretation does not readily follow from the empirical finding that there exists a positive statistical association (i.e., statistically significant correlation) between the probability of a developing country signing (and arguably concluding) a BIT and the conclusion of BITs by its FDI-inflow competitors. Finally, this Chapter also showed that developing countries, even though they amounted to capital-importing institutions during the Twentieth Century (since they had virtually no existing foreign investments and little prospects of having such investments in the near future), need not have concluded IIAs to attract FDI inflows (and therewith further development), but may have done so solely to protect foreign investments.
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