Title

Law and Politics of FDI

Lead Author Major

International Relations

Format

Oral Presentation

Faculty Mentor Name

Yong Kyun Kim

Faculty Mentor Department

International Studies

Abstract/Artist Statement

Purpose of my paper is to study why states would bind themselves to hand-tying agreements in investment treaties that would undermine their state sovereignty. To that extent, I will study the various political and economic conditions that might force or induce the respective states to agree to and conceded to the investor-state dispute (ISD) settlement provisions in order to attract foreign investment. The study will encompass a combination of literature review and case studies comparing Republic of Korea and Australia as well as Brazil and China. Through the paper, I will show that states’ relative bargaining power of the two BIT partners as well as the domestic economic factors, including the respective growth rates and business cycles, of the capital-importing states are the most important factors that might induce the latter state to concede to the negotiations and accept ISD settlement provisions. Logically, the developed countries are the more powerful countries with capital to export, whereas the developing ones that need to import capital are the less powerful partner in the negotiation. These developed countries that are in need of foreign capital are more desperate for a successful treaty agreement, so as to attract foreign investment that could help jump-start their economy. The statistics also show that few years preceding signing of a BIT tend to be a business cycle trough, with lower GDP growth rates. The less-developed countries with low GDP growth rates will have higher demand for new foreign capital compared to those countries that already have high growth rates.

Location

DeRosa University Center, Room 216

Start Date

21-4-2012 9:00 AM

End Date

21-4-2012 12:00 PM

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Apr 21st, 9:00 AM Apr 21st, 12:00 PM

Law and Politics of FDI

DeRosa University Center, Room 216

Purpose of my paper is to study why states would bind themselves to hand-tying agreements in investment treaties that would undermine their state sovereignty. To that extent, I will study the various political and economic conditions that might force or induce the respective states to agree to and conceded to the investor-state dispute (ISD) settlement provisions in order to attract foreign investment. The study will encompass a combination of literature review and case studies comparing Republic of Korea and Australia as well as Brazil and China. Through the paper, I will show that states’ relative bargaining power of the two BIT partners as well as the domestic economic factors, including the respective growth rates and business cycles, of the capital-importing states are the most important factors that might induce the latter state to concede to the negotiations and accept ISD settlement provisions. Logically, the developed countries are the more powerful countries with capital to export, whereas the developing ones that need to import capital are the less powerful partner in the negotiation. These developed countries that are in need of foreign capital are more desperate for a successful treaty agreement, so as to attract foreign investment that could help jump-start their economy. The statistics also show that few years preceding signing of a BIT tend to be a business cycle trough, with lower GDP growth rates. The less-developed countries with low GDP growth rates will have higher demand for new foreign capital compared to those countries that already have high growth rates.