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Investor Rights versus Human Rights: Do Bilateral Investment Treaties Tilt the Scale?

Published online by Cambridge University Press:  28 June 2018

Abstract

This article argues that the broad and legally enforceable protection that bilateral investment treaties (BITs) offer to foreign investors worsens the human rights practices of developing countries. BITs lock in initial conditions attractive to investors that are linked to vertical investment flows and investment and trade competition. They also constrain the provision of welfare benefits or basic infrastructure. The lock-in and constraining effects are sources of popular grievance and dissent in states that host foreign investment. BIT-protected investor rights, however, limit the ability of governments to back-down vis-à-vis investors, lowering the relative cost of human rights violations. Finally, this study suggests that democratic regimes mitigate the negative effect of BITs. Evidence from 113 developing countries from 1981 to 2009 supports the hypotheses.

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Copyright © Cambridge University Press, 2018

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Footnotes

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Department of Political Science, Michigan State University (email: bodeaana@msu.edu); School of Public Economics and Administration, Institute of Political Science, Shanghai University of Finance and Economics (email: ye.fangjin@sufe.edu.cn). Earlier versions of this article were presented at the annual meetings of the Midwest Political Science Association 2015, International Studies Association 2016, and Political Economy of International Organization 2016 and the University of Houston Political Science Department Seminar. We thank Tanya Bagashka, Glen Biglaiser, Jia Chen, Raymond Hicks, Yoram Haftel, Benjamin Appel, Eric Chang, Michael Colaresi, Pablo Pinto, Peter Rosendorff, Min Tang, Rachel Wellhausen and Boliang Zhu for comments. Five anonymous reviewers and the BJPS editor also provided excellent suggestions. Authors are listed alphabetically. Ye acknowledges support from a Michigan State University Dissertation Completion Fellowship, the National Natural Science Foundation of China (No. 71774106) and IRTSHUFE (No. 2014110344). Data replication sets are available at https://dx.doi.org/10.7910/DVN/AVIA6Z and online appendices at: https://dx.doi.org/10.1017/S0007123418000042.

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