Publication

This paper examines why the number of international investment agreements signed by developing countries with increasingly strict commitments to protect foreign investors and liberalize entry regulations continues to grow, even though it is not clear if they stimulate foreign direct investment (FDI). It argues that the reason for this is that the spread of these stricter agreements is self-reinforcing, driven by developing host countries acting defensively and agreeing to binding commitments in order to avoid FDI going to competing developing states which have agreed to similar binding commitments in the past.