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Credibility, preferences, and bilateral investment treaties
- Title
- Credibility, preferences, and bilateral investment treaties
- Authors
- Cho, Seok-ju; Kim, Yong Kyun; Lee, Cheol-Sung
- Ewha Authors
- 김용균
- SCOPUS Author ID
- 김용균
- Issue Date
- 2016
- Journal Title
- REVIEW OF INTERNATIONAL ORGANIZATIONS
- ISSN
- 1559-7431
1559-744X
- Citation
- REVIEW OF INTERNATIONAL ORGANIZATIONS vol. 11, no. 1, pp. 25 - 58
- Keywords
- Bilateral investment treaties; Foreign direct investment; Credibility; Commitment
- Publisher
- SPRINGER
- Indexed
- SSCI; SCOPUS
- Document Type
- Article
- Abstract
- When is a commitment mechanism employed as a solution to a time-inconsistency problem? This article provides a nuanced answer to this question by studying bilateral investment treaties (BITs). We develop a game theoretic model of BIT signing in which the government of a capital-importing country and an investor from a capital-exporting country strategically interact. The model predicts that, on the one hand, when host states highly value foreign direct investment (FDI), the likelihood of BITs increases as their judicial institutions lack credibility. On the other hand, when their preferences for FDI are only modest, the likelihood of BITs increases as their judicial institutions become more credible. We employ Cox proportional hazard models to test our hypotheses, and the results largely support our theory. Our findings have broad implications for the large literature on credible commitment, which has paid insufficient attention to the interplay between preferences and credibility.
- DOI
- 10.1007/s11558-015-9218-8
- Appears in Collections:
- 사회과학대학 > 정치외교학전공 > Journal papers
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