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Credibility, preferences, and bilateral investment treaties

Title
Credibility, preferences, and bilateral investment treaties
Authors
Cho, Seok-juKim, Yong KyunLee, Cheol-Sung
Ewha Authors
김용균
SCOPUS Author ID
김용균scopus
Issue Date
2016
Journal Title
REVIEW OF INTERNATIONAL ORGANIZATIONS
ISSN
1559-7431JCR Link

1559-744XJCR Link
Citation
REVIEW OF INTERNATIONAL ORGANIZATIONS vol. 11, no. 1, pp. 25 - 58
Keywords
Bilateral investment treatiesForeign direct investmentCredibilityCommitment
Publisher
SPRINGER
Indexed
SSCI; SCOPUS WOS
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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