Bounded Rationality and Economic Diplomacy

The Politics of Investment Treaties in Developing Countries

Inbunden, Engelska, 2015

Av Lauge N. Skovgaard Poulsen, Lauge N. (University College London) Skovgaard Poulsen

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Modern investment treaties give private arbitrators power to determine whether governments should pay compensation to foreign investors for a wide range of sovereign acts. In recent years, particularly developing countries have incurred significant liabilities from investment treaty arbitration, which begs the question why they signed the treaties in the first place. Through a comprehensive and timely analysis, this book shows that governments in developing countries typically overestimated the economic benefits of investment treaties and practically ignored their risks. Rooted in insights on bounded rationality from behavioural psychology and economics, the analysis highlights how policy-makers often relied on inferential shortcuts when assessing the implications of the treaties, which resulted in systematic deviations from fully rational behaviour. This not only sheds new light on one of the most controversial legal regimes underwriting economic globalization but also provides a novel theoretical account of the often irrational, yet predictable, nature of economic diplomacy.

Produktinformation

Utgivningsdatum2015-08-21
Mått152 x 229 x 16 mm
Vikt520 g
FormatInbunden
SpråkEngelska
Antal sidor264
FörlagCambridge University Press
ISBN9781107119536

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'Well before the current hype in Europe over investor-state dispute settlement, Poulsen pioneered the view that many countries signed up to investment protection treaties in less than rational ways. This book provides careful, country-specific evidence in support, with eye-opening stories from across the world, ranging from Pakistan and Ghana to the Czech Republic, Costa Rica and South Africa. Countries simply assumed the economic benefits of investment treaties and underestimated the possibility and costs of legal claims. World Bank and UN officials promoted the treaties and so did Western lawyers and advisors. Debunking the rational premise of much of the academic scholarship, this book should be compulsory reading for a new generation of policymakers and scholars alike, if only to avoid the mistakes of the past and find better ways to address today's increasingly complex challenges of economic diplomacy.' Joost Pauwelyn, Graduate Institute, Geneva