The international investment agreement regime (IIA Regime) is composed of thousands of IIAs and a system of investor–state dispute settlement. Historically, high-income developing countries (HIDCs) were part of the global South and thus ‘hosts’ of foreign direct investment (FDI). Increasingly, however, these countries have become ‘home’ to investors who are hosted and exposed to political risk abroad. Representing both home and host country interests simultaneously, how do HIDCs balance these crosscutting pressures? We argue that as the position of an HIDC shifts from mostly a recipient towards a sender of significant amounts of FDI, it will be more willing to provide protection to foreign investors at the expense of state regulatory space in its IIAs, thereby increasing its exposure to the IIA Regime. Employing an original data set that measures this exposure for sixty-four HIDCs over six decades, we first show that the degree of HIDC exposure to the IIA Regime varies a great deal. Using a general method of moments (GMM) analysis and controlling for a host of confounding factors, we demonstrate that, indeed, higher levels of FDI outflows as a share of the national economy result in greater exposure to the IIA Regime.
Bibliographical noteFunding Information:
Earlier drafts of this article were presented at the 2018 Annual Meeting of the European Political Science Association, the 2019 Political Economy of International Organizations Conference, and the 2019 Pacific International Politics Conference. We thank Leo Baccini, Sarah Brooks, Adrian Shin, the anonymous reviewers, and the Editor for helpful comments and suggestions. Darren Cheong, Kirthana Ganeson, and Valentine Herzl provided valuable research assistance.
Copyright © The Author(s), 2021. Published by Cambridge University Press
- The IIA regime
- high income developing countries
- outwards FDI