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When Do States Believe in Treaties? Legalization, Commitment, and Institutional Externality

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  • Zhiyuan Wang

Abstract

Objective This study aims to elucidate the constraining power of international institutions by examining treaty externalities shaped by the interaction between two key factors: legalization and commitment. Methods To illustrate this theoretical possibility, I estimate a two‐way fixed effects model to pinpoint how varying levels of legalization and commitment impact aid flows within OECD‐non‐OECD bilateral investment treaties (BITs) from 1971 to 2012. Results I find clear and robust evidence that pledging the highest level of commitment to highly legalized BITs effectively reduces foreign aid from a capital‐exporting member to a capital‐importing member. Conclusion The finding substantiates that the externalities of international institutions can also be indicative of their constraining power.

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  • Zhiyuan Wang, 2025. "When Do States Believe in Treaties? Legalization, Commitment, and Institutional Externality," Social Science Quarterly, Southwestern Social Science Association, vol. 106(6), November.
    • Handle: RePEc:bla:socsci:v:106:y:2025:i:6:n:e70097
    DOI: 10.1111/ssqu.70097
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