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Economic Interest versus Social Conscience Signing Bilateral Investment Treaties – Does Human Rights Matter?

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  • Vadlamannati, Krishna Chaitanya

Abstract

Both theoretical and empirical literatures have identified several channels through which bilateral investment treaties encourage FDI in developing economies like providing investment protection guarantees and so on. Economic and political interests are said to be the driving forces behind signing the investment treaties. However, there is virtually no systematic evidence on whether countries consider human rights performance of the host country while signing bilateral investment treaties. We make an attempt to examine this question by considering 87 developing countries over a period 1980-2006. Different estimation techniques like: negative binomial and poisson models are used. The results demonstrate that economic interests drive bilateral investment treaties to human rights performance. Economic interests measured by economic development, long-term investments, return on investments and macroeconomic risk are significant while human rights performance namely, political terror scale and physical integrity rights remain consistently insignificant. The results are robust to the use of alternative estimation techniques and sensitivity analysis. These results highlight that economic interests preside over social conscience while countries signing investment treaties.

Suggested Citation

  • Vadlamannati, Krishna Chaitanya, 2008. "Economic Interest versus Social Conscience Signing Bilateral Investment Treaties – Does Human Rights Matter?," MPRA Paper 15431, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:15431
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    File URL: https://mpra.ub.uni-muenchen.de/15431/1/MPRA_paper_15431.pdf
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    References listed on IDEAS

    as
    1. Eric Neumayer, 2006. "Do international human rights treaties improve respect for human rights?," Conferences on New Political Economy,in: Max Albert & Stefan Voigt & Dieter Schmidtchen (ed.), Conferences on New Political Economy, edition 1, volume 23, pages 69-104(36 Mohr Siebeck, Tübingen.
    2. Deger, Saadet & Sen, Somnath, 1983. "Military expenditure, spin-off and economic development," Journal of Development Economics, Elsevier, vol. 13(1-2), pages 67-83.
    3. Schneider, Friedrich & Frey, Bruno S., 1985. "Economic and political determinants of foreign direct investment," World Development, Elsevier, vol. 13(2), pages 161-175, February.
    4. Grossman, Herschel I & Kim, Minseong, 1996. "Predation and Accumulation," Journal of Economic Growth, Springer, vol. 1(3), pages 333-350, September.
    5. Dunning, John H, 1973. "The Determinants of International Production," Oxford Economic Papers, Oxford University Press, vol. 25(3), pages 289-336, November.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    bilateral investment treaties; FDI and human rights performance;

    JEL classification:

    • P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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