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Democracies cooperate more: Even where it threatens to bite?

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  • Hühne, Philipp
  • Meyer, Birgit
  • Nunnenkamp, Peter
  • Roy, Martin

Abstract

Estimating two-step selection models, we find that more democratic governments are more likely to conclude preferential trade agreements (PTAs) and to agree to stricter investment provisions related to pre-establishment national treatment and investor-state dispute settlement in PTAs. This is surprising when considering the potentially high costs of litigation.

Suggested Citation

  • Hühne, Philipp & Meyer, Birgit & Nunnenkamp, Peter & Roy, Martin, 2015. "Democracies cooperate more: Even where it threatens to bite?," Kiel Working Papers 2004, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:2004
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    References listed on IDEAS

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    1. Elkins, Zachary & Guzman, Andrew T. & Simmons, Beth A., 2006. "Competing for Capital: The Diffusion of Bilateral Investment Treaties, 1960–2000," International Organization, Cambridge University Press, vol. 60(4), pages 811-846, October.
    2. Lauge N. Skovgaard Poulsen & Emma Aisbett, 2011. "When the Claim Hits: Bilateral Investment Treaties and Bounded Rational Learning," Crawford School Research Papers 1105, Crawford School of Public Policy, The Australian National University.
    3. Eric Neumayer & Peter Nunnenkamp & Martin Roy, 2016. "Are stricter investment rules contagious? Host country competition for foreign direct investment through international agreements," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 177-213, February.
    4. Edward D. Mansfield & Helen V. Milner & Jon C. Pevehouse, 2008. "Democracy, Veto Players and the Depth of Regional Integration," The World Economy, Wiley Blackwell, vol. 31(1), pages 67-96, January.
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    Cited by:

    1. Nunnenkamp Peter, 2016. "Demokratie und internationale Investitionsabkommen: (Überraschende) Zusammenhänge und (lückenhafte) Erklärungen," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 17(4), pages 364-382, December.

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    More about this item

    Keywords

    preferential trade agreements (PTA); investor-state dispute settlement; national treatment; democracy;
    All these keywords.

    JEL classification:

    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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