We are hosting a discussion at the Cato Institute on the politics of investment treaties in developing countries, on Friday, April 15th at 4:30-6:00. The discussion will take as its starting point a new book by Lauge Poulsen, entitled "Bounded Rationality and Economic Diplomacy: The Politics of Investment Treaties in Developing Countries". Here is the publisher's description:
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.
Steve Charnovitz from GW, Alvaro Galindo from Dechert, and Andrea Menaker from White & Case will be providing comments. Each of the speakers will talk for 10-15 minutes and then we will have an open discussion for 40 minutes or so. We hope to get a good discussion going, so please join us! If those of you in the DC area are interested in coming, please email Huan Zhu from Cato at [email protected].
