- Definition of investment — Investor — Treaties, interpretation — Treaty provisions
This chapter addresses the puzzle of why developing countries have so enthusiastically embraced investment treaties. For while investment treaties are formally reciprocal, foreign investment between developed and developing countries has traditionally flowed primarily from the former to the latter. It evaluates three potential explanations for why developing countries adopted the treaties—(i) investment promotion; (ii) promoting or tying in domestic reforms; and (iii) diplomatic and symbolic reasons. We then examine an important cross-cutting issue: the role of expertise. Regardless of the objectives that developing countries sought to achieve by adopting investment treaties, many failed to appreciate the risks and implications of the treaties. The chapter concludes by examining recent developments—including the newfound role of some developing countries as seeking rights for ‘their’ investors abroad.
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