International Pressures and Legal Development: Influence of Investment and Trade Regimes on Property Rights in Non-OECD Countries

Abstract

This thesis evaluates whether international pressures can contribute to changes in domestic legal performance. It seeks to answer two research questions: does participation in investment and trade regimes lead to changes in subsequent property rights protection, and does involvement in disputes under either of the regimes result in changes in property rights? The World Trade Organization (WTO) and Bilateral Investment Treaties (BITs), which guide trade and investment flows but also allow foreign investors and governments to sue a state for changes in domestic regulation, are controversial. In recent years scholars and the public have expressed concerns that the regimes infringe on states’ sovereignty and could even lead to deterioration in domestic legal systems. Given these concerns, investigating the impact of the regimes seems timely. Insofar as economic development and strong legal performance are seen as central goals of policy-makers, understanding the effects of trade and investment regimes is important. While the literature has devoted more attention to economic impacts of the WTO and BITs, there remains a question whether the effects of regime participation on economic growth and institutional performance are complementary, or whether countries face a trade-off between the two. This thesis seeks to resolve a part of this puzzle by analyzing the effect of regime participation and dispute involvement on property rights in countries that were not members of the Organization for Economic Cooperation and Development (OECD) in 1995. Based on quantitative analysis, it concludes that WTO and BIT participation is associated with positive, and not negative, changes in subsequent property rights. Further, supported by a case study analysis of legal performance in China, this thesis finds evidence for positive, although limited, impact of regime participation on the Chinese legal system. At the same time, it finds no evidence for any effect of dispute involvement on property rights.