816 International Organization TABLE 1.The first forty bilateral investment treaties signed Investing country Host country Year BIT signed Germany Dominican Republic 1959 Germany Pakistan 1959 Germany Malaysia 1960 Germany Greece 1961 Switzerland Tunisia 1961 Germany Togo 1961 Germany Thailand 1961 Germany Liberia 1961 Germany Morocco 1961 Switzerland Niger 1962 Switzerland Cote d'Ivoire 1962 Switzerland Guinea 1962 Germany Cameroon 1962 Switzerland Congo 1962 Switzerland Senegal 1962 Germany Guinea 1962 Germany Turkey 1962 Germany Madagascar 1962 Switzerland Rwanda 1963 Netherlands Tunisia 1963 Switzerland Liberia 1963 Switzerland Cameroon 1963 Germany Sri Lanka 1963 Germany Tunisia 1963 Germany Sudan 1963 Italy Guinea 1964 Switzerland Togo 1964 Germany Senegal 1964 Germany Niger 1964 Switzerland Madagascar 1964 Belgium-Luxembourg Tunisia 1964 Germany Korea 1964 Switzerland Tanzania 1965 Switzerland Malta 1965 Germany Sierra Leone 1965 Switzerland Costa Rica 1965 Germany Ecuador 1965 Netherlands Cameroon 1965 Netherlands Cote d'Ivoire 1965 Sweden Cote d'Ivoire 1965 ment."9 By the mid-1980s,the United States pursued investor protection in the same fashion as did the Europeans.Schultz noted in his communication with the 19.George P.Schultz,transmission letter to the president recommending transmission of the U.S.- Turkey Bilateral Investment Treaty,1985.Available at(http://www.state.gov/documents/organization/ 43615.pdf).Accessed 12 July 2006
ment+”19 By the mid-1980s, the United States pursued investor protection in the same fashion as did the Europeans+ Schultz noted in his communication with the 19+ George P+ Schultz, transmission letter to the president recommending transmission of the U+S+- Turkey Bilateral Investment Treaty, 1985+ Available at ^http:00www+state+gov0documents0organization0 43615+pdf&+ Accessed 12 July 2006+ TABLE 1. The first forty bilateral investment treaties signed Investing country Host country Year BIT signed Germany Dominican Republic 1959 Germany Pakistan 1959 Germany Malaysia 1960 Germany Greece 1961 Switzerland Tunisia 1961 Germany Togo 1961 Germany Thailand 1961 Germany Liberia 1961 Germany Morocco 1961 Switzerland Niger 1962 Switzerland Cote d’Ivoire 1962 Switzerland Guinea 1962 Germany Cameroon 1962 Switzerland Congo 1962 Switzerland Senegal 1962 Germany Guinea 1962 Germany Turkey 1962 Germany Madagascar 1962 Switzerland Rwanda 1963 Netherlands Tunisia 1963 Switzerland Liberia 1963 Switzerland Cameroon 1963 Germany Sri Lanka 1963 Germany Tunisia 1963 Germany Sudan 1963 Italy Guinea 1964 Switzerland Togo 1964 Germany Senegal 1964 Germany Niger 1964 Switzerland Madagascar 1964 Belgium-Luxembourg Tunisia 1964 Germany Korea 1964 Switzerland Tanzania 1965 Switzerland Malta 1965 Germany Sierra Leone 1965 Switzerland Costa Rica 1965 Germany Ecuador 1965 Netherlands Cameroon 1965 Netherlands Cote d’Ivoire 1965 Sweden Cote d’Ivoire 1965 816 International Organization
Diffusion of Bilateral Investment Treaties 817 30 25 ● Dyads signing BITs ● 20 15- 10- ● All dyads at risk 1960 1970 1980 1990 2000 Year Note:Data points shown are for dyads signing BITs. FIGURE 2.Mean difference in GDP per capita between dyad members president after completion of six BITs in 198620 that,"[o]ur BIT approach fol- lowed similar programs that had been undertaken with considerable success by a number of European countries,including the Federal Republic of Germany and the United Kingdom,since the early 1960s."21 By the late 1980s,most analysts would agree that governments in countries home to large multinational corporations (MNCs)had nearly converged on a single treaty model.Developing countries could, increasingly,opt to take it or to leave it.As Figure 1 attests,many did the former. Early on,BITs were primarily agreements between countries of starkly varying developmental levels and political traditions.Figure 2,which plots the mean dif- ference in gross domestic product(GDP)per capita between BIT partners as well as that between states in all other dyads"at risk"of signing in a given year,dem- onstrates that the economic differences within these dyads have declined fairly substantially over time,even while the wealth disparities between non-BIT dyads have increased.As is the case with wealth,the "political gap"between new BIT signers has also diminished significantly over the past thirty years.Figure 3 plots the mean difference in the level of democracy (as measured by Polity scores)of 20.Turkey,Morocco,Haiti,Panama,Senegal,and Zaire. 21.George P.Schultz,transmission letter to the president recommending transmission of the U.S.-Turkey Bilateral Investment Treaty,1985.Available at (http://www.state.gov/documents/ organization/43615.pdf).Accessed 12 July 2006
president after completion of six BITs in 198620 that, “@o#ur BIT approach followed similar programs that had been undertaken with considerable success by a number of European countries, including the Federal Republic of Germany and the United Kingdom, since the early 1960s+”21 By the late 1980s, most analysts would agree that governments in countries home to large multinational corporations ~MNCs! had nearly converged on a single treaty model+ Developing countries could, increasingly, opt to take it or to leave it+ As Figure 1 attests, many did the former+ Early on, BITs were primarily agreements between countries of starkly varying developmental levels and political traditions+ Figure 2, which plots the mean difference in gross domestic product ~GDP! per capita between BIT partners as well as that between states in all other dyads “at risk” of signing in a given year, demonstrates that the economic differences within these dyads have declined fairly substantially over time, even while the wealth disparities between non-BIT dyads have increased+ As is the case with wealth, the “political gap” between new BIT signers has also diminished significantly over the past thirty years+ Figure 3 plots the mean difference in the level of democracy ~as measured by Polity scores! of 20+ Turkey, Morocco, Haiti, Panama, Senegal, and Zaire+ 21+ George P+ Schultz, transmission letter to the president recommending transmission of the U+S+-Turkey Bilateral Investment Treaty, 1985+ Available at ^http:00www+state+gov0documents0 organization043615+pdf&+ Accessed 12 July 2006+ FIGURE 2. Mean difference in GDP per capita between dyad members Diffusion of Bilateral Investment Treaties 817
818 International Organization 20 15- Dyads signing BITs 10- All dyads at risk 。● 1960 1970 1980 1990 2000 Year Note:Universe consists of states with more than 1 million inhabitants between 1960 and 1999. Data points shown are for dyads signing BITs. FIGURE 3.Mean difference in democracy between dyad members BIT partners in the year of their signing against that of all other dyads at risk of signing.Over time,new BIT partners have become more similar,evidence that the institution is spreading to a population of dyads of similar political and eco- nomic structure and,presumably,with less reason to sign such agreements. By the late 1990s,there emerged a few twists to the basic theme of wealthy countries picking off potentially lucrative but risky venues one at a time.From about 1999,developing countries began a rather more proactive effort to create bilateral investment treaties among themselves.These activities have been coordi- nated through the UN Conference on Trade and Development (UNCTAD),and sometimes with the assistance of a major capital exporting country,such as Ger- many or France.During a meeting jointly sponsored by UNCTAD,the Swiss gov- ernment,and a group of fifteen developing countries(G-15),seven developing countries signed eight bilateral treaties among themselves.22 Individual develop- ing countries soon began to seize the initiative.At the request of Thailand,a mini- lateral conference yielded seven more developing country BITs,23 and furthered discussions on several more.Bolivia(2000),India (2001),and Croatia (2001) initiated minilateral discussions on a similar model.France financed a round of 22.Egypt,India,Indonesia,Jamaica,Malaysia,Sri Lanka,and Zimbabwe. 23.Thailand-Zimbabwe,Thailand-Croatia,Thailand-Iran,Zimbabwe-Croatia,Zimbabwe-Sri Lanka, Croatia-Iran,Thailand-Kazakhstan,Zimbabwe-Kazakhstan,and Croatia-Kazakhstan.Sweden also par- ticipated and concluded a BIT with Thailand
BIT partners in the year of their signing against that of all other dyads at risk of signing+ Over time, new BIT partners have become more similar, evidence that the institution is spreading to a population of dyads of similar political and economic structure and, presumably, with less reason to sign such agreements+ By the late 1990s, there emerged a few twists to the basic theme of wealthy countries picking off potentially lucrative but risky venues one at a time+ From about 1999, developing countries began a rather more proactive effort to create bilateral investment treaties among themselves+ These activities have been coordinated through the UN Conference on Trade and Development ~UNCTAD!, and sometimes with the assistance of a major capital exporting country, such as Germany or France+ During a meeting jointly sponsored by UNCTAD, the Swiss government, and a group of fifteen developing countries ~G-15!, seven developing countries signed eight bilateral treaties among themselves+ 22 Individual developing countries soon began to seize the initiative+ At the request of Thailand, a minilateral conference yielded seven more developing country BITs, 23 and furthered discussions on several more+ Bolivia ~2000!, India ~2001!, and Croatia ~2001! initiated minilateral discussions on a similar model+ France financed a round of 22+ Egypt, India, Indonesia, Jamaica, Malaysia, Sri Lanka, and Zimbabwe+ 23+ Thailand-Zimbabwe, Thailand-Croatia, Thailand-Iran, Zimbabwe-Croatia, Zimbabwe-Sri Lanka, Croatia-Iran, Thailand-Kazakhstan, Zimbabwe-Kazakhstan, and Croatia-Kazakhstan+ Sweden also participated and concluded a BIT with Thailand+ FIGURE 3. Mean difference in democracy between dyad members 818 International Organization
Diffusion of Bilateral Investment Treaties 819 discussions primarily among the Francophone countries in 2001 that attracted twenty participants and yielded forty-two BITs,many of which involved noncontiguous, poor,highly indebted African countries for which it is difficult to imagine much benefit.(What are the chances that capital from Burkina Faso would flow to Chad, or investors from Benin would soon demand entree to Mali?)More understand- able,from an economic point of view,was the German-funded and supported meet- ing in October 2001 that drew together seven capital-poor countries(five of which were officially"highly indebted poor countries")and four wealthy European coun- tries,24 yielding both understandable (Belgium-Cambodia)and bizarre (Sudan- Zambia)bilateral treaty combinations.25 This recent turn toward BITs between developing states is more difficult for our theory to explain.It does seem to sug- gest that more political or sociological explanations may be increasingly relevant quite recently in some regions.However,these cases are still relatively few and of such recent vintage that they do not affect the broader relationships we report below. Leaders and Followers in BIT Agreements BITs present potential benefits for both capital-exporting and capital-importing countries.But which group of countries initiates and drives the signing of such agreements?Our theory,to anticipate the following section,assumes that poten- tial host countries have an important(although not exclusive)role in initiating or nurturing BIT negotiations.Is this a plausible assumption?After all,power- based theories-or "coercive"theories in the language of Simmons,Dobbin,and Garrett26-suggest that dominant capital-exporting countries such as Germany or the United States control the agenda and begin BIT negotiations according to their schedule and needs.Indeed,the chronology described above suggests that some home countries establish BIT"programs"and sign agreements with a slate of devel- oping countries in concentrated periods of time. If the dominant powers determine the BIT schedule,then we should see evi- dence of home country"programs"when we look at BITs,by country,across time. Programs would look like clusters,or peaks,of activity in certain eras in a home country's history.By the same logic,if host countries take a lead role in produc- ing BITs,their histories would also show some evidence of concerted,program- matic activity.Figure 4 and Figure 5 chart the number of BITs signed since 1959 for the twelve most active BIT signatories from both home (Figure 4)and host (Figure 5)countries.It appears that most home countries have BIT activity that 24.Participants included Cambodia,Eritrea,Malawi,Mozambique,Sudan,Uganda,and Zambia. Upon the request of these countries,Belgium,France,the Netherlands,and Sweden were both invited to participate and responded affirmatively. 25.Notice that even multilateral meetings of this sort have not yielded multilateral treaties on invest- ment.The states involved have always chosen instead to sign a series of BITs.The question of why multilateral approaches are not adopted is interesting,but we leave it for another day. 26.Simmons.Dobbin,and Garrett,this volume
discussions primarily among the Francophone countries in 2001 that attracted twenty participants and yielded forty-two BITs, many of which involved noncontiguous, poor, highly indebted African countries for which it is difficult to imagine much benefit+ ~What are the chances that capital from Burkina Faso would flow to Chad, or investors from Benin would soon demand entrée to Mali?! More understandable, from an economic point of view, was the German-funded and supported meeting in October 2001 that drew together seven capital-poor countries ~five of which were officially “highly indebted poor countries”! and four wealthy European countries, 24 yielding both understandable ~Belgium-Cambodia! and bizarre ~SudanZambia! bilateral treaty combinations+ 25 This recent turn toward BITs between developing states is more difficult for our theory to explain+ It does seem to suggest that more political or sociological explanations may be increasingly relevant quite recently in some regions+ However, these cases are still relatively few and of such recent vintage that they do not affect the broader relationships we report below+ Leaders and Followers in BIT Agreements BITs present potential benefits for both capital-exporting and capital-importing countries+ But which group of countries initiates and drives the signing of such agreements? Our theory, to anticipate the following section, assumes that potential host countries have an important ~although not exclusive! role in initiating or nurturing BIT negotiations+ Is this a plausible assumption? After all, powerbased theories—or “coercive” theories in the language of Simmons, Dobbin, and Garrett26—suggest that dominant capital-exporting countries such as Germany or the United States control the agenda and begin BIT negotiations according to their schedule and needs+ Indeed, the chronology described above suggests that some home countries establish BIT “programs” and sign agreements with a slate of developing countries in concentrated periods of time+ If the dominant powers determine the BIT schedule, then we should see evidence of home country “programs” when we look at BITs, by country, across time+ Programs would look like clusters, or peaks, of activity in certain eras in a home country’s history+ By the same logic, if host countries take a lead role in producing BITs, their histories would also show some evidence of concerted, programmatic activity+ Figure 4 and Figure 5 chart the number of BITs signed since 1959 for the twelve most active BIT signatories from both home ~Figure 4! and host ~Figure 5! countries+ It appears that most home countries have BIT activity that 24+ Participants included Cambodia, Eritrea, Malawi, Mozambique, Sudan, Uganda, and Zambia+ Upon the request of these countries, Belgium, France, the Netherlands, and Sweden were both invited to participate and responded affirmatively+ 25+ Notice that even multilateral meetings of this sort have not yielded multilateral treaties on investment+ The states involved have always chosen instead to sign a series of BITs+ The question of why multilateral approaches are not adopted is interesting, but we leave it for another day+ 26+ Simmons, Dobbin, and Garrett, this volume+ Diffusion of Bilateral Investment Treaties 819
15 154 15H 820 Germany Switzerland France United Kingdom 10 10 10 10 5 0 19601970198019902000 19601970198019902000 1960197019801990 2000 1960 1970198019902000 15- 15H 15 15 Italy Spain International Organization Netherlands Belgium 10 10 10 10- 5- 0 an n al n 0- 19601970198019902000 19601970198019902000 19601970198019902000 19601970198019902000 15 15 15H Sweden Denmark United States Finland 10 10、 10- 10- 5- 5、 19601970198019902000 1960 1970198019902000 19601970 19801990 2000 19601970198019902000 Year Note:Figure includes twelve most active BIT signers of capital-exporting countries. FIGURE 4.Number of BITs signed,by country,1959-99
FIGURE 4. Number of BITs signed, by country, 1959–99 820 International Organization