What states want: Estimating ideal points from international investment treaty content
| Author | Florencia Montal,Jane Lawrence Sumner,Carly Potz-Nielsen |
| Published date | 01 November 2020 |
| DOI | 10.1177/0022343320959130 |
| Date | 01 November 2020 |
| Subject Matter | Regular Article |
What states want: Estimating ideal points
from international investment treaty content
Florencia Montal
Universidad Torcuato Di Tella
Carly Potz-Nielsen
University of Minnesota
Jane Lawrence Sumner
University of Minnesota
Abstract
When negotiating investment treaties, states balance two goals: providing strong protections for investors (investor
protection), which is thought to attract foreign direct investment, and maintaining the ability to regulate their
economies (regulatory autonomy). In this article we argue that treaty content can tell us about the latent preferences
that states have over the level of investor protection enshrined in BITs. We use an item response theory (IRT) model
and a dataset of 1,144 treaties to estimate latent preferences on this scale for signatory countries. Our measure is of
use to scholars interested in studying bilateral investment treaties, international law, and foreign direct investment,
and our model is of use to anyone aiming to estimate latent preferences from jointly produced manifestations.
Keywords
Bayesian item response theory model, bilateral investment treaties, latent variable estimation
Introduction
Bilateral investment treaties (BITs) are agreements
between two countries for the protection of each coun-
try’s investments in the other’s territory. Up to this date,
2,897 BITs have been signed.
1
That is, on almost 3,000
occasions, representatives from two governments got
together to decide, fundamentally, on what government
actions should international law protect investors against
and what consequences should follow when states decide
to act in those particular ways.
However, that both countries are willing to sign a BIT
does not mean they are on the same page about its
content. Former BIT negotiator Kenneth Vandevelde
(1988) describes the process leading to the earlier US
treaties in the following way. First, countries that
expressed interest in concluding a treaty would receive
a draft text from the USA. If after seeing the initial draft
the country remained interested – meaning their initial
preferences were not so far apart that no eventual agree-
ment was possible – a round of face-to-face negotiations
followed. According to Vandevelde, ‘(i)n some cases, the
other nation’s negotiating team appeared at the first
round with a completely revised counter-draft’. Other
times, ‘negotiations proceeded entirely from the United
States model, with discussion confined to those provi-
sions which the other country found unclear or objec-
tionable’ (p. 211). That is, since perfect coincidence of
preferences from the onset is unlikely, negotiations
involve two parties working to pull the final draft
towards their own positions.
Corresponding author:
fmontal@utdt.edu
1
UNCTAD, International Investment Agreements Navigator.
Journal of Peace Research
2020, Vol. 57(6) 679–691
ªThe Author(s) 2020
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DOI: 10.1177/0022343320959130
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