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Asymmetric diffusion: World Bank 'best practice' and the spread of arbitration in national investment laws

Research output: Contribution to journalArticlepeer-review

Open Access Status

  • Embargoed (until 25/08/21)

Author(s)

Tarald Laudal Berge, Taylor St John

School/Research organisations

Abstract

Globally, 74 countries have domestic investment laws that mention investor-state arbitration and 42 of these laws provide consent to it. That is, they give foreign investors the right to bypass national courts and bring claims directly to arbitration. What explains this variation, and why do any governments include investor-state arbitration in domestic legislation? We argue that governments incorporate arbitration into their domestic laws because doing so was labelled ‘international best practice’ by specialist units at the World Bank. We introduce the concept of asymmetric diffusion, which occurs when a policy is framed as international best practice but only recommended to a subset of states. No developed state consents to arbitration in their domestic law, nor does the World Bank recommend that they do so. Yet we show that governments who receive technical assistance from the World Bank’s Foreign Investment Advisory Service are more likely to include arbitration in their laws. We first use event history analysis and find that receiving World Bank technical assistance is an exceptionally strong predictor of domestic investment laws with arbitration. Then we illustrate our argument with a case study of the Kyrgyz Republic’s 2003 law.
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Details

Original languageEnglish
Pages (from-to)1-27
JournalReview of International Political Economy
VolumeLatest Articles
Early online date25 Feb 2020
DOIs
Publication statusE-pub ahead of print - 25 Feb 2020

    Research areas

  • Foreign direct investment, National investment laws, Investor-state dispute settlement, World Bank, Arbitration, Technical assistance, Templates

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