Compensation for Indirect Expropriation in International Investment Agreements: Implications of National Treatment and Rights to Invest
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Emma Aisbett
International investment agreements allow investors to bring compensation claims when their investments are hurt by new regulations. This requirement that host governments compensate for indirect expropriation helps solve post-investment moral hazard problems such as hold-ups, thereby helping to prevent inefficient over-regulation and encouraging foreign investment. However, when the social or environmental harm of a project is uncertain pre-investment, compensation requirements can interact with National Treatment clauses in a manner that reduces host government welfare and makes them less likely to admit investment. A police powers carve-out from the definition of compensable expropriation can be Pareto-improving and increase foreign investment.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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- Research Foundation
- Do Poorer Countries Have Less Capacity for Redistribution?
- Contagion, Liberalization, and the Optimal Structure of Globalization
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- Policy Analysis
- Recent Russian Debate on Moving from VAT to Sales Taxes and Its Global Implications
- Aid, Growth, and Development: Have We Come Full Circle?
- Compensation for Indirect Expropriation in International Investment Agreements: Implications of National Treatment and Rights to Invest
- The Past and Future of American Finance: American Experimentalism without American Exceptionalism
- Puzzle
- Borrowing to Save
- Symposium
- Introduction: Is the Era of the Dollar Over?
- Towards A New Global Reserve System
- Does the SDR Have a Future?
- The New Politics of Global Reserve Reform
- An SDR Based Reserve System
- Building an SDR-Based Global Reserve System
- The Future of the Reserve System
- Is the Era of the Dollar Over?
