Investor State Dispute Settlement and Multinational Firm Behavior
18 Pages Posted: 8 Apr 2017
Date Written: January 27, 2017
Investor-state dispute settlements (ISDS) were supposed to become an integral part of multilateral trade and investment agreements although the partner countries of these deals do not suffer from substantial institutional weakness. This paper shows why multinational firms lobby for ISDS also in this environment beyond the potential compensation an ISDS provision may offer. ISDS makes them more aggressive by increasing cost-reducing investment. Therefore, potential compensations to a foreign investor do not imply a zero-sum game, and competition with a domestic firm does not necessarily help but may imply even more excessive investment.
Keywords: Investor-State Dispute Settlement, Mulitnational Enterprises, Foreign Direct Investment, TTIP, TPP
JEL Classification: F21, F23, F53, F55
Suggested Citation: Suggested Citation