Abstract: Investing in host countries without independent courts, multinational corporations (MNCs) face two types of hazards, the risks of opportunistic expropriation by the government (political hazards) and the threat of contract breach by their domestic partners (contractual hazards). Existing literature focuses on how bilateral investment treaties (BITs) settle investor-state disputes and mitigate political risks for foreign firms. However, institutions that enforce private contracts, such as transnational commercial arbitration (TCA) institutions, remain understudied. TCA institutions provide impartial venues for foreign investors to resolve their disputes with domestic firms. Therefore, countries that have signed BITs and established TCA institutions can address both the political and contractual hazard concern for foreign investors even if their domestic courts are corrupt and dependent. Using dyadic-level data and a case study of China, I find that a combination of BIT and TCA leads to an increase in FDI inflows, particularly in countries with a lower level of judicial independence. Moreover, these two sets of international institutions are useful to attract FDI only when jointly present.
Bio: Weiwen Yin is currently a postdoctoral fellow at the China and the World Program. Weiwen's research and teaching interests include comparative and international political economy, international law and organizations, economic history, and quantitative methods, with a regional focus of East Asia. His publications appear in Journal of Conflict Resolution, International Relations of the Asia-Pacific, China: An International Journal, and Japanese Journal of Political Science. In 2019, his research was funded by the Japanese Studies Fellowship, Japan Foundation.
Weiwen recently completed his Ph.D. in political science from Texas A&M University. Before his Ph.D. study, Weiwen received his B.A. at the School of International Studies, Peking University, M.P.P. at the University of Tokyo, and M.A. in political science at Central European University. During 2015-2016, he was also working as a research assistant at the Lee Kuan Yew School of Public Policy, National University of Singapore.
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