Abstract
Developing countries with weak institutions often face severe commitment problems. International investors are reluctant to invest in these countries because their property rights are insufficiently protected. We argue that in order to overcome the commitment problem countries may subject investors’ rights protection to independent investment tribunals. These tribunals are known to strictly support property rights protection and to be reluctant to honor human rights considerations, although they might be applicable. This may explain why human rights of the local smallholders in large-scale land acquisitions are hardly protected in the Global South.
Acknowledgments
The authors would like to thank the journal editor, an anonymous reviewer, Matthias Bujko, Malte Dold, Christian Fischer, Laura Renner and Daniel Wisehart for most helpful comments and discussions.
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