LCIL Lecture 'The Politics of Investment Treaties in Developing Countries'

Lecture summary: Modern investment treaties give private arbitrators power to determine whether governments should pay compensation to foreign investors for a wide range of sovereign acts. In recent years, particularly developing countries have incurred significant liabilities from investment treaty arbitration, which begs the question why they signed the treaties in the first place. In his talk, Dr. Poulsen will introduce some of the key findings in his book, Bounded Rationality and Economic Diplomacy (Cambridge Press, 2015). The book shows that governments in developing countries typically overestimated the economic benefits of investment treaties and practically ignored their risks. Rooted in insights on bounded rationality from behavioral psychology and economics, the analysis highlights how policy-makers often relied on inferential shortcuts when assessing the implications of the treaties, which resulted in systematic deviations from fully rational behavior. This not only sheds new light on one of the most controversial legal regimes underwriting economic globalization but also provides a novel theoretical account of the often irrational, yet predictable, nature of economic diplomacy. Bounded Rationality and Economic Analysis won the International Studies Association’s inaugural prize for best book in International Political Economy.

Lauge Poulsen is an Associate Professor in International Political Economy at University College London. His research focuses on the theory and practice of economic diplomacy with a particular emphasis on foreign investment, dispute settlement, and international economic law. Prior to joining UCL, Dr Poulsen was a Postdoctoral Research Fellow based at University of Oxford, Nuffield College, where he remains a Senior Research Associate at the Global Economic Governance Program. Previously he has been a visiting scholar at the Economic Studies Division of the Brookings Institution and the Law Department at the London School of Economics. He wrote his PhD dissertation at the London School of Economics. Dr Poulsen has appeared before committees at the UK House of Lords, the UK House of Commons, the Danish Parliament, and the European Parliament.

  The Lauterpacht Centre Friday lecture series is kindly supported by Cambridge University Press

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