Natural Resources, Property Rights, and the Domestic Logic of BIT Signing

In contrast to the substantial scholarship on whether bilateral investment treaties (BITs) increase foreign direct investment (FDI), there is less work on what drives governments to sign these treaties in the first place. I develop a theory of treaty signing that emphasizes the domestic factors that motivate a government to sign BITs. Using a panel dataset of developing countries from 1960 to 2010, I find that governments scarce in natural resources are more likely to sign BITs compared to their richer counterparts. In addition, governments with middle levels of property rights are more likely to sign BITs compared to those with low or high levels. Finally, the most likely BIT signers are resource-scarce countries with middle levels of property rights. That strategic dynamics exist in BIT signing has implications for assessing the effects of these treaties in other issue areas such as trade, human rights, and the environment.