Do bilateral investment treaties help post-coup countries attract foreign investment?

Abstract

Studies of international investment treaties have debated whether these agreements independently increase foreign investment flows. This article contributes to the debate by contextualizing the impact of bilateral investment treaties on post-coup domestic political environments. We argue that these treaties enable capital-receiving countries to live up to their commitments of investment protection and promote foreign investment when signatories’ capacity for investor protection has been compromised by the political turmoil of coup events. Using a sample that covers 81 countries between 1970 and 2017, we find that bilateral investment treaties are positively associated with foreign investment in post-coup countries, and that this association is strongest in the immediate years following the coup and attenuates gradually over time. This finding potentially lends support to theorizations of bilateral investment treaties as substitutes, rather than complements, to domestic institutions in fostering investment activities.