Play the scramble, avoid the backlash? Partisan dynamics in the negotiation of bilateral investment treaties

Sparked by a proliferation of bilateral investment treaties (BITs) at the turn of the century, the modern international investment regime now faces a backlash from dissatisfied states. We examine the link between these two periods of cooperation at the treaty level. Specifically, we argue that different partisan coalitions within developing countries influence an agreement’s formation with implications for its design and longevity. Left-wing parties are generally reluctant to form BITs, which grants them an advantage in negotiation for the rare agreements they do sign onto. In contrast, right-wing parties embrace BITs with high costs to lock-in pro-business policies. Agreements formed by the left avoid such stringent obligations and developing countries remain satisfied with the treaty’s terms for a longer period of time. We test the argument quantitatively with data on BIT formation, design, and exit from 1980 to 2020, with an emphasis on the inclusion of exit clauses. The paper adds to our understanding of the international investment regime’s present crisis and highlights the understudied role of partisan politics in international cooperation.