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International economists often refer to multinational enterprises and foreign firms interchangeably, yet one of the enduring divisions in the globalization debate is whether international law should be strengthened to protect foreign firms from predatory host governments, or rather strengthened to protect host governments from powerful multi- national firms. We contribute to this debate conceptually by distinguishing between foreign firms and multinational firms. We then use firm level data on government-firm relations from eighty countries to contribute empirical evidence on the debate. We find that multinational firms (both foreign and local) are indeed relatively influential over government, and find no evidence that foreign firms (multinational or otherwise) suffer significant disadvantages in terms of self-reported influence.

The rapid and concurrent increase in both foreign investment and government efforts to attract foreign investment at the end of last century makes the question of causality between the two both interesting and challenging. I take up this question for the case of the nearly 2,500 bilateral investment treaties (BITs) that have been signed since 1980. Using data on bilateral investment outflows from OECD countries, I test whether BITs stimulate investment in twenty eight low- and middle-income countries. In contrast to previous studies that have found a strong effect from BIT participation, I explicitly model and empirically account for the endogeneity of BIT adoption. I also test for a signaling effect from BITs. I find that the initially strong correlation between BITs and investment flows is not robust controlling for selection into BIT participation. Furthermore, I find no evidence for the claim that BITs signal a safe investment climate. My results show the importance of accounting for the endogeneity of adoption when assessing the benefits of investment liberalization policies.

ABSTRACT
Investment treaties grant foreign investors legal rights to compensation for losses caused by certain host state conduct. Many states are reconsidering their involvement in these treaties because they perceive the risks to outweigh the benefits. We start from the normative premise that participation in investment treaties should benefit both 'host' and 'home' states. Using a law and economics approach, we model a variety of common fact scenarios that arise in investment treaty arbitration. Our modelling demonstrates that being party to an investment treaty does not necessarily benefit a host state. The objective of mutual benefits would be achieved if investment treaties were modified to provide only the minimum protection necessary to solve time inconsistency problems for the host state and, thereby, deter opportunistic conduct. The treaties should not place wider constraints on legal and policy change. Our specific proposal is that a state should only have to compensate the investor if it breaches or modifies the domestic legal regime governing the investment and that compensation should be the lesser of the investor's loss and the host state's gain from the host state not having had the new legal regime in place when the investment was made.

AbstractDoes tariff liberalization cause regulatory chill by putting downward pressure on health, safety, and environmental standards? Or does it cause a race to the top as governments seek to use standards as nontariff barriers to trade? There remains remarkably little empirical evidence to answer these long‐debated questions. We seek to address this lack by analyzing annual country‐by‐industry data on notifications of changes in sanitary and phytosanitary standards by world trade organization members. Our results suggest that the impact of increased trade pressure depends on whether domestic producers are likely to gain or lose from a change in standards. Regulatory chill is the dominant response in most countries, but countries in which producers can adapt to standards relatively cheaply appear to race to the top. Consequently, tariff liberalization encourages divergence in standards across countries.

An adversarial game is used to model a firm's intrinsic and exerted influence over a regulator. Data from the World Business Environment Survey provide strong evidence in support of model hypotheses across a wide range of government agents, countries, and regulatory areas. Of particular relevance to public debate, the theory and econometric analysis show that large firms are more likely to be influential and to benefit from subsidies and low tax constraints. However, large firms are also likely to face greater regulatory constraint from environmental and safety rules.

An adversarial game is used to model a firm's intrinsic and exerted influence over a regulator. Data from the World Business Environment Survey provide strong evidence in support of model hypotheses across a wide range of government agents, countries, and regulatory areas. Of particular relevance to public debate, the theory and econometric analysis show that large firms are more likely to be influential and to benefit from subsidies and low tax constraints. However, large firms are also likely to face greater regulatory constraint from environmental and safety rules.

An adversarial game is used to model a firm's intrinsic and exerted influence over a regulator. Data from the World Business Environment Survey provide strong evidence in support of model hypotheses across a wide range of government agents, countries, and regulatory areas. Of particular relevance to public debate, the theory and econometric analysis show that large firms are more likely to be influential and to benefit from subsidies and low tax constraints. However, large firms are also likely to face greater regulatory constraint from environmental and safety rules. [Copyright Elsevier B.V.]