Nose, Manabu2014-02-032014-02-032014-01https://hdl.handle.net/10986/16813This paper constructs a large contract-level data set to examine factors that trigger breach of foreign investment contracts. Similar to the case of outright expropriation, political regime type is an important determinant of breach of contract. Furthermore, although investors' bargaining power becomes obsolete as contracts mature, contracts can be designed to mitigate the risk of breach of contract by involving multilateral organizations and creating buffers to absorb commodity price shocks. The paper examines the type of countries prone to contract breaches. After controlling for regional and sector fixed effects, less-democratic and resource-dependent governments are more likely to breach contracts, especially after large global shocks, notably natural disasters.en-USCC BY 3.0 IGOADJUSTMENT MECHANISMAFFILIATED ORGANIZATIONSARBITRAL AWARDSARBITRATIONARBITRATIONSBANK POLICYBARGAININGBARGAINING POWERBILATERAL INVESTMENT TREATIESBREACHBREACH OF CONTRACTBREACHESBUSINESS CLIMATECAPITAL INVESTMENTSCHECKSCLAIMANTCOMMODITIESCOMMODITYCOMMODITY EXPORTSCOMMODITY PRICECOMMODITY PRICESCOMPETITIVE BIDDINGCONSUMPTION EXPENDITURECONTRACT DESIGNCONTRACT DESIGNSCONTRACT DISPUTESCONTRACT ENFORCEMENTCONTRACT RENEGOTIATIONCONTRACTUAL AGREEMENTCONTRACTUAL DISPUTECONTRACTUAL DISPUTESCONTRACTUAL OBLIGATIONSCONTRACTUAL PERIODCONTRACTUAL TERMSDATA AVAILABILITYDECENTRALIZATIONDEMOCRACIESDEMOCRACYDEVALUATIONDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPMENT BANKDEVELOPMENT ECONOMICSDISTRIBUTION OF INCOMEDOUBLE TAXATIONDUMMY VARIABLEECONOMIC CRISISECONOMIC DEVELOPMENTECONOMIC FLUCTUATIONSECONOMIC GROWTHECONOMIC POLICIESECONOMICSEQUITY INVESTMENTSEXCHANGE RATEEXISTING CONTRACTSEXPIRATION OF CONTRACTSEXPORTEREXPORTERSEXPOSUREEXPOSURESEXPROPRIATIONEXPROPRIATION RISKEXPROPRIATIONSEXTERNAL DEBTFINANCE CORPORATIONFINANCIAL CRISISFISCAL CAPACITYFIXED EFFECT MODELFOREIGN DIRECT INVESTMENTFOREIGN INVESTMENTFOREIGN INVESTMENTSFOREIGN INVESTORSFOREIGN TRADEGLOBALIZATIONGOVERNMENT GUARANTEEGOVERNMENT GUARANTEESGROWTH RATESHOST COUNTRIESHOST COUNTRYHOST GOVERNMENTHOST GOVERNMENTSINCOMEINCOME INEQUALITYINCOME LEVELINCOMPLETE CONTRACTINCOMPLETE CONTRACTSINFRASTRUCTURE CONCESSIONSINFRASTRUCTURE INVESTMENTSINFRASTRUCTURE PROJECTSINITIAL CONTRACTINSURANCEINSURERSINTERNATIONAL ARBITRATIONSINTERNATIONAL BANKINTERNATIONAL BUSINESSINTERNATIONAL CAPITALINTERNATIONAL CAPITAL MARKETINTERNATIONAL COMMERCIAL ARBITRATIONINTERNATIONAL COURTINTERNATIONAL FINANCEINTERNATIONAL FINANCIAL INSTITUTIONSINTERNATIONAL INVESTORSINTERNATIONAL LAWINTERNATIONAL TRADEINVESTINGINVESTMENT BANKINVESTMENT CONTRACTSINVESTMENT FLOWSINVESTMENT PERIODLAW ENFORCEMENTLIQUIDITYLIQUIDITY CONSTRAINTLOCAL ECONOMYLOCAL SECURITYLOW-INCOME COUNTRIESMACROECONOMIC VARIABLESMARGINAL COSTMATURITYMIDDLE-INCOME COUNTRIESMONETARY FUNDMONOPOLYMULTILATERAL INVESTMENT GUARANTEE AGENCYMULTINATIONAL CORPORATIONSNATURAL DISASTERNATURAL DISASTERSNATURAL RESOURCENATURAL RESOURCESNEGATIVE INCOME SHOCKSNEGOTIATIONSNEW CONTRACTNOMINAL VALUENPLOIL PRICEORIGINAL CONTRACTSPARTICIPATIONSPAYMENT GUARANTEEPAYMENT OBLIGATIONSPOLITICAL ECONOMICSPOLITICAL ECONOMYPOLITICAL INSTITUTIONSPOLITICAL POWERPOLITICAL POWERSPOLITICAL REGIMEPOLITICAL RISKPOLITICAL RISK INSURANCEPRICE ADJUSTMENTPRICE CHANGEPRICE RISKPRICE SERIESPRICE VOLATILITYPRIVATE ENTITIESPRIVATE INFRASTRUCTUREPRIVATE INVESTMENTPRIVATE INVESTMENTSPRIVATE INVESTORPRIVATE INVESTORSPRIVATIZATIONPROCUREMENTPRODUCTIVE INVESTMENTSPROFIT MARGINPROPERTY RIGHTPROPERTY RIGHTSPROVISION OF GUARANTEESPUBLIC INVESTMENTSPUBLIC POLICYPUBLIC-PRIVATE PARTNERSHIPREGIONAL DUMMIESRENTSREPUDIATIONREPUTATIONRISK APPETITERISK AVERSIONRISK MANAGEMENTRISK REDUCTIONSETTLEMENTSOLICITATIONSOVEREIGN DEBTSOVEREIGN DEFAULTSOVEREIGN DEFAULTSSUSTAINABLE DEVELOPMENTTAXTAX REVENUETAX REVENUESTERMINATIONTRANSACTIONTRANSACTION COSTSTRANSPARENCYTREATIESTREATYTURNOVERTURNOVERSUNSOLICITED PROPOSALSWorld Bank10.1596/1813-9450-6738