When Do States Believe in Treaties? Legalization, Commitment, and Institutional Externality

Zhiyuan Wang

Social Science Quarterly, 2025, vol. 106, issue 6

Abstract: Objective This study aims to elucidate the constraining power of international institutions by examining treaty externalities shaped by the interaction between two key factors: legalization and commitment. Methods To illustrate this theoretical possibility, I estimate a two‐way fixed effects model to pinpoint how varying levels of legalization and commitment impact aid flows within OECD‐non‐OECD bilateral investment treaties (BITs) from 1971 to 2012. Results I find clear and robust evidence that pledging the highest level of commitment to highly legalized BITs effectively reduces foreign aid from a capital‐exporting member to a capital‐importing member. Conclusion The finding substantiates that the externalities of international institutions can also be indicative of their constraining power.

Date: 2025
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