Reviving the emperor’s old clothes: The good governance agenda, development and international investment law

Abstract

The concept of ‘good governance’ has long occupied a central space in contemporary development policy. Originally conceived and promulgated widely by development agencies, notably the World Bank, in response to concerns over the effectiveness of development assistance, the good governance agenda quickly gained broader currency as a tool of international economic law and policymaking. In the realm of international investment, the notion of good governance has been regularly enrolled by its proponents to advocate for and facilitate institutional reforms in developing countries aimed at creating what is termed ‘an enabling climate’ for foreign direct investment (FDI). Here, the design of the institutional framework of domestic governance, particularly those which manage and regulate the entry and conduct of foreign investors, are seen as crucial to capacity of developing countries to attract and sustain FDI and thereby engendering economic growth and development. In terms of international investment law, the language of good governance, its associated rule of law narrative and their relationship to development outcomes have been used to justify the normative and institutional evolution of law and policy in this area. Specifically, notions of stability, predictability and efficacy that feature prominently on the good governance and rule of law agenda have been widely conscripted to legitimise the rapid proliferation of international investment agreements (IIAs) and the attendant ascendency of the investment arbitration regime over the past two decades.