The proponents of globalization have argued that the liberalization of the legal regime of foreign investment is fundamental to the achievement of economic progress by developing and transition economies. Since its proponents tout the new global economic order or globalization as a catalyst for universal economic development, particularly the economic development of developing and transition economies, scholars of international economic law, economists and political scientists in general have pursued the veracity or otherwise of this assertion from different scholarly perspectives. Against the backdrop of international arbitration of State contracts, this dissertation examines the benefits, if any, of the new global economic order to developing countries and transition economies with particular focus on applicable substantive law issues in international arbitration of State contracts. Upon the critical examination of the benefits of foreign investment liberalization to developing and transition economic with particular focus on applicable substantive law issues in international investment disputes, the picture that emerges is not as rosy as that asserted by the proponents of the global economic order. For example, the doctrine of indirect expropriation in contemporary international arbitration of State contracts is a potential legal landmine that can stifle the economic development of developing and transition economies. In the light of these problems, this thesis makes some suggestions for changes in the legal regime of foreign investment. These changes are very fundamental if developing and transition economies are to realize the economic benefits of globalization or the new global economic order. It is also very important that these problems be addressed because they can lead to another wave of nationalist backlash given that a policy reversal is always possible in a changing world order. (Abstract shortened by UMI.)
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