Three essays on globalization and sustainable development

The three essays in this dissertation address questions and concerns related to the costs and benefits of economic globalization---with particular emphasis on poverty, development, and the environment. Proponents of globalization often conclude that its critics are ignorant or self-motivated. In doing so, they have missed a valuable opportunity to discover both how best to communicate the benefits of globalization, and how to improve on the current model of globalization. The essay in Chapter 2 examines the values, beliefs, and facts that lead critics to the view that globalization is bad for the poor. We find that critics of globalization tend to be concerned about non-monetary as well as monetary dimensions of poverty, and more concerned about the total number of poor than the incidence of poverty. In regard to inequality, critics tend to refer more to changes in absolute inequality, and income polarization, rather than the inequality measures preferred by economists. It is particularly important to them that no group of poor people is made worse off by globalization. Finally, we argue that the perceived concentration of political and economic power that accompanies globalization causes many people to presume that globalization is bad for the poor, and the continued ambiguities in the empirical findings mean that this presumption can be readily supported with evidence.;The essays in Chapters 3 and 4 focus on a specific and controversial aspect of economic globalization---namely international investment agreements. Nearly 2,500 bilateral investment treaties (BITs) have been signed since 1980, over eighty percent of which include at least one developing country. Using data on bilateral investment outflows from OECD countries, Chapter 3 tests 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, we explicitly model and empirically account for the endogeneity of BIT adoption. We also test for a signaling effect from BITs. We find that the initially strong correlation between BITs and investment flows is not robust controlling for selection into BIT participation. Furthermore, we find no evidence for the claim that BITs signal a safe investment climate. Our results show the importance of accounting for the endogeneity of adoption when assessing the benefits of investment liberalization policies.;The final essay in this dissertation considers the optimal design of investment agreements using the investment chapter of the North American Free Trade Agreement (NAFTA) as an example. NAFTAs investment treaty has led to several expropriation compensation claims from investors hurt by new environmental regulations. Expropriation clauses in international treaties solve post-investment moral hazard problems such as hold-ups. However, these clauses can interact with National Treatment clauses in a manner that hinders investment. A police powers carve-out from the definition of expropriation can be Pareto-improving and can increase the level of foreign investment.