Law Intersession - Intl/Comp: Int'l Arbitration & Economic Development - 2254

Arbitration can be used as an incentive to economic development. It is perceived as a flexible, neutral, and centralized dispute resolution mechanism in international trade. The regular use of arbitration as the chosen dispute resolution option offers a risk management tool that can promote trade flow by providing private parties with reasonable guarantees that their contracts will be effectively enforced, and thus can encourage parties to engage in international transactions with others from emerging economies. Crossborder trade flow has been identified by economists as a significant variable in economic development. Thus, enhancing cross-border trade flow through the use of arbitration for effective dispute resolution can help reduce uncertainties and consequently offers significant advantages.The quality of domestic legal institutions influences a country’s openness to international trade and its ability to integrate with international markets. Domestic institutions are the final destination for parties to enforce their contract if a party refuses to perform voluntarily. Higher institutional quality is a positiveindication of a country’s commitment to credible and impartial contract enforcement. This portrays a friendlier business environment to the international market, resulting in increased trade flow.