World Investment and Political Risk 2010

Daniel Villar

Description

Two years into the deepest global financial crisis in the post-war era, the world economy is still experiencing uneven economic recovery and financial weakness. Financial market conditions are signaling improved investor confidence and more appetite for cross-border investments. As part of its mandate to encourage investment to developing countries, the Multilateral Investment Guarantee Agency (MIGA) seeks to foster more understanding of the role of political risk, and instruments to mitigate it.
The objective for this report is to examine (i) overall investment trends and perceptions of political risk especially for what regards foreign direct investment (FDI) to emerging markets; (ii) investments and risks specifically in Conflict-Affected and Fragile States (iii) the role political risk insurance (PRI) is playing today and its likely role in the future.

Informations

• Publié par: world-bank-publications
• Publié le: 12 janvier 2011
• Nombre de lectures: 27
• EAN13: 9780821384794
• Langue: English
• Poids de l'ouvrage: 2 Mo

Extrait

2010
World Investment Trends
and Corporate Perspectives
Investment and Political Risk World Investment
in Conflict-Affected and
Fragile Economies
and Political Risk The Political Risk Insurance
Industry2 | MIGA WIPR REPORT 2010 © 2011 The International Bank for Reconstruction and Development /The World Bank
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Washington, DC 20433
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This volume is a product of the staff of the Multilateral Investment Guarantee Agency / The World Bank. The
findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the
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Cover art: Stock.XCHNG
Photo credit: p.10, Gettyimages, Lionel Healing, AFP; p.28, Gettyimages, Chris Hondros;
p.52, Michael Foley, World Bank Group
Design, cover, and document: Suzanne Pelland, MIGA/World Bank Group
ISBN: 978-0-8213-8478-7
e-ISBN: 978-0-8213-8479-4
DOI: 10.1596/978-0-8213-8478-7
MIGA WIPR REPORT 2010 2010
WORLD INVESTMENT
AND POLITICAL RISK
World Investment Trends
and Corporate Perspectives
Investment and Political Risk
in Conflict-Affected and
Fragile Economies
The Political Risk Insurance IndustryTABLE OF CONTENTS
FOREWORD ....................................................................................................................................................................1
ACKNOWLEDGMENTS ...................................................................................................................................................3
SELECTED ABBREVIATIONS ..........................................................................................................................................5
EXECUTIVE SUMMARY ...................................................................................................................................................7
CHAPTER ONE
World Investment Trends and Corporate Perspectives ..............................................................................................10
Overview ......................................................................................................................................................... 11
Global Recovery and Economic Prospects ................................................................................................... 11
Capital Flows in the Aftermath of the Crisis ...............................................................................................12
The Rebound of FDI Flows into Developing Countries ...14
FDI from Developing Countries ....................................................................................................................16
Corporate Perceptions of Political Risk in Developing Countries .............................................................. 17
Political Risk: A Major Constraint to FDI in Developing C...........................................................18
Corporate Approaches to Political Risk Management ............................................................................... 24
CHAPTER TWO
Investment and Political Risk in Conflict-Affected and Fragile Economies ..............................................................28
Overview ........................................................................................................................................................ 29
Conflict-Affected and Fragile Economies .................................................................................................... 29
Capital Flows and FDI Trends in CAF Economies ....................................................................................... 31
Political Risk Perceptions in CAF Economies ..............................................................................................36
Sector-Level Perspectives ...............................................................................................................................39
Corporate Approaches to Political Risk Management in CAF Economies ............................................. 46
CHAPTER THREE
The Political Risk Insurance Industry .......................................................................................................................... 52
Overview ......................................53
After the Crisis: Recent Trends in the PRI Industry .................................................................................... 54
Political Risk Insurance in CAF Economies ................................................................................................ 61
PRI Supply: A Market Failure? ......................................................................................................................62
Multilateral CAF Initiatives: Rising to the Challenge .................................................................................. 65
Conclusion......................................................................................................................................................69
APPENDICES
Appendix 1 FDI Inflows, 2002–2009 ..................................................................................................................... 74
Appendix 2 MIGA-EIU Political Risk Survey 2010 ................................................................................................. 76
Appendix 3 Countries Rated in the Two Highest Political Violence Risk Categories by the Political Risk
Insurance Industry on January 1, 2010 ................................................................................................85
Appendix 4 Number of BITs Concluded as of June 2010 by Countries or Territories Rated in the Two
Highest Political Violence Risk Categories .........................................................................................86
Appendix 5 Conflict and Foreign Direct Investment: A Review of the Academic Literature .............................. 87
Appendix 6 MIGA-EIU CAF Investors Survey.........................................................................................................89
Appendix 7 Model Specification, Methodology, and Regression Results ...........................................................97
Appendix 8 Lloyd’s Syndicates ...............................................................................................................................105
Appendix 9 Berne Union and Prague Club Members ......................................................................................... 106
MIGA WIPR REPORT 2010 BOXES
Box 1.1 What is Political Risk? ................................................................................................................................19
Box 2.1 AngloGold Ashanti in the Democratic Republic of Congo ................................................................... 40
Box 2.2 The Weight of History: Old Mutual in Zimbabwe ................................................................................. 42
Box 2.3 FDI in Natural Resources and Political Violence ................................................................................... 44
Box 2.4 Mitigating Risk on Several Fronts: SN Power in Nepal .........................................................................47
Box 3.1 The Berne Union ....................................................................................................................................... 53
Box 3.2 Overview of the PRI Industry .................................................................................................................... 55
Box 3.3 Political Risk Insurance and its Benefits ..................................................................................................56
Box 3.4 OECD Country Risk Ratings ...................................................................................................................63
Box 3.5 The Nonconcessional Borrowing Policy ................................................................................................. 64
Box 3.6 Oil Exploration Project in Sudan .......................