Foreign direct investment, an important driver of growth in emerging economies, is on the rise. But the vast majority goes to relatively few countries, leaving the world's poorest and least developed largely ignored. Moreover, concerns about uncertain policy environments and perceptions of political risk often inhibit interest in investing in these countries. So too does the lack of awareness of the many investment opportunities, often due to the limited capacity or ability of emerging countries to effectively market and promote themselves.
The Multilateral Investment Guarantee Agency (MIGA) was created in 1988 as part of the World Bank Group to address these concerns. The Agency's mandate is to promote foreign direct investment by offering political risk insurance (guarantees) to investors and lenders, and by providing skills and resources to help emerging economies attract and retain this investment.
MIGA contributes to development at the broader level through its capacity-building and information dissemination services on investment opportunities in emerging economies. At the project level, the Agency has provided more than $17.4billion in guarantees, covering investment projects in 96 developing countries. Increasingly, these flows are being directed to the poorer countries.
The Agency also plays an important catalytic role by facilitating additional investment for the projects it supports, with every MIGA-insured dollar generating an average of five additional dollars in investment.
Projects that MIGA supports typically convey many direct benefits to host countries, including jobs created for local workers; accompanying and enduring investments in skills and training for employees; a general impact on the national economy as a whole, as provided by tax revenues and foreign exchange earnings through exports; and support for environmental protection, due to firm adherence to the World Bank Group's environmental guidelines.
The Agency also complements the activities of other insurers and draws on the strengths of its partners, seeking innovative ways to expand the political risk insurance industry's capacity to the ultimate benefit of MIGA's member countries.
Much of MIGA's strength derives from its structure as an international organization whose shareholders are the governments of most countries of the world. The Agency provides an umbrella of deterrence against government actions that could disrupt investments, and influences host governments in the event of potential disputes. MIGA's unique capacity to serve as an honest broker enhances investor confidence in the security of an investment going into an emerging economy.
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