New MIGA Report Finds Europe and Central Asian Markets On List of Top Frontier Investment Destinations
VIENNA, AUSTRIA, February 17, 2011—A report launched in Vienna today by the Multilateral Investment Guarantee Agency (MIGA) shows that four of the top 15 investment destinations among countries recently in conflict or affected by fragility are in Europe and Central Asia: Bosnia and Herzegovina, Georgia, Kosovo, and Uzbekistan. A survey conducted for the report, World Investment and Political Risk, also indicates that over 60 percent of the executives who responded expect to increase FDI in the region over the next three years.
For the second year running, MIGA surveyed multinational executives and found that their top worry when operating in developing countries over the next three years is political risk. Political risk tops business concerns such as market size, lack of finance, and quality of infrastructure.
This year’s report also focuses on FDI into conflict-affected and fragile economies, where investors are primarily concerned about adverse government intervention (for example changes in regulations, breach of contract, non-honoring of sovereign guarantees, currency restrictions, and expropriation) rather than overt political violence. In fact, adverse changes in regulations not only rank first among investors’ concerns in conflict-affected and fragile economies, but also are most often responsible for losses in these destinations.
MIGA’s report underlines the importance of FDI in conflict-affected and fragile economies. By providing much-needed financial resources, technology transfer, managerial expertise, and connections to the global economy, FDI can help generate and sustain economic growth and promote development, both essential to stability. The report also notes that multilateral political risk insurance providers have a key role to play in covering FDI in fragile countries because their development mandate allows them to look beyond the bottom line.
"Frontier markets in the region have several interesting success stories with respect to foreign direct investment," noted Kobayashi. "For example, Bosnia and Herzegovina went from $1 million in FDI in 1994 to more than $2 billion in 2007 by taking steps to minimize risk and attract inflows."
Fifty-seven percent of MIGA’s current portfolio is in the region. To learn more about MIGA in Europe and Central Asia, visit www.miga.org/europecentralasia
For more information on World Investment and Political Risk, visit www.miga.org/wipr
MULTILATERAL INVESTMENT GUARANTEE AGENCY
A Member of the World Bank Group
1818 H Street, NW, Washington, DC 20433
Mallory Saleson, MIGA
Tel: +1 202 473-0844
Rebecca Post, MIGA
Tel: +1 202-473-1964
Cara Santos Pianesi