The World Investment and Political Risk report examines the overall trends in political risk perceptions, foreign investment intentions, and longer-term demand for political risk insurance (PRI), especially in emerging economies.
The research conducted for the report includes an Economist Intelligence Unit survey of multinational investors that addresses their risk perceptions for developing countries in the short and medium term. The survey finds that breach of contract and regulatory risks once again top survey respondents’ political risk concerns. Survey results show that these concerns are based on actual experience as well as sentiment.
The report also examines PRI trends and the role of PRI in promoting investment into developing countries. New issuance by members of the Berne Union—the leading association of public, private, and multilateral insurance providers—increased by 33 percent in 2012, and is expected to reach similar levels in 2013.
The 2013 edition of the report offers an innovative analysis of breach of contract risk, combining deal and country-specific causes of breach for the first time. The study finds the risk appears to be higher in middle-income countries than lower-income ones. It also finds that investors are more likely to face higher risk in contractual relationships involving public utilities than in other sectors. It notes the presence of a multilateral or development financial institution in a deal is likely to enhance the chances of contract success.