Multilateral investment guarantee agency: a critical appreciation of its guarantee service

Foreign Direct Investment (FDI) in developing countries alarmingly decreased during the first half of the 1980s. Gross FDI declined during this period from $13 billion to $9 billion in 1986.1 However, there are strong indications that viable investment opportunities exist in those countries but investors tend to avoid these opportunities because of concern about risks which are primarily non-commercial and political in nature. In such a situation Multilateral Investment Guarantee Agency (MIGA), fifth affiliate to the World Bank Group, has been established as the first international guarantor of FDI. It is an autonomous international organisation with 'full judicial personality' under international law and the domestic laws of its members.2 The main objective of the Agency is to encourage the flow of investment for productive purposes among its member countries and, in particular, to its developing member countries.