Multilateral Investment Guarantee Agency2013-12-182013-12-182014978-1-4648-0039-910.1596/978-1-4648-0039-9https://hdl.handle.net/10986/16388This report seeks to understand investors' perceptions of political risk as they affect Foreign Direct Investment (FDI), as well as the role of the political risk insurance industry in mitigating these risks. It is found that investors continue to rank political risk as a key obstacle to investing in developing countries, though investors classify macroeconomic instability as their top concern over the medium term. The report confirms a continued increase in the use of political risk insurance as a risk-mitigation tool and reaffirms the industry's health and resilience. Providers have met the challenge of these years with new products and innovative ways to use existing tools as well as substantial capacity to meet growing demand. It also looks at breach of contract risk and its causes. The research helps guide investors and insurers when they participate in a project that involves a contract with a developing-country government entity. As private and public sectors continue to increase their cooperation in service of bringing important investments to fruition, this research is particularly timely.en-USCC BY 3.0 IGOAccess to financingaccountingadvanced economiesaffiliatesArbitrationarbitrationsasset qualitybanking marketsbanking sectorbanksbond issuesbrokerbrokersbusiness environmentbusiness environmentsbusiness riskbusiness riskscapital constraintscapital flowcapital flowscapital outflowscapital ratioscapital reliefCapital RequirementsCDcivil warcommoditiescommoditycommodity pricesConfidence Indexconsolidationconsumer basecontract designcontract renegotiationscontractual obligationscontractual relationshipconvertibility restrictionscredit agenciescredit agencyCredit Riskcurrencycurrency depreciationscurrent account deficitsdebt crisesdebt crisisdebt flowsdeveloping countriesdeveloping economiesdeveloping marketsDevelopment Bankdisclosuredivestmentdivestmentsdomestic bankingeconomic developmentseconomic downturneconomic downturnseconomic performanceeconomic performanceseconomic riskequity flowsequity fundsequity investmentequity investmentsexpenditureexpendituresExport creditexportersexposureExpropriationexpropriationsfinancial crisesfinancial crisisfinancial marketsFinancial regulationfinancial sectorfinancial systemfinancial systemsfiscal deficitsforeign direct investmentforeign firmsforeign investmentForeign investorforeign investorsgeneral insuranceGlobal Economic Prospectsglobal economyglobal investmentglobal investorGlobal Riskglobal tradegovernment regulationgovernment subsidiesGross domestic productgrowth rategrowth ratesholdinghost governmentsincomeincome levelincomesindebtednessinflationinflation ratesinflationary pressuresinformation sharinginformed investorinitial public offeringinstitutional capacityInsuranceInsurance Industryinsurance marketinsurance productinsurersinterest rateinterest ratesInternational BankInternational financial institutionsinternational investmentinternational investment agreementsinternational marketsinvestingInvestment Corporationinvestment disputesinvestment insuranceinvestment lendinginvestment opportunitiesinvestment plansinvestment policiesinvestment promotioninvestment returnsinvestor confidenceinvestor interestinvestor perceptionsissuancelabor costsliquiditylong-term yieldslow-income countriesmacroeconomic conditionsmacroeconomic datamacroeconomic instabilitymacroeconomic stabilitymarket conditionsmaturitymiddle-income countriesmismanagementMonetary Fundmonetary policyMultilateral Investment Guarantee Agencynatural resourcenatural resourcesNet debtnew entrantsnew marketsnew productnew productsofferingsoil pricespartial riskpolitical considerationspolitical regimesPolitical RiskPolitical Risk InsurancePolitical riskspolitical uncertaintyportfolioportfolio investmentprivate capitalprivate capital flowprivate capital flowsprivate capital inflowsprivate debtprivate debt flowsprivate equityprivate investmentprivate lendersprivate marketproperty rightspublic debtpublic financespublic marketpublic spendingreal estateregime changeregime changesregulatory scrutinyReinsuranceReinsurance companiesreturnreturnsrisk factorsRisk Managementrisk of expropriationsecurity concernsSettlementSolvencysovereign bondsovereign debtStatistical analysissubsidiarysukuktaxtax revenuesTerrorismtrade credittrade deficitstraditional investortransition countriestransparencyTransparency InitiativeTreasuryTreasury billstreatyUnderwritersunderwritingunemployment rateswater supplyWithdrawalWorld Bank10.1596/978-1-4648-0039-9