The global economic and financial crisis has severely curtailed economic growth and international private capital flows, prompting unprecedented government interventions. Although developing countries have not been spared, past economic and policy reforms, growing domestic markets and emergency financial assistance have helped them weather the storm. 

In the current context of high uncertainty and relative retreat of the private sector, this report seeks to examine the evolution of political risk perceptions. Understanding how investors perceive and deal with these perils will contribute to mapping out the role of political risk insurance in the emerging post-crisis investment landscape, and how it can contribute to a revival of FDI. With scarcer private capital and only a handful of countries absorbing the majority of investment flows to emerging markets, encouraging private capital to the world’s poorest economies remains a critical focus for the World Bank Group.

The report focuses on how the current global financial crisis has impacted the outlook of the investment community and the insurance industry regarding investments in developing countries. For this purpose, MIGA commissioned independent agencies to conduct several corporate surveys. More specifically, the report examines: (i) overall trends in FDI and political risk perceptions; (ii) corporate views on foreign investment and the political risk environment in emerging markets; and (iii) the ability of the PRI industry to respond to an emerging post-crisis investment landscape. Given the changing shape of the world economy and MIGA’s mandate, the report pays particular attention to the growing role of South-based investors and PRI providers in promoting global crossborder investment flows.