How effective is the Multilateral Investment Guarantee Agency?

Foreign direct investment (FDI) plays a crucial role in stimulating economic and social development. Developing countries strive to attract foreign capital and investment to accelerate development, alleviate unemployment, increase exports, and introduce technology. These countries possess resources but lack capital and technology. While investors in developed countries seek to increase their investments and expand their markets based on calculated commercial risks, they are wary of unforeseen risks that could hinder their investment objectives in developing countries. These unforeseen risks are primarily political and non-commercial, often stemming from measures taken by the host country, such as confiscation of assets, nationalization, and restrictions on profit repatriation. Therefore, developed countries, initially in the United States and other major investment-exporting nations, adopted national guarantee systems to safeguard their citizens' investments against political risks in developing countries. This concept then spread to the regional level, leading to the establishment of the Arab Investment and Export Credit Guarantee Corporation. It is worth noting that the idea of ??establishing an international program to guarantee foreign investments through an international body, with the participation of both investment-exporting and investment-importing countries, emerged in the countries where investors pursue their interests. However, it appeared as a contribution to development efforts in developing countries by encouraging the flow of foreign direct investment (FDI) to them. This encouraged the World Bank for Reconstruction and Development to adopt the establishment of this international body. Projects continued to be submitted, but remained subject to approval until the final version of the project was adopted in October 1985. The Bank then invited its members to sign the project and join what became known as the Multilateral Investment Guarantee Agency (MIGA). MIGA entered into force on April 21, 1988, after the United States and the United Kingdom ratified its founding agreement. Since its inception, MIGA has pursued policies and strategies to achieve its objectives of encouraging the flow of FDI to developing countries hosting investment to achieve their economic development. It does this by fulfilling its functions of providing guarantees against non-commercial risks and complementary services. Today, MIGA has become one of the most important international guarantees for protecting foreign investments, making it a valuable resource and a model worthy of study.