Foreign Direct Investment in Less Developed Countries: The Role of Icsid and Miga

Foreign Direct Investment in Less Developed Countries: The Role of Icsid and Miga

Foreign Direct Investment in Less Developed Countries: The Role of Icsid and Miga

Foreign Direct Investment in Less Developed Countries: The Role of Icsid and Miga

Synopsis

The International Centre for Settlement of Investment Disputes (ICSID) and the Multilateral Investment Guarantee Agency (MIGA) are two of the more significant international agencies whose objective is to promote foreign direct investment in less developed countries (LDCs). This is the first detailed treatment of their establishment, the history of their operations, and an evaluation of these operations.

ICSID, established in 1966, facilitates the arbitration or conciliation of investment contract disputes between foreign investors from countries that are signatories of the ICSID Convention and host signatory states. MIGA, whose first year of operations was 1988, insures foreign investment against political risks. Drawing on cases, Baker shows how the functions of these two agencies have encouraged a significant amount of foreign investment in LDCs and how the operations of these two agencies continue to grow in importance. Scholars, professionals, and policy makers will find this to be the most comprehensive description available of these important agencies.

Excerpt

In 1972, I was an attendee of the Hague Academy of International Law at the International Court of Justice. During this three-week program, Aron Broches presented five lectures and two seminars about the operations of an obscure six-year-old institution called the International Centre for Settlement of Investment Disputes (ICSID). Thus, I first became aware of this small agency that has now completed three decades of dispute resolution in a very narrow area of jurisdiction. The late Mr. Broches was the first secretary-general of ICSID and his lectures and seminars excited me and another attendee and colleague, John K. Ryans, Jr., now Bridgestone Professor of International Business at Kent State University, to place this organization on our research agenda. Our articles about ICSID in the 1970s were the first about this institution to appear in the business academic literature. Since then, ICSID has remained a subject of my research interests.

After that initial encounter, the subject of international financial management became a major teaching interest to me. Foreign investment and political risk are important topics in this course. As a result, methods to reduce the loss from political risks developed into another research interest.

One such major method is foreign investment insurance against loss from political risks. In the latter part of the 1980s, another international agency was established and became another major research interest for . . .

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