CONTENTS FOREWORD 1 ACKNOWLEDGEMENTS 3 SELEaEDABBREVIATIONS 5 EXECUTIVE SUM MARY 7 1 World Investment Trends: Outlook and Corporate Perspectives 13 Overview 13 The Global Economy on the Way to Ricc 15 Trends in Foreign Direct Investment 15 Private Capital and EDI into Developing Countries 15 Developing Countries as a Source of FDI 17 The Impact of the Crisis on FDI 19 Outlook for Foreign Direct Investment 20 Corporate Perspectives on Foreign Direct Investment 20 Foreign Direct Investment Plans 21 Investment Intentions to Emerging Markets 21 Investors from Emerging Markets and FDI 24 2 The Challenge of Political Risk 27 Overview 27 Political Risk, Foreign Direct Investment and Corporate Perceptions 28 What is Political Risk? 28 Evolution of Political Risks 28 The Impact of the Financial Crisis on Political Risk Perceptions 31 Corporate Perceptions of Political Risk Management 32 Investors from Emerging Markets: Political Risk Perceptions and Mitigation 36 3 The Political Risk Insurance Industry: A View from the Supply Side 45 Overview 45 Political Risk Insurance and FDI 46 Trends in the PRI Industry 48 Impact of the Global Financial Crisis 51 Political Risk Insurance and South-based Investors 57 Public Insurers and South-based Investors 58 The Private Insurers Focus on South-based Investors 59 Trends in South-based Investment Insurance 59 Conclusion 60 ANNEXES Annex1 Net FDI Inflows, 2000-2008 64 Annex 2 Net Private Capital Inflows to Emerging Markets, 2005-2008 65 Annex 3 MICA-EIU Political Risk Survey 2009 66 Annex 4 The MIGA-VCC Political Risk Survey in the BRICs 79 Annex 5 FDI and Political Risk: A Review of the Academic Literature 89 Annex 6 PRI Providers 90 Annex 7 Selected Factors Affecting Pricing in the PRI Industry 92 BIBLIOGRAPHY 93