ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Foreign Investment Spillovers

Evidence from Multilateral Investment Guarantee Agency Projects

The evidence regarding foreign investment spillovers is examined, drawing on a new source of evidence, ex post evaluations of guarantee projects supported by the Multilateral Investment Guarantee Agency. The evidence presented in the paper regarding the positive spillover effects of MIGA guarantee projects is fully consistent with the findings in the literature regarding foreign investment spillovers. The evidence also suggests that foreign investment indeed promotes development by creating beyond-project effects.

Declaration of Interest: I certify that there are no dual commitments, competing interests, or competing loyalties involved in the writing of this paper.

Foreign investment spillovers—impacts of foreign firms on domestic firms—have been a matter of research and discussion in academic and policy circles for long. This paper contributes to the debate by drawing on a new source of evidence, ex post evaluations of guarantee projects supported by the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group (WBG). MIGA was established in 1988 with the mandate to promote cross-border investments into developing countries by providing guarantees (political risk insurance and credit enhancement) to investors and len­ders, contributing to economic growth, poverty reduction, and improved lives of people.1 This paper is also part of a broader effort to use evaluation evidence from MIGA guarantee projects to explore development issues, supplementing other analytical approaches.2

The paper is divided into different parts. It first presents the analytical issues related to foreign investment spillovers, drawing on the findings from previous studies and the literature. Then the paper moves on to present the ex post evaluation framework for MIGA guarantee projects. Then the paper presents the evidence regarding the spillovers of foreign investments, based on ex post evaluations of MIGA guarantee projects, a new source of evidence. Finally the paper presents the conclusions.

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Updated On : 2nd May, 2023
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