Property Rights

Dec 07, 2012 (LBO) – World Bank group’s Multilateral Investment Guarantee Agency, which provides political risk cover for foreign investors, said expropriation risks are rising in developing countries, with Argentina, Bolivia and Sri Lanka coming into prominence in the recent past. “Expropriation”which was an important threat to foreign investors in the developing world
a few decades ago, but had since abated”is becoming more prevalent,” MIGA said in a new report released today.

“Several new direct expropriations occurred in 2011-2012, notably YPF S.A. in Argentina partly owned by Repsol YMP S.A. (Spain) and Transportadora de Electricidad, a power transmission company in Bolivia owned by Red Electrica Española (Spain), and some local companies in Sri Lanka.”

A survey by MIGA found that more investors were worried about the expropriation – violation of private property rights by the state through nationalization – than war or terrorism.

Adverse regulatory changes were what investors most feared in developing countries, followed by breach of contract, transfer and convertibility restrictions (exchange controls), civil disturbance, non-honoring of government contracts