Background Note | HBS Case Collection | March 2006 (Revised November 2010)

Protecting Foreign Investors

by Louis T. Wells Jr.


Describes the emergence of several kinds of efforts to assure the safety of foreign investment in emerging markets: international arbitration, expanded official political risk insurance, credit from government agencies, and intervention by investors' home governments. Points out the roles of bilateral investment treaties and regional economic agreements in making arbitration accessible to an increasing number of foreign investors. Views the various arrangements as substitutes for a global agreement on foreign direct investment that would parallel the WTO for trade given that attempts to negotiate a comprehensive arrangement have so far failed. Also, presents several criticisms of the current system.

Keywords: Foreign Direct Investment; Risk Management; Emerging Markets; Agreements and Arrangements; Business and Government Relations; Safety;


Wells, Louis T., Jr. "Protecting Foreign Investors." Harvard Business School Background Note 706-044, March 2006. (Revised November 2010.)