Abstract:
Private insurers, government-sponsored agencies (such as the U.S. Over-seas Private Investment Corporation), and multilateral organizations (for example, the Multilateral Investment Guarantee Agency) provide insurance policies pro-tecting foreign direct investments against expropriation of assets, civil strife, war, and currency inconvertibility. The cost associated with purchasing insurance is the portion of the premium, which exceeds the expected value of the firm's loss.
