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          Bank Press Release No. 62/12                       SUBJECT:    Publi--~a.tion of "Multi lateral
          For Release A.M. Ne'WSpaper,c;i                                Investment Insurance"
          Monday, March 5, 1962


                 The World Bank today announced. publication of a staff study, "Multilateral

           Investment Insurance."       The report was transmitted last week, by Eugene R. Black,

          President of the Bank, to the Development Assistance Committee of' the Organiza-

          tion for Economic cooperation and Development, which had requested the Bank to

          prepare a study of possible multilateral guarantee systems.

                 The Govermrients of the United states, Japan and the Federal Republic of

.:        Germany insure the overseas investments of' their n~tionals ag~iP__st c.e.ptain risks,

           including expropriation without adequate compensation, inability to repatriate

          capital or profits; and. war &tmage.          In recent years a number of private indivi-

           duals and organizations have proposed that similar insurance for private foreign

          investments be made available on an international basis.· These proposals
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          prompted the World Bank study, in part because many of them envisaged World Bank

          administration, but prima.-rily because their objective, an increased flow of pri-

          vate capital to the less developea"'=countries, ia one of the :sank•s own basic

          objectives.
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                 The study makes no recommenc'...ations for or against a multilateral investment

          insurance program.        It notes that it is not possible to estimate the amount of

          additional investment which might be induced by new insurance f'acilitiet,, and




•         that therefore there is no basis on -which to judge whether governmental financial

          commitments on the sea.le required wo~d be justified.                 It also notes that the
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              establishment r,f a.n effective multilateral program would raise a num~ of' d.if'fi-

              cult prob1a<rttll.   Accordingly, the report seeks on1y "to identify a.nd focus atten-
              tion upon the principal issues which are inherent in the concept of a multi-

              lateral scheme and which it ia believed that governments 'Will find relevant in

              considering whether to create such a system.       It does not attempt to devise, in
              detilil or in outline, a specific proposal for a multilatera1 program. " .Among the
              issues discussed a.re the possible scope of protection, the typ~s of investment
              which may be eligible for insurance, membership in the program, and capitali-
              zation.    The report also considers the advantages and disadvantages of a multi-
              lateral program.      It does not deal m.th the question of administration..   The
              preface to the report explains that in the view of the Bank's management, it
              would be premature to do so: discussion of thi~ question should await the out-
              come of consideration by governments of the other issues treated in the report •



•                   Annexes to the study describe the three national programs now in operation;
              summarize the principal proposals for multilateral insurance; and analyze the

              responses of about 400 firms and associations in more than 20 countries to a

              c;iuestionnaire ( prepared jointly by the Bank and the International Chamber of

              Commerce) designed to discover whether businessmen thought an international
              investment insurance program desirable.

                    Publication of the report was authorize~.by the Executive Directqrs of the
              Bank in the belief that it would be use:f\ll both to governments and to private

              interests.     In authorizing publicatdon, the Directors expressed no views, either
              on their own behalf or on behalf of the governments ~m.ich appointed or elected
              them, concerning the issues discussed in the report •




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