WASHINGTON, D.C., Jan. 07—The International Finance Corporation (IFC) has released its fourth technical paper entitled "Investment and Institutional Uncertainty: A Comparative Study of Different Uncertainty Measures."
It is widely believed that uncertain political environments reduce foreign investment. The new IFC study examines the kinds of institutional uncertainty that are most harmful to investment. The authors find that government instability, political violence, policy volatility, and uncertain enforcement of laws all have a negative impact on foreign investment. The two factors found to reduce investment most are corruption and the absence of a credible rule of law.
The authors of the paper are Aymo Brunetti of the University of Saarland and the University of Basel, and Beatrice Weder of the University of Basel.
IFC, a member of the World Bank Group, is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
–––––
