FOREIGN DIRECT INVESTMENT AND NON-COMMERCIAL RISKS

Abstract

The aim of this paper is to define noncommercial or political risks, determine their nature and genesis, and analyse their impact on foreign direct investment as an important element of foreign trade relations. Also, starting from the need to implement one of the postulates of international economic relations - the principle of free movement of capital - the paper analyses the extent of protection against certain non-commercial risks of the capitalexporting countries and capital importing countries. A significant part of the paper is devoted to the measures for international insurance of foreign direct investment against political risks, which were adopted as a result of the activities of the organs of the United Nations, the World Trade Organization and the Organization for Economic Co-operation and Development. Binding multilateral documents and regulations, created upon the initiative of the most developed countries of the world, have become an international legal framework for investments, and a matrix for building national investment legislations. Harmonisation of national legal standards for the protection of foreign direct investment was achieved through the membership in the Multilateral Investment Guarantee Agency which insures the countries from the political risks, but also during the process of settling investment disputes through the International Centre for Dispute Resolution, both headquartered in Washington, D.C. National and international insurance of foreign investments against political risks have been standardised and they guarantee the free movement of capital.

Keywords

• Keyword:foreigndirectinvestment
• non-commercialrisks
• transferofprofits
• protectivemeasure