ABSTRACT
A complementary multilateral guarantee facility will scarcely be in a position to mobilise a substantial and permanent additional flow of capital for direct investment in the Third World. One of the main arguments advanced for the creation of a multilateral guarantee facility is that numerous potential capital exporters must allegedly forego overseas investment almost entirely because they have no access to insurance against political risks in developing countries. Bearing in mind the small amount of additional capital that will be mobilised - primarily from a few OPEC countries - a complementary multilateral scheme seems to hold relatively little importance for the capital-importing developing countries. Having examined the requirements underlying the World Bank proposal and discussed selected problems of implementation, the chapter concludes by investigating the extent to which such an approach accords with the interests of capital-exporting and capital-importing countries. It looks at both the need for such a tool and its possible repercussions.
