Rewarding a friend: Does the World Bank direct non-commercial risk insurance to countries that support US foreign policy interests?

Many scholars have investigated the politics of World Bank Group (WBG) lending, often finding that WBG loans are distributed in ways that advance US policy interests. However, the organisation’s other major activity, promoting foreign direct investment (FDI), has received little attention. This study fills this void in the literature, with attention to the Multilateral Investment Guarantee Agency (MIGA), the youngest of the five agencies that collectively make up the WBG. MIGA provides multinational companies with insurance to protect their investments from non-commercial risks in host countries, such as the outbreak of civil war or government expropriation. Given considerable evidence that WBG loans support US interests, MIGA’s risk insurance may be similarly politicised. However, since MIGA is financially independent and prohibits political activity, we theorise that US influence operates informally through MIGA staff, who reward US-aligned countries to ‘please the principal,’ and hence ensure that the US continues to support the Agency. Empirical analysis based on over 1500 MIGA-insured investments covering 121 member countries over the 1990–2020 period shows that MIGA insurance is disproportionately rewarded to investments in host countries that support US policy interests. Our findings suggest that this politicisation is primarily staff-led.