The Multilateral Agreement on investment protection is provided to foreign investments in the country from its administrative and legal procedures. It is an agreement under the Multilateral Investment Guarantee Agency, an institute related to the World Bank.
This device helps to protect investors from currency convertibility and transfer related regulation in any country.
India joined as a member to this Agency in 1993 for attracting foreign investment in our economy for development. India and other developing countries require a big amount of capital for their economic growth. Investors would not be ready to invest their money if it is at any non-professional risk.
This agreement makes provision that such investments will be protected from any risk in foreign countries. To encourage investors, such guarantee is necessary but the agreement goes to the extent of providing counter guarantee by bilateral agreements among member states. The guarantee, not only for security of investment but for a profit, is beyond necessity.
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In such condition, the developing countries would have adverse effect on their economy because the agreement provides that no interference, administrative or legal, should be there for the foreign investment. Such guarantee are not available to the domestic investors.
More and more investment, in the cover of such counter guarantee, will, of course, increase economic development in developing countries but will not protect domestic industries to complete with such foreign investors.