Political Risk Political Risk Chapter by gjjur4356

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									Political Risk


         Chapter Sixteen

         Eitman, Stonehill, &Moffett



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Political risk
 change in rules which lead to
  reallocation of resources
      tax rules
      ownership rules/capital controls
            restrictions of foreign ownership
      exchange controls
 change in political structure which
  portends reallocation of resources

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Macro risks
 expropriation
      government seizure of property
      valuation
            book?? Market??
            exchange rates??
      time value of money
 civil strife
      investment in Yugoslavia, Russia??
 antagonistic governments
                   Chapter 17 - ??
      for US Iran , Cuba Political Risk
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Micro risks -
Government Policy Goals
 employment policies
 resource reallocation
      taxes
      transfers
 trade policies
      protectionism
      balance of payments
      exchange rate policy
 economic development
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Barriers
 limitations to trade
      quotas, embargoes, licensing, domestic
       content
 administrative restrictions
      fees, tariffs, deposit requirements, tax
       adjustments
 non-economic discrimination
      quality standards, environmental, health
 direct government interference
      procurement, export subsidies, domestic5
April 25, 2011   Chapter 17 - Political Risk
Non-economic goal conflicts
 economic emperialism
      African economies
 national security concerns
      U.S. concern
 corruption & nepotism
      South, Central America, Africa, Asia
 xenophobia
      Asian economies

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Assessing Political risk
 political stability
      probability of change
      direction change would take
 firm specific
      negotiating terms
      operating strategies to mitigate risk




April 25, 2011     Chapter 17 - Political Risk   7

								
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