ch06 - CHAPTER 6 CountryRiskAnalysis THE MEASUREMENT OF...

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Country Risk Analysis CHAPTER 6
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THE MEASUREMENT OF POLITICAL RISK I. MEASURING POLITICAL RISK A. Country-specific perspective focuses on the country from a “top-down” view, i.e. macroeconomic variables to industry-specific analysis 2
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THE MEASUREMENT OF POLITICAL RISK B. Political Stability 1. Measured by: a. Frequency of government changes b. Level of violence c. Number of armed insurrections d. Conflict with other states 3
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THE MEASUREMENT OF POLITICAL RISK C. Economic Factors 1. Indicators of political unrest a. Rampant inflation b. Balance of payment deficits c. Slowed growth of per capita GDP 4
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THE MEASUREMENT OF POLITICAL RISK D. Subjective Factors 1. Profit Opportunity 2. Political Risk and Uncertain Property Rights 5
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THE MEASUREMENT OF POLITICAL RISK 3. Capital Flight a. Definition: the export of savings by a nation’s citizens because of safety-of-capital fears. b. Measurement: use the balance-of- payment account 6
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THE MEASUREMENT OF POLITICAL RISK c. Causes of capital flight 1.) Inappropriate economic policies 2.) Expectation of devaluation 3.) High political risk 7
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This note was uploaded on 02/22/2011 for the course BMGT 446 taught by Professor Staff during the Spring '08 term at Maryland.

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ch06 - CHAPTER 6 CountryRiskAnalysis THE MEASUREMENT OF...

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