domestic economy declines, the more nationalistic it becomes in protecting itself against intrusions.C.Targeted Fear and/or AntimosityD.Trade DisputesIII.Political Risks of Global BusinessA.Confiscation, Expropriation, and DomesticationConfiscation - the seizing of a company’s assets without payment and the most severe political riskConfiscation was most prevalent in the 1950s and 1960s when many underdeveloped countries saw confiscation, albeit ineffective, as a means of economic growth. Expropriation - the host government seizes a company's property but some reimbursement for the assets is made. When the expropriated investment is nationalized, it becomes a government-run entity.Domestication - the host country gradually causes the transfer of foreign investments to national control and ownership through a series of government decrees by mandating local ownership and greater national involvement in a company’s management. The ultimate goal of domestication is to force foreign investors to share more of the ownership, use local content, enter into labor and management agreements, and share participation in export sales as a condition of entry; in effect, the company has to become domesticated as a condition for investment.Expropriation and nationalization have often led to nationalized businesses that were inefficient, technologically weak, and noncompetitive in world markets.Risks of confiscation and expropriation appear to have lessened over the last two decades (with exceptions in Latin America, particularly Venezuela) because experience has shown that few of the desired benefits materialize after government takeover. Today, countries often require prospective investors to agree to share ownership, use local content, enter into labor and management agreements, and share participation in export sales as a condition of entry; in effect, the company has to become domesticated as a condition for investment.B.Economic Risks1. Exchange Controls: established by a country in order to maintain a specific level of foreign exchange. They are used especially during periods when the country faces shortages of foreign currency. When a nation faces shortages of foreign exchange and/or a substantial amount of capital is leaving the country, controls may be levied over all movements of capital or selectively against the most politically vulnerablecompanies to conserve the supply of foreign exchange.