Types of Country Risk Produced by Political Systems
6.5 Identify the types of country risk produced by political systems.
How do political systems create challenges for firms engaged in international business? Let’s examine the specific risks produced by political systems.
Government Takeover of Corporate Assets
Governments occasionally seize the assets of corporations. The industry sectors most often targeted by government seizure are natural resources (for example, mining and petroleum), utilities, and manufacturing. Fortunately, aggressive seizure is less common these days as governments in many developing countries have adopted institutional reforms that aim to attract FDI from abroad and foster economic growth.
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