Types of Country Risk Produced by Legal Systems
6.6 Identify the types of country risk produced by legal systems.
In addition to political concerns, country risk also arises due to peculiarities of national legal systems. Especially relevant to international business are commercial law, which specifically covers business transactions, and private law, which regulates relationships between persons and organizations, including contracts and liabilities that may arise due to negligent behavior. In many countries, the legal system favors home-country nationals. Laws are designed to promote the interests of local businesses and the local economy.
Legal systems in both the host country and the home country pose various challenges to firms, which ...
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