
CROSS-BORDER INVESTMENT DECISIONS 347
Risks in Cross-border Investment Decisions
There are several kinds of risks associated with cross-border investments. These risks may
broadly be classified as political risk, currency risk, and inflation risk. It may be noted that
these different risks may have overlapping influences on investment projects. An outline of
each of these risk factors is presented below.
Political Risk
Political risk arises from the political environment in the host country, that is, the country
in which the foreign project is established. The political set-up in the country may influence
the residents to purchase or prefer products ...