The oil crises of the 1970s and the worldwide economic turmoil were the first post-war events that highlighted the importance of a global risk factor for the management of firms and organizations, as well as for the sustainable socio-economic development of countries. Despite the stabilization of the global economic and business environment during the 1980s and the development of the 1990s, this risk factor has not lost its importance. The rapid change toward a globalized environment has already highlighted, in several situations, the multiplicative effect that a socioeconomic turmoil at a national or regional level may have at the global level. The recent crises in Southeast Asia and South America are typical and clear examples of this finding. Country risk analysis has evolved as a major research topic within the fields of economics and finance during the past three decades, focusing on the investigation of the economic and financial difficulties that countries face, the factors that are related to these difficulties and their impact on economic policymaking, as well as on the business and investment environments. The major significance of country risk analysis is clearly understood by the plethora of existing risk rating agencies that provide assessments of country risk (Erb et al., 1996).
KeywordsInstitutional Investor Credit Rating Debt Ratio Political Risk External Debt
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