Political Risk and International Investment
Political risk involves the uncertainty that investors have about changes in laws and regulations that national authorities apply to the transfer of funds across national borders and the ownership of assets within their jurisdictions by foreign firms and residents. Each national government can control the movement of securities across national borders, thus hindering foreign loans and investments, and the repatriation of profits, dividends and capital. Each government can use its legal powers to acquire the property of private parties — of foreign residents as well as of domestic residents — located within its jurisdiction. And each also can refuse to pay its debts to foreigners with minimal fear of being sued.
KeywordsInterest Rate Foreign Firm Exchange Risk Foreign Currency International Investment
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- Dan Haendel and Gerald T. West with Robert G. Meadow, ‘Overseas Investment and Political Risk’, Foreign Policy Research Institute Monograph Series (Nov 1975).Google Scholar
- Robert Z. Aliber, ‘The Impact of External Markets for National Currencies or Central Bank Reserves’, in Harry G. Johnson and Alexander K. Swoboda (eds.), The Economics of Common Currencies ( London: Allen and Unwin, 1973 ).Google Scholar