Valuation of Foreign Direct Investment in the Presence of Political Risk

B.C. Lee () and J.G. Powell
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B.C. Lee: University of Wollongong, http://www.uow.edu.au/commerce/econ/who/index.html

No WP99-08, Economics Working Papers from School of Economics, University of Wollongong, NSW, Australia

Abstract: Investments in a country are subject to risks stemming from the same political events and government policies. Therefore it is possible to construct a portfolio which mimics the income profile of a particular FDI project using assets with readily observable prices. This paper provides a general risk replication model for valuing FDI projects in the presence of political risk.

Keywords: investments; foreign direct investment; political risk (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ifn
Date: 1999
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