Country Risk in The Contemporary Global Economy - Theoretical Concept and Operational Tool

Flavius - Ioan Rovinaru () and Liviu - Daniel Deceanu ()
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Flavius - Ioan Rovinaru: "Babes Bolyai" University of Cluj-Napoca
Liviu - Daniel Deceanu: "Babes Bolyai" University of Cluj-Napoca

Ovidius University Annals, Economic Sciences Series, 2010, vol. X, issue 1, 159-163

Abstract: Economic globalization has advantages and disadvantages. We believe that the first ones' dimension is significantly higher than the inconveniences' one, and, as Professor Pascal Salin1 said, globalization is an objective necessity. However, the negative side of the internationalization of economic life is a reality, the country risk being an important vector of it. More than a mere academic specialty, the concept of country risk has now become an operational necessity, being the focus of analysis institutions (rating agencies, for example), but also of the different categories of agents interested in ratings (governmental creditors, various borrowers, banks, investors, multinational companies, exporters, etc.). Currently, risk assessment in the world of international businesses differs significantly from that methodology used several decades ago; risks have multiplied and diversified, and are present in any international economic transaction. Foreign direct investments in particular face the problem of country risk; it covers all the obstacles that affect the implantation process - administrative, institutional and social behaviors and practices that discourage the investment. In order to improve economic decisions, a serious study of the country risk is necessary; this analysis is based on fundamental issues accompanying economic, financial and political imbalances.

Keywords: country risk; globalization; foreign direct investments; multinational companies; ratings (search for similar items in EconPapers)
JEL-codes: F34 (search for similar items in EconPapers)
Date: 2010
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