Political Risk and Foreign Investment

Amarandei Cristina Mihaela () and Postolachi Andrei Teofil ()
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Amarandei Cristina Mihaela: “Alexandru Ioan Cuza” University of Iasi, The Doctoral School Economics
Postolachi Andrei Teofil: “Alexandru Ioan Cuza” University of Iasi, The Doctoral School Economics

Ovidius University Annals, Economic Sciences Series, 2011, vol. XI, issue 1, 73-78

Abstract: This paper`s target is to point the role of political risk in international affairs. Despite the fact that now we live in a globalized world the reality shows that national borders still matters. In this context, multinational companies face a lot broader types of risk when they invest abroad. One of this risks is political risk and that`s because politics influences how markets operate. Often the most unpredictable economic events are political in origin, the result of inconsistent political decisions or incapacity to maintain a stable and predictable economic environment. The importance of assessment and management of political risk exposure is highlighted by a theoretical framework that outlines the multidimensionality of the concept. To illustrate the framework and the complexity of the political risk phenomenon, a number of 2 case examples are presented from the international oil and gas exploration and production industry and the energy sector.

Keywords: risk; political risk; foreign investment; multinational companies (search for similar items in EconPapers)
JEL-codes: F21 F23 G32 (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:ovi:oviste:v:11:y:2011:i:1:p:73-78

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