The Effects of Economic Crisis on Country Risk

Mariana Iovitu and Elena Iliescu
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Mariana Iovitu: A.S.E Bucureşti, Romania

Timisoara Journal of Economics, 2009, vol. 2, issue 4(8), 191-198

Abstract: It is widely accepted that risk is a constant of the human activity in general. From this perspective, the expansion of business across country borders requires identification, assessment and brief analysis of the overall risk that operators would face in a targeted national economy.Country risk is the one that shows in a general manner the international business risks, reflecting the overall situation and the cumulative effects of other risks. It is therefore considered to be a diagnosis of the socio-economic potential of the country receiving international economic flows. The complex, dynamic and variable character of the "new economy" has imposed a permanent adaptation of the country risk concept and has increased its importance given the international affairs. This is because knowing and understanding it, enable the economic agents to make rational decisions, minimizing the risks and increasing the profitability of their foreign activities. Also for a greater efficiency in decision making regarding internationalization, a specific activity became essential, which is country risk management. Country risk issues remain open to interpretations, especially in the context of economic crisis. The situation the world economy is facing today, changes considerably the criteria and also the assessments regarding the cataloguing of country risk.

Keywords: risk; uncertainty; country risk; systematic risk; economic decline; risk management (search for similar items in EconPapers)
JEL-codes: F21 G24 G32 (search for similar items in EconPapers)
Date: 2009
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