Growth Crisis And Governance

Whereas country risk analysts focused on debt ratios and growth rate indicators in the 1980s, a consensus is emerging to place governance at the heart of the development process. Corporate and sovereign governance get the headlines of academic articles and magazines. The US Justice Department's investigation against Enron, which collapsed into bankruptcy court proceedings in late 2001, shed light on corrupt practices linking Enron and developing country governments. Claims of corruption in...

Political Risk

Power Structure Presentation

The preceding section has already dealt with the issue of political risk in fast-changing societies. Political risk is also discussed regarding the rating approach in Chapter 5, and political risk insurance is discussed in Chapter 9. 9 World Bank, Indicators of Governance and Institutional Quality. Political risk has never been so much on the front burner as since the 11 September 2001 terrorist attack on the United States. The attack illustrated that there is no sanctuary, since the most...

External Indebtedness Liquidity And Solvency Analysis

Although the most visible element of emerging market crises is debt servicing suspension or, at worst, sheer defaulting, the root causes of the debt crises are still complex and the subject of endless academic debates. In particular, policymakers and economists around the world focus on such fundamental questions as (A) What are the relationships between external debt and domestic growth (B) Is external indebtedness a transitory but necessary ingredient behind long-term sustainable growth And...

Review Of The Literature

The literature on country risk uses several terminologies and has generated various streams depending on the definition that is retained, the sources of risk, the nature of the investment, the historical context, and the chosen methodology. These various approaches will be dealt with in the following paragraphs and are summarized in Table 2.1. Just a few years after many American firms were expropriated by the Cuban revolution, the notion of political risk began to emerge in the literature of...

Outline Of The Book

Various definitions and several terminologies exist to deal with the risk related to a foreign investment. In this book, we define country risk as all the additional risks induced by doing business abroad, as opposed to domestic transactions. When a firm starts to expand internationally, it is faced with a new environment, composed of different risks and uncertainties, which it is not used to dealing with. Country risk encompasses all these specific sources of potential difficulties encountered...