References

Akerlof G, 1970, The Market of Lemons Quality Uncertainty and the Market Mechanism. Quarterly Journal of Economics, 84, 488-500. Bardhan P, 1997, Corruption and Development A Review of Issues. Journal of Economic Literature, Sep, 1322. Beck PJ and Maher MW, 1986, A Comparison of Bribery and Bidding in Thin Markets. Economic Letters, 20, 1-5. Bouchet MH, 1987, The Political Economy of International Debt. Greenwood, IL Quorum Books. Bouchet M and Groslambert B, 2000, Co te d'Ivoire Trois Defis...

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...

Devaluation

3.1.1 Relative Price Effects The Elasticities Approach The elasticities approach to devaluation looks at the relative price effects of a devaluation on the balance of payments, which it analyzes in terms of the supply and demand of exports and imports. Exports are assumed to account for the total supply of foreign exchange and imports for the total demand for foreign exchange. In this framework, there are no capital flows between countries. Foreign exchange can be obtained exclusively by...

Info

Capital output ratio to determine growth rates. The marginal capital output ratio is supposed to measure the marginal productivity of capital and is usually calculated by dividing gross fixed domestic investment in one period by the increase in GNP one or two periods later. A lower ratio signifies a higher productivity of capital and the higher the productivity of capital, the better the outlook for GNP growth. The net capital imports gross domestic fixed investment ratio indicates the extent...

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...