Risk in Foreign Trade: An Empirical Investigation

The results are reported of an empirical study of how German companies investigate and analyse political risks in foreign countries prior to direct investment. It would seem that the risk of involvement in countries with varying social, political and business conditions, can only be minimised when the factors that influence and motivate investment are adequately investigated and analysed in advance. However,examples in recent years, such as Iran, have shown that volatile and fundamentally unpredictable political factors exert a strong influence on the economic situation and on direct foreign investment.