Identification, Evaluation and Prediction of Political Risks from an International Business Perspective Available to Purchase

Multinational firms account at present (1976) for almost 15% of the aggregate gross national products of the western world; their total foreign investments are in excess of 320 billion dollars and the aggregate market value of the foreign assets under their control is very likely about four to five times as large. The value of these assets is affected by various risks, i.e. the probability of a loss, that can be broadly classified as economic and political risks. This separation is certainly open to question since there can exist a close interdependency between the factors that constitute economic and political risks. A distinction is, nevertheless, appropriate since political risks stem from changes in (assumed) policy positions whereas economic risks are associated with changes concerning market, competitive, and technological factors that diminish the firm's effectiveness and profit potential. In addition, the factors responsible for political risks becoming an actuality are more easily identified than those forces which are responsible for the economic risks becoming an actuality.