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Old problems remain, new ones crop up: Political risk in the 21st century

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  • Jakobsen, Jo
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    Abstract

    Despite the fact that most developing countries now generally welcome multinational companies, political risk still represents a huge concern for international business. In fact, multinational companies today probably face a much broader array of risks than during the nationalization wave of the 1960s and 1970s. To substantiate this claim, a theoretical framework is presented herein which outlines the key causal relationships in the political risk landscape. It is explained why a discernible attitude change in the developing and emerging world does not necessarily equal a reduced overall level of political risk. To illustrate the framework and the complexity of the political risk phenomenon, a number of recent case examples are presented from the international bauxite and aluminium industry--an industry whose wide-ranging value chain, international focus, global significance, and natural exposure to risks make it very suitable for analysis. The conceptual discussion and the empirical examples presented in this article suggest that political risk is now surely a highly complex, multidimensional phenomenon. This trait poses major challenges for the global business community, particularly in terms of accurately assessing these risks.

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    Bibliographic Info

    Article provided by Elsevier in its journal Business Horizons.

    Volume (Year): 53 (2010)
    Issue (Month): 5 (September)
    Pages: 481-490

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    Handle: RePEc:eee:bushor:v:53:y::i:5:p:481-490

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    Web page: http://www.elsevier.com/locate/bushor

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    Keywords: Political risk Aluminum industry Foreign direct investment Multinational companies Risk assessment;

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    Cited by:
    1. Chou, Kuang-Hann & Chen, Chien-Hsun & Mai, Chao-Cheng, 2011. "The impact of third-country effects and economic integration on China's outward FDI," Economic Modelling, Elsevier, vol. 28(5), pages 2154-2163, September.

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