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Political Risk and Foreign Investment

Author

Listed:
  • Amarandei Cristina Mihaela

    (“Alexandru Ioan Cuza” University of Iasi, The Doctoral School Economics)

  • Postolachi Andrei Teofil

    (“Alexandru Ioan Cuza” University of Iasi, The Doctoral School Economics)

Abstract

This paper`s target is to point the role of political risk in international affairs. Despite the fact that now we live in a globalized world the reality shows that national borders still matters. In this context, multinational companies face a lot broader types of risk when they invest abroad. One of this risks is political risk and that`s because politics influences how markets operate. Often the most unpredictable economic events are political in origin, the result of inconsistent political decisions or incapacity to maintain a stable and predictable economic environment. The importance of assessment and management of political risk exposure is highlighted by a theoretical framework that outlines the multidimensionality of the concept. To illustrate the framework and the complexity of the political risk phenomenon, a number of 2 case examples are presented from the international oil and gas exploration and production industry and the energy sector.

Suggested Citation

  • Amarandei Cristina Mihaela & Postolachi Andrei Teofil, 2011. "Political Risk and Foreign Investment," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 73-78, May.
    • Handle: RePEc:ovi:oviste:v:11:y:2011:i:1:p:73-78
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    More about this item

    Keywords

    risk; political risk; foreign investment; multinational companies;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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