Valuation of Foreign Direct Investment in the Presence of Political Risk
Investments in a country are subject to risks stemming from the same political events and government policies. Therefore it is possible to construct a portfolio which mimics the income profile of a particular FDI project using assets with readily observable prices. This paper provides a general risk replication model for valuing FDI projects in the presence of political risk.
|Date of creation:||1999|
|Date of revision:|
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- Eaton, Jonathan & Gersovitz, Mark, 1984.
"A Theory of Expropriation and Deviations from Perfect Capital Mobility,"
Royal Economic Society, vol. 94(373), pages 16-40, March.
- Jonathan Eaton & Mark Gersovitz, 1982. "A Theory of Expropriation and Deviations From Perfect Capital Mobility," NBER Working Papers 0972, National Bureau of Economic Research, Inc.
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