ANALIZING A COUNTRY
When the moment for investing in a foreign country, it is mandatory to analyze all the variables set by a country that can affect the operations of yourbusiness. Certain risks can be managed by planning, like financial studies, culture etc. but others are not easily to anticipate, and must be base on statistics and trends to maybe can approximate to themost accurate of what could happen.
Analyzing a country risk is necessary even so there is uncertainty we can managed this uncertainty by making possible scenarios of what will happen, in order to makebackup plans to respond to the circumstance of the environment in which your business will develop all their operational activities.
One of a crucial factor that may hinder or could help yourbusiness is politics, so many decisions that are taken in a country, like forbidden, increases, regulations, tariffs etc. must be analyze accurately to know in what environment you are working.
In manycountries today, such political risk has been reduced and replaced by a new acceptance of free markets
and a belief that international trade and investment are the bases for economic growth.Nevertheless, political risks still remain.
The Index of Economic Freedom, which must be considered in a risk-return analysis, points to the various ways in which a government may take away potential profits.The Corruption Perception Index warns that doing business in certain countries will require clear corporate practices for bribery, ranging from enforcing a zero-bribery policy, to permitting specifictypes of “gifts,” to authorizing a local partner to undertake certain “assistance” activities for those in power.
But political risk comes in many other forms. Other examples include: a newpresident or prime minister, a change in the country’s ruling party, or an important piece of new legislation. All of these changes can have a big impact on a country’s economic environment and investor...
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