Political, Economic and Social Risks of Developing Countries

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Political, Economic and Social Risks of Developing Countries

International trade barriers, for most, have long fallen. In developed

nations, markets are becoming saturated; specific natural resources

are often exhausted or non-existent and labour rates and material

resources are too costly. Meanwhile, emerging economies such as China,

India, or even Brazil are finally opening themselves up to the rest of

the world. For businesses, this means a chance to take advantage of

opportunities that are too often scarce at home. However, opportunity

does not come without risks; foreign countries have different

political, economic and social frameworks which all affect MNCs in

different ways, especially in developing countries where

socio-political and economic grounds may at times remain unstable.

International managers can do very little to prevent the difficulties

they face, and have

no control over events that may influence those risks. It is therefore

in the interest of any international manager not only to understand

the different risks they face but also to be aware of the methods used

to assess such risks.

Although the question divides risks into three different categories

(political, economic and social), it has nevertheless been noted that

all risks have political, economical and social implications.

Therefore, to avoid confusion, this discursive essay will employ

Griffin & Putsay's risk categorisation[1]:

1. Governmental risks: risks that arise out of governmental action

and/or influence (including legal and regulatory frameworks…)

2. Non-governmental risks: risks that arise out of non-governmental

actions (terrori...

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[1] Griffin, R. & Pustay, M (1999) International Business, A

Managerial Perception, New York, Addison-Wesley.

[2] Holt, D. (1998) International Management, New York, The Dryden

Press

[3] Economist "The world in 2003"

[4] Holt, D. (1998) International Management , New York, The Dryden

Press

[5] Holt, D. (1998) International Management , New York, The Dryden

Press.

[6] Griffin, R. & Pustay, M (1999) International Business, A

Managerial Perception, New York, Addison-Wesley.

[7] ibid

[8] Woods, M. (1995), International Business, London, Chapman &Hall.

[9] The Economist "The world in 2003"

[10] The Chambers Encyclopaedia (2001), Edinburgh, Chambers Harrap

Publishers.

[11] Hill, C. (2003), International Business, New York, The

McGraw-Hill Irwin.

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