Multinational Financial Management（跨国公司财务管理）ch06 Analyzing Country Risk.pptVIP

Analyzing Country Risk CHAPTER 6 PART I. THE MEASUREMENT OF POLITICAL RISK I. MEASURING POLITICAL RISK A. Country-specific perspective THE MEASUREMENT OF POLITICAL RISK B. Political Stability 1. Measured by: a. Frequency of government changes b. Level of violence c. Number of armed insurrections d. Conflict with other states THE MEASUREMENT OF POLITICAL RISK C. Economic Factors 1. Indicators of political unrest a. Rampant inflation b. Balance of payment deficits c. Slowed growth of per capita GDP THE MEASUREMENT OF POLITICAL RISK D. Subjective Factors 1. Profit Opportunity Recommendation 2. Political Risk and Uncertain Property Rights THE MEASUREMENT OF POLITICAL RISK 3. Capital Flight a. Definition: the export of savings by a nation’s citizens because of safety-of-capital fears. b. Measurement: use the balance-of- payment account THE MEASUREMENT OF POLITICAL RISK c. Causes of capital flight 1.) Inappropriate economic policies 2.) Expectation of devaluation 3.) High political risk PART II. ECONOMIC AND POLITICAL FACTORS II. Economic and Political Factors Primary focus: How well is the country doing economically? A. Fiscal Irresponsibility -high government deficits B. Monetary Instability C. Controlled Exchange Rate System -currency usually overvalued D. Wasteful Government Spending -inability to service foreign debt ECONOMIC AND POLITICAL FACTORS D. Resource Base -lack of strong work ethic E. Country Risk and Adjustment to External Shocks 1. What are the impacts of external shocks: -how well a nation responds varies ECONOMIC AND POLITICAL FACTORS 2. Key Indicators of Country Risk a. Relative size of government debt b. Money expansion c. Existence of government- imposed barriers to market forces ECONOMIC AND POLITICAL FACTORS 2. Key Indicators of Country Risk (con’t) d. Level of tax rat