Why Should the Factor of Political Stability Be at the Very Top?

Why should the factor of political stability be at the rattling top of the list of criteria used to evaluate the attractiveness of effectiveness distant enthronements? There argon several issues that should be considered when evaluating the attractiveness of a potential inappropriate investiture. Among them we tramp stress three main groups of criteria planetary market risk of infections, commercial risks and political risks (the ones in focus in this essay). savourlessal risks are caused by changes in a countrys political social structure or policies and, according to Hollensen (2007) ownership, operating and transfer risks are the main types that a marketer can face. Restrictions in repatriation of profits, change of government party, civil strife, change and wars can threat the attractiveness of a certain market. J. Eli Margolis (Estimating State dissymmetry 2012) tried to create a method that could help warning much(prenominal) problems as the Arabic Spring.As we kno w today, it is not merely affordable labor that FDI is constantly seeking political considerations must join the frugal ones so the investment has the chance to be succeeded. As an example, we can babble about the Solomon Islands after serious civil turbulence, law and order were restored and political and stinting situation started improving gradually. However, political mental unsoundness remained a challenge and so, a key obstacle in attracting foreign direct investment into the country. Trade Policy review-WTO). Despite all this evidence we can incessantly find different opinions. According to Peter D. Bennett and Robert T. Green (JMR 1972), political instability can be considered as a primary consideration in foreign investment decisions only within combined contexts of region and economic development and not as a general reason. Risk is not just about the possibility of losing market share or profits. Politic stability is extremely important.Taking the Irish case as an e xample, their aspiration to be free from British dependency resulted in a policy of smashed macroeconomic stability and honest bureaucracy. As a result, nowadays more than half of the Irish economy is foreign owned. There is political risk in every nation but also a massive range of procedures that countries can adopt to become more attractive to foreign investment ( E. g. Ease or resolve instability through humanistic or government aid S. Korean/ N.Korean 1999). In conclusion, I can say that terrorism and corruption are great threats for FI but on that point is always a way to face the situation and succeed. A elaborated analyses of the host market and anticipation of certain risks is essential for the success of the investment and that is why the factor of political stability should be at the very top of the list of criteria used to evaluate the attractiveness of potential foreign investments. Filipa Florencio 26/03/2013