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Country Risks and FDI - Coggle Diagram

- - - - in 1940 when Germany invade France, the US Market dropped 21% and took 795 days to recover. After the 9/11, the Market dropped 8% and took only 40 days to recover.
  - - - Smaller countries face a persistent threat of terrorism are heavily impacted by the reduced of investment and economic growth
- - - - In 2010, Pakistan threatened to cancel a $3 billion Reko Diq copper and gold project that was leaded by Canadian investor Barrick Gold. The project was expected to earn $40-$50 billion from the extraction of raw copper and gold.
        
        The extractive industries are generally more vulnerable to adverse action on the part of host governments.
        
        They tend to be large and high profile - They are strategically important to host countries - They are subject yo a wide range of legal and laws, that frequently change.
        
        A big error that Pakistan made was focusing too much on the Net income than on what makes sense from all parties' perspective.
  - - - In 2006, Evo Morales decides to size all the assets of foreign-owned oil and gas operations and also to nationalize large, privately held property holdings.
        
        A lot of brazilians farmers have invested more than $1 billion to purchase land in an eastern region of Bolivia called "Santa Cruz",, which is one of the most fertile lands in Bolivia. This farmers grow more than a third of Bolivia's soybeans, which is equal to the 7% of the National economy.
        
        Bolivia has, since the nineteenth century, Fought for land and what lies under it with its neighbors. Approximate Half of the land once owned by Bolivia that at one time stretched to the Pacific Coastline, you're gone:
        
        A Chilean assault on the Litoral Province of Bolivia in 1884 cost Bolivia Its shoreline (the war was finally battled over the right to export Dry bird dung, prized for producing fertilizer and saltpeter at the time).
        
        "While nationalization is a "fix" for national economic ambitions in the short term, Its longer-term implications are typically negative because foreign companies Investment in countries that have a willingness to nationalize foreign-owned properties that would be reluctant.
        
        What was done by Brazil, Chile, and Uruguay was what Morales was unable to do this, having succeeded in combining fiscal prudence. With free trade and investment strategies and with the protection of their options to respect for international traders and investors, while at the same time addressing wider national markets Socio-social needs.
  - - - In 2009, a consortium led by ExxonMobil approved a massive and logistically challenging liquefied natural gas. Thats why there was a $15 billion initial phase investment and was set to produce around $35 billion in revenue.
        
        The possible revenue is amazing but it is also a huge test for the country. The government will likely realize a total %5.6-$7.5 billion revenue stream from any existing revenue source.
  - - - Country risk broadly refers to the likelihood that a sovereign state may be unable or unwilling to fulfill its obligations toward one or more lenders. It involves an assessment of economic performance in the context of a country’s demand for external financing and judgments about the prospect for changes in financial returns.
      - Sovereign risk is the risk that a foreign central bank will alter its foreign-exchange regulations, thereby significantly reducing or completely nullifying the value of foreign-exchange contracts. It also refers to the risk of government default on a loan made to it or guaranteed by it
      - Political risk concerns those political and social developments that can have an impact upon the value or repatriation of foreign investment or on the repayment of cross-border lending, which may originate within a host country, the home country, or the international arena. This includes arbitrary or discriminatory actions taken by governments, political groups, or individuals that have an adverse impact on trade or investment transactions.
    - - The Asia Crisis has provided banks with some valuable lessons on transactional risk management, including the need to more efficiently integrate a range of additional sources of knowledge into risk analysis, including the credit risk associated with private sector counter parties, the possible loss of liquidity and the impact of contagion.
    - - Adequate risk management policies and procedures as well as an accurate process for analyzing country risks.
      - Established country exposure limits and a regular monitoring of country conditions
      - Adequate internal controls and a audit function
    - - At a board meeting of a top 20 multinational corporation, the question of whether to invest $50 million in a project in a Middle Eastern country was discussed. As it turns out, the country in question was not as stable as it was portrayed and the company’s investment became tied up in costly legal limbo, which had far-reaching and potentially damaging implications for the company’s brand and reputation.