Understanding Country Risk

Explanations On How Porter Helps Relate To My Understanding Of How Best To Manage Country Risk

Porter explained in Chapter 4 of his text entitled, “The Dynamics Of National Advantage,” that a single component may affect the other factors determining the attractiveness of a country for investment (Porter, 1998.). If a country’s political and social statuses are not stable, ultimately it will affect its economic conditions. If a country is experiencing political instability such as leadership overthrow riots, the people will be all over the streets, participating in violent activities. With these events underway, it is not surprising to see several people in the country get injured and die. The safety of the country in these instances would be in peril. Effective leaders who can manage the economic conditions of the country fail to exist. Due to unattractive safety and economic systems, foreign investors would be scared to invest in the country.