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The Political Environment

The Political Environment. Chapter 6. Sovereignty. What is sovereignty? Trade agreements Stability Political parties Nationalism. Political Risks of Global Business. Confiscation Expropriation Domestication Economic Risks Exchange controls Local-Content Import Restrictions

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The Political Environment

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  1. The Political Environment Chapter 6

  2. Sovereignty • What is sovereignty? • Trade agreements • Stability • Political parties • Nationalism

  3. Political Risks of Global Business • Confiscation • Expropriation • Domestication • Economic Risks • Exchange controls • Local-Content • Import Restrictions • Tax controls • Price Controls • Labor Problems

  4. Political Risks of Global Business • Political Sanctions • Political and Social Activists • Violence and Terrorism • Cyberterrorism

  5. Assessing Political Vulnerability • Uncertainty • Politically Sensitive Products and Issues • Forecasting Political Risk

  6. Reducing Political Vulnerability • When does it work? • Increases exports over imports (balance of payments) • Locally-produced resources are used • Transfers capital, technology, or skills • Create jobs • Makes tax contributions

  7. Reducing Political Vulnerability • Corporate Philanthropy • Joint Ventures • Expanding the Investment Base • Licensing • Planned Domestication • Political Payoffs

  8. Government Encouragement • Why is foreign investment good? • Promotes industrialization • More jobs • More technology • Generate exports

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