Political Forces
Chapter 9
Ideological Forces
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Communism
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Who controls factors of production?
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Why did it fail?
Capitalism
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Expropriation
Confiscation
Are any organizations government-owned?
Socialism
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European socialism
Developing countries
Conservative v. Liberal
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Conservative
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Liberal
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Right wing
Left wing
Political advocacy groups
Government Ownership
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Why?
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Five reasons
Unfair Competition?
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Can lower prices
Cheaper financing
Government contracts
Export assistance
Can hold wages down
Privatization
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“Transfer of public-sector assets to private
sector, the transfer of management of state
activities through contracts and leases and the
contracting out of activities previously conducted
by the state.”
Examples
1985-2002: $525 billion assets privatized
US privatizing?
Example: Water in the UK
Government Protection
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Gulf War
Terrorism
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Italy
September 11
Department of Homeland Security
 Other changes
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Other groups
Government Protection
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Terrorism (cont’d)
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Kidnapping
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Columbia & Peru
Pay the ransom?
Countermeasures
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Cassidy & Davis
International Training, Inc.
Other terrorism
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Ethnocentrism
Nuclear terrorism
Chemical and biological terrorism
Islamic fundamentalism
Government Stability
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Government is stable if
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Maintains itself in power, or
Its fiscal, monetary, and political policies are
predictable and not subject to sudden, radical
changes
Unstable
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Lebanon
Zimbabwe
Traditional Hostilities
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Arab Countries – Israel
Hutus & Tutsis
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Tamils – Sinhalese
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Sri Lanka
Albanians, Bosnians, Croats, and Serbs
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Massacre
Retribution
Zaire
Ethnic cleansing
United Nations & NATO
South Africa
International Organizations
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United Nations
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Main functions
Transnational Corporation Division
UN Conference on Trade & Development
IMF
GATT/WTO
OPEC
EU
OECD
Country Risk Assessment

“Bank or business having an asset in or
payable from a foreign country or
considering a loan or an investment there,
evaluates that country’s economic
situation and policies and its politics to
determine how much risk exists of losing
the asset or not being paid.”
Country Risk Analysis
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Five Types of Risk
Information Content
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Nature of Business
Length of Tome Required
Who does a CRA?
Lessons of International Debt Crises
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External shocks occur to developing countries
Economic policies impact default
Need substantial growth
Social and potential political costs of development
Ripple effects