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Country Risk Analysis
Globalization has become the central driving force of most economies over the past decade. The trend is likely to accelerate dramatically in the next 20 years. The emergence of European Monetary Union, the rise of China to the center stage, the likely rebounding of other Asian economies over the next few years, the imminent expansion of NAFTA to South America, starting with Chile, and the likely completion of political and economic transition in Russia and other East European economies are but a few reasons for the likely explosion of global trade and investment opportunities in the next decade, far beyond the already dramatic increases of the past decade.
To take advantage of these opportunities, US companies small and large, are becoming increasingly globalized. Yet, as recent events in East Asia and Indonesia have shown us, there are crucial risks and uncertainties related to the political and legal structures of many emerging markets, including those that govern the openness of information, the transparency of the financial system, or the respect for property rights. Risks are also associated with host governments' policies towards international capital movements and exchange rates. Thus there is a great need for accurate assessment of country risks and uncertainties facing US companies. The value of timely information to accurately asses such risks is ever greater.
International assessment of country risk began in the 1970s and 80s. However, while data on some broadly defined variables such as the extent of democracy have been available for some time, limitations on more detailed data, such as on property rights, law and order, government repudiation of contracts, government expropriation, bribery, etc. were a hindrance. Such data on these and many more variables are now available on systematic monthly and annual basis and have been used in recent studies. Further, using these data and modern statistical techniques we are able to quantify these risks with considerably greater detail and tailor the information to the specific goals of corporations and banks. ribusiness and Agricultural Biotechnology (Agbiotech)