Ο ρόλος του πολιτικού κινδύνου στις άμεσες ξένες επενδύσεις

Δουλδούρας, Γεώργιος

Master Thesis

Author

Δουλδούρας, Γεώργιος

Date

2024-06-11

Abstract

In the era of globalization, Foreign Direct Investment (FDI) is a critical factor for the economic development of countries, allowing the influx of capital, technology, and managerial expertise. However, these investments carry significant political risks, such as the possibility of political changes that may negatively affect the return on investment. These risks can arise from legislative changes, corruption, or events like unrest and civil conflicts. This thesis examines the impact of political risk on Foreign Direct Investment, presenting a historical analysis of four generations of political risk analysis and combining theoretical approaches with empirical data. The analysis highlights how developments in the understanding of political risk can enhance the strategy and decision-making of businesses. Through thorough research, the thesis provides recommendations for managing and mitigating political risk under various geographical and political conditions. The thesis draws on a plethora of sources, including international databases, research articles, institutional reports, and case studies, ensuring a comprehensive and thorough approach. It contributes to a deeper understanding of political risk as a critical factor in global economic activity, proposing practices and strategies for the effective management and utilization of Foreign Direct Investments. The work begins with an examination of economic globalization, described as the increasing cross-border movement of people, capital, services, technologies, goods, cultures, information, and ideas. Globalization has led to economic and political interdependence on a global scale and has enhanced Foreign Direct Investments. These investments, in turn, contribute to the economic growth of countries, allowing the entry of new capital and the promotion of technological and managerial innovation. Foreign Direct Investments indicate the entry of a company into a domestic industry from a company established in a foreign market. The historical analysis of FDI shows their evolution through multiple stages due to changes in economic policies, global events, and technological developments. The motives of companies investing abroad vary and include seeking new markets, accessing resources, and acquiring strategic assets. The impacts of FDI on host and origin countries are multidimensional, as they enhance employment, productivity, and national wealth, but can also have negative effects on the development of less developed countries. Political risk, defined as the likelihood of political changes that negatively affect investments, is a central theme of the thesis. Theories and models of political risk, such as the Political Risk Assessment Model and Dunning's Eclectic Paradigm, offer insights into how multinational companies perceive and manage political risks when investing abroad. Strategies for mitigating political risk and the role of bilateral investment treaties are analyzed, offering practical solutions for multinational companies. The analysis of the impact of political risks at various stages of the FDI process provides a comprehensive understanding of how these risks affect multinational companies throughout the investment life cycle. At the entry stage, political concerns can influence the decision-making process of multinational companies, affecting the choice of country, industry, and entry method. During operations, multinational companies must manage operational risks associated with the political climate of the host country, such as geopolitical events and social unrest. At the exit stage, political concerns affect a company's ability to repatriate cash and make divestments, with the risk of expropriation and nationalization being critical. The selection of relevant case studies contributes to illustrating the varied impacts of political risks on Foreign Direct Investments. These studies represent a range of political risks across different regions and sectors, providing tangible examples of how political instability, regulatory changes, and geopolitical tensions can affect FDI flows. The chapter on risk and the economy examines risk and the economy as a decisive phenomenon, analyzing how to preserve wealth or prevent loss. It analyzes how risk can be seen as a resource to be distributed and allocated, despite its invisible and difficult-to-assess nature. The evolution and understanding of political risk are vital for Foreign Direct Investments. This chapter provides an overview of the key findings and issues highlighted in the scientific literature, as well as theoretical frameworks and strategies for mitigating political risk. With this structure, the thesis contributes to understanding the complex relationships between political risk and Foreign Direct Investments, providing practical guidance for the effective management of risks in a globalized economic environment.

Postgraduate Studies Programme

Δίκαιο και Οικονομία

Department

Σχολή Οικονομικών, Επιχειρηματικών και Διεθνών Σπουδών. Τμήμα Οργάνωσης και Διοίκησης Επιχειρήσεων

Number of pages

148

Language

Greek

URI

https://dione.lib.unipi.gr/xmlui/handle/unipi/16571
http://dx.doi.org/10.26267/unipi_dione/3993

Collections

Τμήμα Οργάνωσης και Διοίκησης Επιχειρήσεων

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Except where otherwise noted, this item's license is described as
Αναφορά Δημιουργού - Παρόμοια Διανομή 3.0 Ελλάδα