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In this study a relationship between the fluctuation of a nation's monetary reserves and political risk is established. A least square regression model is used for the 1972–87 period and monetary reserves fluctuations of nineteen countries are analyzed. It is concluded that monetary reserves data can be used as a cost efficient proxy for political risk in moderate risk non‐oil exporting countries. Less politically risky countries also exhibit a positive relationship but the results are not statistically significant. This study has special implications for small and medium‐sized corporations. Further, the limitations of this study are discussed.

The purpose of this study is to analyze the relationship between country risk, stock prices and the exchange rate of the renminbi (RMB) compared to that of the US dollar.

An extended open macroeconomic model with investment–saving, liquidity preference–money supply and aggregate supply functions was used by applying comparative static analysis. After checking the series for stationarity and cointegration, a vector autoregressive model was applied. Lag length was selected based on the Akaike information criterion, and the coefficients were calculated for the overall sample and for pre- and post-July 2005 periods.

The stock market index is a significant determinant of variation in the exchange rate: when the Chinese stock market performs well, the RMB appreciates and vice versa. Country risk is not a significant determinant of the exchange rate, but the exchange rate of the RMB is a highly significant determinant of the country risk of China: depreciation of the RMB results in higher country risk and vice versa.

Linear interpolation was used to calculate the monthly values of some of the variables for which only annual data were available.

The authorities should revalue the exchange rate of the RMB against the US dollar, which will result in lower country risk for China. One way to achieve this is to strengthen the performance of stock markets.

To the best of the authors’ knowledge, this is the first study to explore the relationship between the country risk of China and the exchange rate of the RMB. Using an open macroeconomic model, this novel research analyzes the relationships between country risk, stock prices and the exchange rate of the RMB from a different perspective.

International lending has been slowed by the repeated loan reschedulings of less developed countries (LDCs) during the 1980s. However, commercial banks recognize that they must provide international loans in order to generate other business from foreign governments and multinational corporations. For this reason, banks must continue to assess the country risk of target countries, especially those in emerging regions such as the Pacific Rim and Eastern Europe. The risk of any country within an emerging region is much higher than the risk of the industrialized countries. Tliis paper addresses the potential benefits from diversifying business within or across these emerging regions. There is much potential for reducing exposure to country risk in Pacific Rim countries through diversification. For Eastern European countries, the benefits are not as substantial. Some banks may still consider some Eastern European businesses to generate higher returns, yet diversify their international portfolio across regions so that exposure to country risk is tolerable.

Deciding the country or region of the world to expand and/or to continue a firm's direct foreign investment is a decision fraught with risks. Multinational firms are faced with making the decision of expanding their business without full knowledge of what will occur in the months or years ahead in the region with which they are proposing expansion. Many of the factors which will affect the decision are nonquantitative in nature and make the decision more difficult for the firm to undertake. This chapter uses an analytical hierarchy process to help analyze both quantitative and qualitative factors that will affect a country's or region of the world's risk level. The model can be used to evaluate country risk in assessing potential direct foreign investments and can lead to a better allocation of the firm's scarce resources to more profitable areas.

Country risk is an important determinant for foreign direct investment (FDI) decisions. Over the lifetime of an FDI project, country risk can change due to political, social, or economic events in a country. However, how changing country risk influences FDI decisions has not been fully investigated. Therefore, the goal of this study is to provide a theoretical conceptualization of how dynamic risk developments affect FDI. We follow a financial theoretical perspective and base our propositions on discounted cash-flow models. We propose that a positive trend in country risk, where country risk is expected to decrease over time, increases FDI probability. What is more, we propose that predictability of this trend positively moderates this effect, but that high amplitude and high frequency in risk changes reduce the positive effect of a positive trend on FDI. Finally, our theoretical model proposes that firms of different size can manage dynamic risk developments differently: large firms can better deal with high-amplitude changes, whereas small firms can better deal with high frequency changes in country risk. With this study, we want to contribute to a better understanding of how dynamic environments influence investment decisions and introduce a long-term perspective of country risk.

The objective of this study is to investigate how country risk, different political actions from the government and bureaucratic behavior influence the activities in industry supply chains (SCs) in emerging markets. The main objective of this study is to investigate the influence of these external stakeholders’ elements to the demand-side and supply-side drivers and barriers for improving competitiveness of Ready-Made Garment (RMG) industry in the way of analyzing supply chain. Considering the phenomenon of recent change in the RMG business environment and the competitiveness issues this study uses the principles of stakeholder and resource dependence theory and aims to find out some factors which influence to make an efficient supply chain for improving competitiveness. The RMG industry of Bangladesh is the case application of this study. Following a positivist paradigm, this study adopts a two phase sequential mixed-method research design consisting of qualitative and quantitative approaches. A tentative research model is developed first based on extensive literature review. Qualitative field study is then carried out to fine tune the initial research model. Findings from the qualitative method are also used to develop measures and instruments for the next phase of quantitative method. A survey is carried out with sample of top and middle level executives of different garment companies of Dhaka city in Bangladesh and the collected quantitative data are analyzed by partial least square-based structural equation modeling. The findings support eight hypotheses. From the analysis the external stakeholders’ elements like bureaucratic behavior and country risk have significant influence to the barriers. From the internal stakeholders’ point of view the manufacturers’ and buyers’ drivers have significant influence on the competitiveness. Therefore, stakeholders need to take proper action to reduce the barriers and increase the drivers, as the drivers have positive influence to improve competitiveness.

This study has both theoretical and practical contributions. This study represents an important contribution to the theory by integrating two theoretical perceptions to identify factors of the RMG industry’s SC that affect the competitiveness of the RMG industry. This research study contributes to the understanding of both external and internal stakeholders of national and international perspectives in the RMG (textile and clothing) business. It combines the insights of stakeholder and resource dependence theories along with the concept of the SC in improving effectiveness. In a practical sense, this study certainly contributes to the Bangladeshi RMG industry. In accordance with the desire of the RMG manufacturers, the research has shown that some influential constructs of the RMG industry’s SC affect the competitiveness of the RMG industry. The outcome of the study is useful for various stakeholders of the Bangladeshi RMG industry sector ranging from the government to various private organizations. The applications of this study are extendable through further adaptation in other industries and various geographic contexts.