Abstract

Research and analysis of political risk assessment in overseas areas is encumbered with serious definitional and methodological problems. These problems make any interpretive findings at best highly crude (and of limited applicability) and at worst irrelevant and subject to misinterpretation. In light of the nature of these problems, not much appears to be gained by introducing more sophisticated analytical techniques. A realistic approach to political risk analysis must take into account three sets of factors: the general sociopolitical international environment; the foreign and domestic policies of the home country of the multinational parent and those of the host country; and the relative bargaining strength of a particular multinational corporation based on its international investment strategy, technological lead, and investment exposure in a host country.