You are hired as a political consultant for General Motors Company, which is considering building automobile plants in three countries: Brazil, China, and Poland. Choose a country and analyze the political risk of investing in that country. In doing so, utilize websites such as www.cia.gov/library/publications/the-world-factbook or any other relevant Internet resources. You may prepare a final report to GM using a format similar to Exhibit 16.10.
EXHIBIT 16.10 Political Risk Analysis: Vietnam Sovereign Rating: Moody's:B1, Outlook: Stable; S&P: BB-, Outlook: Stable Political Strengths Economic Strengths Political stability with Communist Party in government Transformation to market oriented economy since since end of the country's civil war in 1975 late 1980s Widespread support for the CPV (Vietnam Communist High GDP growth facilitated by foreign investment Party) reflects its success in raising living standards Well educated and cheap labor force and creating and maintaining security Sizable natural resources and advantageous location Political Weaknesses Economic Weaknesses Inconsistent and evolving regulations Large fiscal and trade deficits and weak banking Unreliable legal system and corruption system A lack of financial transparency, insufficient Plethora of state-owned enterprises and less protection for minority owners, and poor corporate diversification governance Industry and credit policies favor state-owned enterprises Political & Governance Indicators Economic Indicators World Bank Ranking - Ease of doing GDP ($US bn) business 90th/183 GDP per capita ($US) Freedom House - Political rights and Real GDP growth (15-year average, %) civil liberties Not Free Fiscal balance % of GDP) Transparency International Ranking- Public debt (% of GDP) Corruption Perception Index 112th/180. Foreign direct investment (% of GDP) OECD country risk rating . Current account (% of GDP) (Scale: 0-7,0 is least risk, 7 is highest risk) External debt (% of GDP) Foreign reserves (% of GDP) 199 2,171 6.5 -5.6 55.0 6.1 0.7 22.8 16.8 . 5 Source: www.efic.gov.au, World Bank, and IMF, 2015 figures. EXHIBIT 16.10 Political Risk Analysis: Vietnam Sovereign Rating: Moody's:B1, Outlook: Stable; S&P: BB-, Outlook: Stable Political Strengths Economic Strengths Political stability with Communist Party in government Transformation to market oriented economy since since end of the country's civil war in 1975 late 1980s Widespread support for the CPV (Vietnam Communist High GDP growth facilitated by foreign investment Party) reflects its success in raising living standards Well educated and cheap labor force and creating and maintaining security Sizable natural resources and advantageous location Political Weaknesses Economic Weaknesses Inconsistent and evolving regulations Large fiscal and trade deficits and weak banking Unreliable legal system and corruption system A lack of financial transparency, insufficient Plethora of state-owned enterprises and less protection for minority owners, and poor corporate diversification governance Industry and credit policies favor state-owned enterprises Political & Governance Indicators Economic Indicators World Bank Ranking - Ease of doing GDP ($US bn) business 90th/183 GDP per capita ($US) Freedom House - Political rights and Real GDP growth (15-year average, %) civil liberties Not Free Fiscal balance % of GDP) Transparency International Ranking- Public debt (% of GDP) Corruption Perception Index 112th/180. Foreign direct investment (% of GDP) OECD country risk rating . Current account (% of GDP) (Scale: 0-7,0 is least risk, 7 is highest risk) External debt (% of GDP) Foreign reserves (% of GDP) 199 2,171 6.5 -5.6 55.0 6.1 0.7 22.8 16.8 . 5 Source: www.efic.gov.au, World Bank, and IMF, 2015 figures
