Topics in Development: Political Risk Analysis

We explore the impact of international, national and subnational political institutions on firms' and investors' strategies. Political institutions, including trade and investment agreements; democratic or non-democratic governance structures; and national labor and environmental regulations affect business strategy decisions. Political events, especially elections and mass protest and demonstrations, also can heighten political risk. We draw on research to consider how business leaders assess risk at the firm- and country-level, and to evaluate how governments that want to attract or retain investment seek to ameliorate political risk.