Investment And Non-Commercial Risks In Developing Countries

Kasatuka, C.
Organization: The Southern African Institute of Mining and Metallurgy
Pages: 8
Publication Date: Jan 1, 2006
Globalization creates investment opportunities for enterprises around the world. Attracting foreign investment has been a key challenge for economic growth in developing countries. Corruption, political instability, armed conflict, and other internal problems affect foreign direct investment (FDI) inflows negatively. A framework of criteria provides a basis for comparing non-commercial risk (NCR) among twenty-three mineral economies. Countries competing for foreign direct investment inflows are ranked from least to most risky. This study compares Inward FDI Performance Index (IND) with NCR ratings in developing countries and shows that risk is increasingly mitigated by means of appropriately structured insurance. Given the option for countries with similar mineral potential, investors will generally invest in the country that offers lower non-commercial risk. Keywords: foreign direct investment, non-commercial risk, developing countries.
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