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Country Risk

The Bane of Foreign Investors

  • Book
  • © 2020

Overview

Authors:
  1. Norbert Gaillard

    1. NG Consulting, Paris, France

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  • Provides fresh analysis of country risk in the current context of world economic depression

  • Introduces and describes new aspects of country risk that have been overlooked so far (global warming, terrorism, sanitary risk, etc.)

  • Measures and compares the performance of country risk assessments and delivers a critical view

  • Discusses how country risk components are factored into the business strategies of Dow Jones 30 companies

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Table of contents (6 chapters)

  1. Front Matter

    Pages i-xiv
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  2. Introduction

    • Norbert Gaillard
    Pages 1-7

  3. Understanding Country Risk

    1. Front Matter

      Pages 9-9
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    2. Two Centuries of Country Risk, 1816–2016

      • Norbert Gaillard
      Pages 11-88

    3. Taxonomy of Country Risk

      • Norbert Gaillard
      Pages 89-139

  4. Sovereign and Country Risk Indicators

    1. Front Matter

      Pages 141-141
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    2. Sovereign Risk Indicators

      • Norbert Gaillard
      Pages 143-189

    3. Country Risk Indicators

      • Norbert Gaillard
      Pages 191-256

    4. Concluding Remarks

      • Norbert Gaillard
      Pages 257-259
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Keywords

About this book

Country risk has been a key notion for economists, financiers, and investors. Norbert Gaillard defines this notion as “any macroeconomic, microeconomic, financial, social, political, institutional, judiciary, climatic, technological, or sanitary risk that affects (or could affect) an investor in a foreign country. Damages may materialize in several ways: financial losses; threat to the safety of the investing company’s employees, clients, or consumers; reputational damage; or loss of a market or supply source.”


Chapter 1 introduces the key concepts. Chapter 2 investigates how country risk has evolved and manifested since the advent of the Pax Britannica in 1816. It describes the international political and economic environment and identifies the main obstacles to foreign investment. Chapter 3 documents the numerous forms that country risk may take and provides illustrations of them. Seven broad components of country risk are scrutinized in turn: international political risks; domestic political and institutional risks; jurisdiction risks; macroeconomic risks; microeconomic risks; sanitary, health, industrial, and environmental risks; and natural and climate risks. Chapter 4 focuses on sovereign risk. It presents the rating methodologies used by four raters; next, it measures and compares their performance (i.e., their ability to forecast sovereign defaults). Chapter 5 studies the risks likely to affect exporters, importers, foreign creditors of corporate entities, foreign shareholders, and foreign direct investors. It presents the rating methodologies used by seven raters and measures their track records in terms of anticipating eight types of shocks that reflect the main components of country risk analyzed in Chapter 3.


This book will be most relevant to graduate students in economics as well as professional economists and international investors.

Authors and Affiliations

  • NG Consulting, Paris, France

    Norbert Gaillard

About the author

Norbert Gaillard is a French economist and independent consultant (norbertgaillard.com). He studied at Sciences Po Paris and Princeton University. He is a Euromoney Country Risk expert and his areas of expertise are public debt and sovereign risk, local government debt and subnational risk, country risk, and credit rating agencies. He has written more than twenty research papers and book chapters on credit risk. Among these, the most important are “The End of Gatekeeping: Underwriters and the Quality of Sovereign Bond Markets, 1815–2007” (in NBER International Seminar on Macroeconomics 2009, University of Chicago Press, 2010), “What Is the Value of Sovereign Ratings?” (German Economic Review, 2014), “Efficient, Commonsense Actions to Foster Accurate Credit Ratings” (Capital Markets Law Journal, 2016), “The Icarus Syndrome: How Credit Rating Agencies Lost Their Quasi Immunity” (Southern Methodist University Law Review, 2018). He has published four books: Les Agences de Notation (La Découverte, Paris, 2010), A Century of Sovereign Ratings (Springer, New York, 2011; also translated into Chinese), When Sovereigns Go Bankrupt (Springer, Cham, 2014), and The Failure of Financial Regulation (Palgrave Macmillan, Cham, 2019).

Bibliographic Information

  • Book Title: Country Risk

  • Book Subtitle: The Bane of Foreign Investors

  • Authors: Norbert Gaillard

  • DOI: https://doi.org/10.1007/978-3-030-45788-4

  • Publisher: Springer Cham

  • eBook Packages: Economics and Finance, Economics and Finance (R0)

  • Copyright Information: Springer Nature Switzerland AG 2020

  • Hardcover ISBN: 978-3-030-45787-7Published: 07 July 2020

  • Softcover ISBN: 978-3-030-45790-7Published: 07 July 2021

  • eBook ISBN: 978-3-030-45788-4Published: 06 July 2020

  • Edition Number: 1

  • Number of Pages: XIV, 259

  • Number of Illustrations: 17 b/w illustrations

  • Topics: International Economics, Microeconomics, Globalization

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