International Conference on Eurasian Economies

1-3 July 2014 – Skopje, MACEDONIA

Paper detail

Paper ID : 1108
Status : Paper published
Language : English
Topic : International Trade and Globalization
Presenter:
Session : 4A International Relations

World Investments, Global Terrorism and the New Perception of Politic Risk
World Investments, Global Terrorism and the New Perception of Politic Risk

• Asst. Prof. Dr. Murat Koç (Çağ University, Türkiye)
• Assoc. Prof. Dr. Hakkı Çiftçi (Çukurova University, Türkiye)

Abstract

Based on economic power struggle, the economic strength began to take the place of military power and economic security has been considered as important as military security in this new world order. Multinational companies and their feasibility studies constitute the agenda of politic risks before entering these markets. Political risk faced by firms can be defined as “the risk of a strategic, financial, or personnel loss for a firm because of such nonmarket factors as macroeconomic and social policies, or events related to political instability”. However, terrorism should be considered as a multiplier effect on some of the components mentioned above. Terrorism itself and these strict measures directly affect investments. In 2012, FDI (Foreign Direct Investment) flows into the Middle East and North Africa have been adversely affected by political risk over the past couple of years. Investor perceptions of political risks in the region remain elevated across a range of risks. The Arab Spring countries have fared worse than other developing countries in the region. The risk perception of civil disturbance and political violence, but also breach of contract, is especially prominent in Arab Spring countries. In other words, global terrorism has created a negative multiplier effect in the region. In this context, Multiplier effect can be summarized as an effect on a target, situation or event which exceed its creating strength than expected. Considering this impact, MNC’s SWOT analysis and investment analysis must signify a redefinition in a wide range by the means of political risk perceptions.

JEL codes: M16

Koç, Murat, Çiftçi, Hakkı (2014). "World Investments, Global Terrorism and the New Perception of Politic Risk" in Proceedings of International Conference of Eurasian Economies 2014, pp.125-131, Skopje, MACEDONIA.

DOI: https://doi.org/10.36880/C05.01108

Full paper in PDF format.

Session 4A: International Relations