ABSTRACT
Essentially, there are four critical areas of concern to foreign investors: a country’s risk issues, or sovereign risk, its economic fundamentals, its cost dynamics, and its investment incentives. The relative weight of these concerns can be illustrated by a pyramid cut horizontally into four segments. At the bottom of the pyramid is country and sovereign risk, which provides the foundation for equity investment. Resting on that essential foundation are the country’s economic fundamentals. Above that are cost factors and, finally, at the top, and of least importance, are investment incentives.
