ABSTRACT
This chapter explains different political systems and the political risks associated with them. It discusses the different economic systems and economic risks that affect multinational corporations (MNCs) profitability. The chapter describes different legal systems and identifies legal risks that originate from either the home or host country. It shows how MNCs can manage country risk before and after entering foreign markets. Nationalization, as a type of political risk, was mainly analyzed in Cuba, Bolivia, and Brazil. Fidel Castro succeeded Cuba's revolution in 1959 and immediately began confiscating land and limiting foreign MNCs' ownership of land. China's economic reform refers to Chinese socialism program that was launched in December 1978 by the reformist, Deng Xiaoping, of the People's Republic of China (PRC). Democracy can be defined as principle in which all people in a country are politically and legally equal. Foreign investment law not only affects the type of entry strategies for MNCs but also their activities and performance.
