Dr Frank Plantan, Co-Director of the International Relations Programme, University of Pennsylvania, said some other group of companies had changed line of production. He was delivering a lecture on “FDI: Political Risks in Emerging Economies and Industrialised Nations”, at the Emirates Centre for Strategic Studies and Research on Tuesday. Platan said the UAE lies in a region and an environment characterised by political risks like the situation in Iraq, Iran and Israel but remains an attractive market for FDI thanks to its transparent economic and politicial policy, regulations for encouragement and protection of investment, free transfer of capital and availability of free zones.
He said the dollar is still alive and kicking though its value has depreciated. The greenback has recently bounced back and begun to recover amidst speculation of the euro as a rising star to replace the dollar and China’s call for introducing a basket of foreign currencies. He said that FDI in the United States in 2008 totalled $ 325.3 billion, having increased by 82 per cent over the past decade. Despite the United States still being the world’s largest economy, risk forecasts and future world economy projections suggest a sea change may be underway.
The United States has never been considered a major risk factor, yet today the political situation and government actions of the G-7 countries have led political risk analysts to apply their methods and models to evaluating risk to FDI in the United States and in other developed countries, he added.
Historically, political risk analysis focused on the risk of developed-country investments in the developing world. It involved the assessment of the stability of the social and political environment for doing business abroad and for the execution of international transactions, particularly FDI and currency management and arbitrage, he said.
Today, it also focuses on risk insurance, protection of overseas personnel, country risk, and the challenges of compiling and interpreting intelligence data for government and business, he said.
The relative successes of FDI – as measured by its magnitude, profitability, the economic impacts of FDI on job creation, and the economic growth and multiplier effects that results from it – are all the more effective when governance structures in the political and regulatory arena, in corporate boardrooms and in the marketplace are predictable, he said.
