Part III The Contractual Legal Framework, 11 Political Risk Insurance
From: The Three Laws of International Investment: National, Contractual, and International Frameworks for Foreign Capital
Jeswald W. Salacuse
- International economic law — Foreign Direct Investment — Inconvertibility of payments — Expropriation — Settlement of disputes — International organizations
Risk, which one may define as the probability that expected benefits will not be received, is inherent in any investment. Traditionally, business analysts have divided the risks faced by international investments into two categories: commercial risks and political risks. Commercial risks are those associated with normal economic activities, such as fluctuations in commodity prices, the failure of a new technology to perform as expected, or the advent of a new competing product that makes the investor’s product obsolete. Political risks, on the other hand, are...