How to Do Country Analysis?

In: Business and Management

Submitted By madhurbhatia89
Words 9826
Pages 40
Country analysis involves the examination and interpretation of a nation’s economic, social and political environment. The analysis offers a comprehensive overview of a country
Objectives
To identify the common factors used by MNCs to measure a country’s political risk and financial risk;
To explain the techniques used to measure country risk; and
To explain how MNCs use the assessment of country risk when making financial decisions
Country analysis is useful for: * Investors in the financial market * Companies intending to set up a subsidiary * Companies wishing to enter a new market * People wishing to reside in the country

Factors Considered in a Country Analysis
A country analysis is often conducted through country reports researched by professional government or independent firms, such as the Economist Intelligence Unit, World Bank and Organization for Economic Cooperation and Development (OECD).
Some of the data points considered in a country analysis are:
Economic Indicators: Indicators such as gross domestic product (GDP), consumer price index (CPI), inflation rate and producer price index (PPI) help in gauging a country’s economic health. High GDP growth, low inflation and high CPI are favorable for companies and investors. These indicators also reflect job availability and standard of living in the country.
Government Policy: Governments often introduce policies and programs to promote the growth of certain industries. Favorable government policies (such as subsidies and tax rebates) attract multinational and domestic companies.
Industry Association Support: An industry association not only works towards enhancing opportunities, but also lobbies the government for easing regulations.
Financial Markets: The extent of regulations, liquidity and volatility determine how reliable the financial markets in a country are. The…...

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