International business analysis spots the high-risk countries
Overseas governments may be a bit more stable in 1986, but international business will still face tough conditions in Africa, Central and South America, and the Middle East, says a recent study by an international market-analysis firm. The perusal of conditions throughout the world comes from the Frost & Sullivan Political Risk Services Division in New York.
Countries where risks could increase during 1986 include the Philippines, South Africa, Saudi Arabia, South Korea, Turkey, Cameroon, Egypt, the Ivory Coast, and Jamaica.
But improved conditions are seen in Argentina, Brazil, Morocco, Venezuela, Zaire, and Zimbabwe.
The strength of the United States dollar and the political situation in the Philippines bear close watching, says a Frost & Sullivan spokesman.
The Philippines could become another potential Vietnam as the communist insurgency movement gains strength, and dissatisfaction with President Ferdinand E. Marcos continues, he says. Growing conflict there could have major regional and international impact, the report says.
Frost & Sullivan bases its forecasts on 11 assumptions, including that US-Soviet tensions will be reduced, that crude oil prices will remain weak, that mineral and agricultural commodity prices will not increase, and that the minumum needs of international credit will be met.
Lower risks in certain countries have occurred for various reasons, the report says. In Argentina, President Ra'ul Alfons'in continues to have public support for his austerity policies. Despite the transition to a civilian regime and the death of the president-elect, Brazil also remains politically stable.
In Morocco, high agricultural production and a successful election have lowered risks somewhat.
Zimbabwe Prime Minister Robert Mugabe's government has been helped by improved food production and exports and by reduced influence from radicals.
Worsening conditions resulting from weak economies and internal conflict occur in such countries as Cameroon and the Philippines.
The high-risk ratings of some countries have neither changed for the better nor worse in the past year, says the report. These include Chile, Bolivia, Peru, most Central American countries, Iran, Iraq, Syria, Sri Lanka, and Pakistan.
Other findings conclude:
Fewer elections overseas and a reduced likelihood of military coups which could mean more stability for foreign governments.
Street crime, employee theft, and product contamination are on the rise.
Risks to direct foreign investment will occur more often from currency problems and violence than from government-imposed restrictions such as protectionist policies. The foreign investment policies of most countries will continue to be liberalized, but internal conflicts and currency shortages will steady investment risk.
Transfer of money across borders will be more risky in countries with weak foreign-exchange positions.
Third-world countries that import heavily and that lack foreign currency will continue to create high risks for countries that send them exports. A slowdown in the general world economy could also increase risk in these countries.