Dreyhaupt, StephanNimac, IvanHornberger, Kusi2012-08-132012-08-132012-03https://hdl.handle.net/10986/10416Political risk has once again become a key concern of investors after the perceived openness and liberalization of foreign direct investment (FDI) regimes in the 1990s. Governments that do not recognize this trend pay a high price in lost investments. Confronting political and regulatory risks as part of the investment climate is thus crucial for countries to make their business environments more competitive. This note suggests reforms that can have immediate impacts: addressing ex ante and ex post issues in the legal and regulatory framework to protect investors, mitigating risks at the sector level, managing reputational and integrity risks at the project level, and using financial instruments to ease short-term impediments in the investment climate.CC BY 3.0 IGOALTERNATIVE DISPUTE RESOLUTIONARBITRATIONASSETSBARGAINING POWERBARRIERS TO ENTRYBASIS POINTSBREACH OF CONTRACTBUSINESS ENVIRONMENTBUSINESS ENVIRONMENT RANKINGSBUSINESS ENVIRONMENTSBUSINESS TAXCHECKSCODES OF CONDUCTCOMMERCIAL DISPUTESCOMMITMENT DEVICESCOMPETITIVE MARKETSCOMPLIANCE COSTCORPORATE INVESTMENTSCORPORATE INVESTORSCORRUPTIONCOUNTRY RISKCREDIBILITYCREDIT AGENCIESCURRENCYCURRENCY TRANSFERCURRENCY TRANSFERSDEBTDEVELOPING COUNTRIESDISCRETIONARY POWERDISPUTE RESOLUTIONDISPUTE RESOLUTION MECHANISMSDUE DILIGENCEECONOMIC CRISESECONOMICSEMERGING MARKETSENFORCEMENT OF LAWSENTRY POINTEXISTING LAWSEXPORT CREDITEXPROPRIATIONEXPROPRIATIONSFACE VALUEFINANCE CORPORATIONFINANCIAL INSTRUMENTSFINANCIAL PRODUCTSFIRM GROWTHFOREIGN DIRECT INVESTMENTFOREIGN INVESTMENTFOREIGN INVESTMENTSFOREIGN INVESTORSFOREIGN OWNERSHIPFRAUDGLOBAL BUSINESSGLOBAL BUSINESSESGLOBAL ECONOMYGLOBAL TRADEGOVERNMENT INTERVENTIONHOME COUNTRIESHOST COUNTRIESHOST GOVERNMENTHOST GOVERNMENTSINSTRUMENTINSURANCEINSURANCE INDUSTRYINSURERSINTERNATIONAL FINANCEINTERNATIONAL FINANCIAL INSTITUTIONSINTERNATIONAL INVESTMENTINTERNATIONAL TRADEINVESTINGINVESTMENT CLIMATEINVESTMENT CLIMATE REFORMINVESTMENT CLIMATESINVESTMENT DECISIONSINVESTMENT ENVIRONMENTINVESTMENT INSURANCEINVESTMENT POLICYINVESTMENT PROMOTIONINVESTMENT REGIMESINVESTMENT REGULATIONINVESTOR CONFIDENCEINVESTOR INTERESTSINVESTOR PERCEPTIONSINVESTOR PROTECTIONJOB CREATIONJUDICIARYLAND OWNERSHIPLEGAL RECOURSELENDERSLIBERALIZATIONMACROECONOMIC INSTABILITYMARKET SIZEMONETARY VALUEMONEY LAUNDERINGMULTILATERAL INVESTMENT GUARANTEE AGENCYNATURAL RESOURCESNEGOTIATIONOPPORTUNITIES FOR INVESTORSPAYOFFPOLITICAL RISKPOLITICAL RISK INSURANCEPOLITICAL RISKSPOTENTIAL INVESTMENTPOTENTIAL INVESTORSPRIVATE SECTOR DEVELOPMENTREGULATORY FRAMEWORKREGULATORY FRAMEWORKSRENEWABLE ENERGYREPATRIATIONREPUTATIONREPUTATIONSRISK MANAGEMENTRISK MANAGERSRISK MITIGATIONRISK PREMIUMRISK PREMIUMSRISK PROFILESMALL BUSINESSSOVEREIGN RISKSTARTUPTAXTAX REVENUETRANSACTIONTRANSACTION COSTSTREATIESWorld Bank10.1596/10416