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International Finance and Political Risk

Response Guidelines

Respond to at least one peer, taking the opposite side, see below . If applicable, consider the ethical implications and consequences. Support your response with the theories presented in this week’s required reading.

least 50 words minimum

Student 1

Pakistan is a country in South Asia and is the fifth most populous country. Its population exceeds 212,742,631 people. It’s the 33rd largest country. Pakistan is a political ally of the United States, but it has a troubled economy.

Pakistan is an ally to the U.S. for political reasons. The relationship between the U.S. and Pakistan is cordial. There have been a few disputes on certain issues, but the links are still strong from both sides. It is secure for U.S. companies to ascertain and enlarge its existence in Pakistan.

Pakistan is not stable or promising as there are political, social and economic issues. Frequent war like situations has put a strain on the economic welfare of the country and the rating in respect to currency risks is volatile. Pakistan rupee has sunk by over 20 percent in the past seven months, which the U.S. dollar is better than the rupee and when we evaluate the risk against the U.S. dollar, the investor will be in an advantage position. “Pakistan allows 100% foreign ownership of capital, there is no minimum capital requirement for investments, foreign investors are allowed to operate without listing in the local stock exchanges and investors are allowed to remit the entre profits and dividends abroad” (Choudhury, 2018). Also, Pakistan allows investors to disinvest their initial investment capital at any time. Therefore, companies emerge stronger in terms of their market share and better profitability.

If I was in a decision-making position, the specific factors I would take into considerations are as follow: the low cost of expansion and development, the fact that Pakistan is rich in minerals and produce many of the precious natural minerals, such as gypsum, limestone, chromite, iron, ore, rock salt, silver and gold, which can be bought, owned and sold for a price generating a profit. Also, their rupee is worth less than the U.S. dollar and that Pakistan has a lot to offer foreign investors.

References

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Choudhury, R. (2018). Exploring Investment Opportunities in Pakistan. International Policy Digest. Retrieved on August 17, 2018 from https://intpolicydigest.org/2018/05/23/exploring-investment-opportunities-in- pakistan/

Shahid, K. (2018). Pakistan’s Economic Crisis. The Diplomat. Retrieved on August 16, 2018 from https://thediplomat.com/2018/08/pakistans-economic-crisis/