You are the CEO of a company that has a choice of making a $500 million...

You are the CEO of a company that has a choice of making a $500 million investment in either Ethiopia or Venezuela. The profits you can expect to make would be the same in both locations, so your choice will depend on your assessment of the political risks in each country. Do some research to assess the various risks of doing business in either county. Which one would you choose and why?

Expert Solution

Being a CEO of a company I would chose Ethiopia for making a $500 million investment. Both the countries has certain advantages and disadvantages in various context. However if me consider political risk then we may conclude that both the nation has political instability. There are lots of ups and downs in terms of political context of the nation. However to certain extent it seems that Ethiopian government is more unethical in executing its political power as compare to Venezuela, but that is a part and parcel of the political powers. Every political party in the world would like highlight its presence with its plans and policies. Now backing up the reason for selecting Ethiopia are as follows, As said in the question, investing in any country will fetch more or less the same profit. Judicial Effectiveness Index of Ethiopia is 45.1 effective as compare to Venezuela with 12.6. Business Freedom Index of Ethiopia is 48.6 where as it is 30.8 in case of Venezuela Investment Freedom Index of Ethiopia is 35 whereas Venezuela has no freedom in Investment Economic Freedom Index of Ethiopia is 53.6 whereas it is 25.2 in case of Venezuela Inflation rate in consumer price is utmost higher for Venezuela as compare to Ethiopia, which make the situation unfavourable for Venezuela

Rahul Sunny answered 2 years ago

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