Department of Political Science

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Browsing Department of Political Science by browse.metadata.advisor "Brink, Charlotte"

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    Assessing the political and investment risk climate of the PRC : a SAB-Miller case study
    (Stellenbosch : Stellenbosch University, 2004-03) Lanhove, Tom; Brink, Charlotte; Stellenbosch University. Faculty of Arts & Social Sciences. Dept. of Political Science.
    ENGLISH ABSTRACT: This research assignment has investigated the overall nature of the investment climate in the People's Republic of China (PRC).The investment climate was analysed using a Political Risk Analysis (PRA) framework, whereby the PRC was scrutinised closely for its most defining socioeconomic features and, especially, for its most salient political risk factors. Based on this, the assignment evaluated this climate with specific relevance to the investment plans of the South African company SAB-Miller. Since its accession to the World Trade Organisation (WTO)in 2001, the PRC has intensified its economic restructuring process, a necessary and inevitable process, in order to comply with the terms of the WTOframework. This period of adjustment has heightened the anxiety over the strength of the Chinese economy, and the repercussions and/or opportunities for the multinational SAB-Miller.To remedy this uncertainty, this assignment has drawn up an in-depth qualitative scenario, in order to forecast the major trends of the PRC's short-term socio-political future. The main findings of the assignment indicate that a 'high-road' scenario is the most likely to occur in the PRC in the short-term. Clearly, this favourable forecast 1S dependent on the continuation of the current economic and socio-political restructuring process in the PRC. With regards to the main macro-political risks factors, the assignment draws attention to several critical areas of concern. Firstly, the lack of legitimatisation from the 'bottom-up' is a worrying feature, especially in light of the growing economic disparities between citizens and between provinces. Secondly, the financial and governmental sectors need a thorough restructuring, according to WTO criteria. Thirdly, the fragmentation of the market inside the PRe undermines the potential of the PRC government to diffuse the benefits of economic growth and to absorb the downsides of globalisation. Micro-specific risk factors for the company SAB-Miller are focussed predominantly on the speed and the depth of the implementation of the guidelines of the WTO. Especially with regards to the lowering of intra-provincial trade barriers and the efficacy of the distribution networks. Lastly, SAB-Miller should eliminate any risk factors, which may originate from inside the company's behaviour, such as the effects of its adopted labour policies. Lastly, it should maintain a clear level of transparency in their associations with governmental institutions. Throughout the assignment, these risk factors will be investigated and related to the overall political risk climate and utilised to draw conclusions concerning the potential of the investment plans of SAB-Miller.
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    Foreign direct investment and political risks in South Africa and Nigeria : a comparative analysis
    (Stellenbosch : Stellenbosch University, 2003-04) Pekeur, Juanita; Brink, Charlotte; Stellenbosch University. Faculty of Arts and Social Sciences. Dept. of Political Science.
    ENGLISH ABSTRACT: Instability in foreign political and social systems, changing power structures in international relations, and growing demands by host countries for a greater control over the operations of multinational enterprises (MNEs) have all led to the necessity of an improved way in which to determine foreign investment opportunities. Not surprisingly therefore, political risk assessment has become one of the fastest growing fields of study. Being concerned with the identification, analysis, management, and reduction of socio-political risks for foreign investors. The focus of this study is that of political risk analysis and the way in which it impacts on investor perception and consequently determines levels of foreign direct investment received by a particular country. Numerous definitions for the term "political risk" exist. Consequently, no specific definition is regarded as being completely correct since consensus still needs to be reached. One of the definitions used within this study is that political risk analysis is the analysis of the possibility that factors caused or influenced by governmental political decisions or other unforeseen events in a country will affect business climates in such a way that investors will lose money or not make as much profit as they expected when the initial decision to invest was made. These factors can be of internal (from inside the host country) or external origin, and can pose macro or micro risks. Foreign Direct Investment in brief is an investment involving a long-term relationship and reflecting a lasting interest and control of a resident entity in one economy in an enterprise resident in an economy other than that of the foreign direct investor. This study is a comparative between South Africa and Nigeria. South Africa and Nigeria share many similarities, they are both resource based, African countries. They are both fairly recent democracies, although some may contest the status of Nigeria as being a democracy. They are also both heterogeneous states, both consisting of various ethnic groups. Nigeria offers investors a low-cost labour pool, abundant natural resources, and a large domestic market. However, Nigeria suffers from an inadequate and poorly maintained infrastructure, confusing and inconsistent regulations, endemic corruption, and a lack of confidence in the rule of law. Despite all of this, Nigeria alone accounts for a quarter of FDI flows to Africa. In comparison, South Africa's FDI potential has not been fully exploited. This study will discuss the possible reasons why this is the case. The labour market in both countries and the challenges they face are discussed in depth within this study. Due to the fact that aside from investment, the economic growth within a country is dependent on a variety of factors, the backbone of which is the labour market. In determining levels of risk within both South Africa and Nigeria, this study made use of a political risk model. Although the intention has been to be as accurate and as thorough as possible, it should be noted that as yet, no generalised systematic method of conducting political risk assessment exists. Results, although extensively substantiated, remains the interpretation of the researcher and as such remains open to debate.
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    Scenario analysis 2022 : potential political risks facing foreign investors in the PRC
    (Stellenbosch : Stellenbosch University, 2002-12) Katainen, R.; Brink, Charlotte; Stellenbosch University. Faculty of Arts & Social Sciences. Dept. of Political Science.
    ENGLISH ABSTRACT: Since the beginning of the economic reforms in 1978, the People's Republic of China (PRC) has attracted continuous interest from foreign investors, both in the form of foreign direct investment (FDI) and international trade, making the PRC the second largest host of FDI in the world. Despite occasional declines in foreign investment, foreign investors remain very interested in the long-term prospects for doing business in the country. The PRC's phenominal economic growth, large consumer market, the accession to the World Trade Organisation (WTO), and the government's commitment to open markets, economic reforms, and restructuring of the economy are amongst the factors that continue to attract foreign investment and trade. Despite the huge market potential and strong desire by foreign investors to do business in The PRC, the track record of foreign companies and investments in the country have at best been mixed. While some foreign investors have reaped large profits, others have failed to meet their performance targets. Foreign investors have faced a number of problems that are not market or trade related, but associated with economic, political and social trends and developments, including corruption, nepotism, crime, poor infrastructure, a depleted banking system, inefficient legal system, unemployment and poverty. Therefore, it is not surprising that many foreign investors are asking themselves whether the benefits of doing business in the PRC are worth the risks. In an increasingly uncertain and instable international trade and investment environment political risk assessment and management have become essential components of any profitable foreign investment strategy. Consequently, numerous political risk-rating agencies and a large number of both qualitative and quantitative risk assessment methods have emerged over the years. There is, however, neither general consensus regarding the definition of political risk nor a comprehensively systematic method of conducting political risk assessment. The definitions of political risk include a wide variety of indicators, ranging from governmental actions to all non-market developments. The number of methods available for political risk analysis range from informal, unsystematic assessments by a few individuals to formal, systematic, and sophisticated risk analysis models. There are, however, some similarities. The main objective of political risk analyses is to describe, explain, and forecast political conditions and events that affect the interests of foreign investors operating abroad or planning to enter a foreign market. In addition, political risk analyses attempt to forecast losses, and recommend means of managing the risk, avoiding the losses, and seizing the opportunities. Scenario planning is one of the qualitative methods used to analyse political risk. Scenario planning, however, differs from most other approaches as it does not try to accurately predict what will happen in the future or to provide the right tool for foreseeing the future developments, but to offer a range of possible futures. The underlying assumption is that the future cannot be forecast or predicted with certainty, but that the very process of thinking about the future and exploring the implications of possible future scenarios may have a profound impact on foreign investment and trade. Scenario planning is a method that provides insightful information necessary to understand, anticipate and respond to change and uncertainty in the future PRC. The development of four 20-year scenarios in this study demonstrates that the prospects for foreign investment can be both positive and negative. When the economy continues to grow strongly, and the government is able to maintain a stable environment and successfully implement the necessary changes foreign investors are expected to reap the desired benefits. However, if the problems facing the PRC at the moment further deteriorate foreign investors could expect increased risks, and the possibility of failure.