Abstract

GULAMHUSSEN, Mohamed Azzim  and  MARQUES, Áurea. The political sensivity of Portuguese foreign investment in Brazil: A case study. Rev. Portuguesa e Brasileira de Gestão [online]. 2007, vol.6, n.2, pp.58-69. ISSN 1645-4464.

Economic globalization associated with intense and volatile capital movements lead corporations to keep risk at the centre stage of the analysis of their investment decisions. There are several studies that analyze the impact of different types of risks that are faced by firms. In this particular study, we analyze the political sensitivity of the Portuguese investment in Brazil. The case study shows that the investment is not as politically sensitive as analyses in trade newspapers and magazines tends to suggest. In particular, the case study reveals that implicit probabilities of 52% in the case of expropriation, 12.33% in the case of blocked funds, and 38% in the case of change in fiscal policy. These probabilities reveal the confidence that Portuguese managers had when making their investments in Brazil. Recent experience shows that these levels of confidence did not turn out to be exaggerated.

Keywords : Political Risk.

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