Political risk assessment and multinational firms in an emerging market

Political Risk Assessment (PRA) is an important influence on Foreign Direct Investment (FDI) and the competitiveness of multinational firms, yet little is known about PRA in emerging markets. This study investigates the techniques used for PRA in an emerging market. It empirically used a multi-method approach to analyse data collected from 74 multinational firms and the dataset of the International Country Risk Guide (ICRG) PRA annual rating for Nigeria during the period 2011 to 2015. Quantitative techniques are only useful if accurate data are used to conduct an assessment. This will influence how firms’ conduct PRA and decision making and may also help to explain why some firms have invested in an emerging market with low financial and economic risks despite the presence of high political risk.