What are three examples, either real or hypothetical, of political and legal barriers that may eliminate a country from further consideration as a...

Different firms have different standards and can tolerate different levels of risk.  Therefore, not all of these barriers would necessarily eliminate a country from every firm’s considerations as a place to locate a business.  However, here are three barriers that could potentially cause a firm to stop considering locating a business in a given country:

1. Lack of protection for intellectual property.  Many companies rely on their intellectual property to make profits.  This particularly includes firms...

Different firms have different standards and can tolerate different levels of risk.  Therefore, not all of these barriers would necessarily eliminate a country from every firm’s considerations as a place to locate a business.  However, here are three barriers that could potentially cause a firm to stop considering locating a business in a given country:

1. Lack of protection for intellectual property.  Many companies rely on their intellectual property to make profits.  This particularly includes firms like movie or music companies and any companies that have important patents.  These firms might not want to locate a business in a country that does not have laws protecting those kinds of property.


2. Possibility of nationalization.  Some governments do not really respect property rights very strongly.  These governments will sometimes expropriate the property of private companies and make them into companies owned by the state.  If a firm believes a country’s government is likely to do something like this, it might avoid setting up a business in that country for fear of losing its investment to nationalization.


3. Possibility of political upheaval.  Companies like to have as much certainty as they possibly can.  They do not want to invest money in a country unless they are relatively certain they will be able to make money off of their investment.  If a country has an unstable government, firms might be afraid to start a business in that country.  Firms might fear the government will be overthrown and the new government will do things like nationalize firms’ properties.  Therefore, firms might avoid countries whose governments are not very stable.

All of these are examples of political barriers/ risks that might deter companies from entering certain countries.