Zagreb Inc., negotiates a multi-million dollar contract with the government to provide electricity to country X. The government is voted out of power shortly after. The new government changes the contracts it has with all oil companies but not contracts with firms in other industries. This is an example of ________.

Question

Quizplus · Accepted Answer

This is an example of micro political risk, which refers to political risks that are specific to a certain company or industry. The new government's changes to oil contracts only suggest a targeted policy and not a wide-scale policy, thus not a macropolitical risk. Expropriation involves the government taking over private property or assets, which does not apply to this scenario. Barriers to repatriation refer to obstacles that a company may face when trying to transfer funds or assets out of a foreign country, which is not a factor in this scenario.