Zagreb Inc., a transnational energy company, negotiates a multimillion-dollar contract with the government to provide electricity to Pilladia.The government is voted out of power shortly after.The new government cancels all 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 scenario exemplifies micropolitical risk, which is the risk that a specific decision made by a host government will negatively impact a foreign business's operations. In this case, the cancellation of the contracts with oil companies by the new government is a result of a specific decision and not a general policy of protectionism or confiscation. Barriers to repatriation refer to restrictions on the transfer of profits or capital back to the home country, which are not present in this scenario.