Local content requirements are one form of political risk.

Question

Quizplus · Accepted Answer

Local content requirements are a form of political risk because they can create barriers for foreign companies seeking to enter a market or do business in a country. These requirements may include mandates to use local suppliers, hire local workers, or transfer technology to local partners, which can increase costs and decrease profits for foreign firms. Additionally, local content requirements can be unpredictable and subject to change, presenting challenges for companies that have made long-term investments in a country or region based on certain assumptions about the regulatory environment.

Local Content Requirements Are One Form of Political Risk