Development Opportunities in Brazil

Topics: Brazil, Risk, Insurance Pages: 3 (950 words) Published: June 24, 2013
Tutorial 4
1. Identify one nation which is categorised as “Very High, or High, or Moderate in Political Risk” and discuss the key political risks.

Political risk is the likelihood that a society will undergo political change that negatively affects local business activity and investments. Factors of political risk include government stability, military and religion in politics, corruption, law and order and bureaucracy. There are two types of political risk, namely macro risk which threatens all companies regardless of industry, and micro risk which threatens companies within particular industry or even segment of an industry. Most of the political risks are of government stability, internal conflict and military in politics. All of the conflict, violence and terrorism are of large scales and serious in nature and therefore are macro risks that threatens all companies. Brazil, officially the Federative Republic of Brazil is the largest country in both South America and the Latin American region. According to the Political Risk (Dynamic) Index of 2013, Brazil is one of the countries with a moderate political risk. Many companies come to Brazil because the business environment is more familiar than the other BRIC countries, which are Russia, India and China. Brazil also has a more stable public and private sector and a better-proven legal framework than some other BRIC countries. However, there are also challenges for companies that want to do business in Brazil. The levels of bureaucracy and lack of transparency of rules make Brazil a difficult country to do business in. The complexity of tax rules is a great challenge for investors, and the compliance of law is difficult because there is a lot of over-complication of rules that are not common in the United States. Besides, the huge opportunities for foreign companies in Brazil's growing economy are threaten because of the country's relatively high taxes and labor costs. Therefore, foreign companies need...
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