E-Book Overview
The point of departure for this book is the fundamental assertion that managers of international enterprises must cope not only with the hazards that jeopardize the success of ordinary domestic transactions but also with additional perils that are uniquely international. Two of the most important of these are the risk of a breakdown in the rules and practices that govern international trade and investment flows, and country risk - the risk that a sovereign power will interfere with the repatriation of profits, interest payments, principal repayments, or the control of foreign assets. The issues addressed include the prospects for foreign exchange crises, trade wars, international banking crises, and oil shortages; the factors that generate economic, political, and social risk; organizational strategies for mitigating country risk; and the scope for insuring against international risks. The contributors include academic experts from the fields of economics and finance and distinguished practitioners from international corporations, financial institutions, and international agencies.
E-Book Content
Managing international risk Managing international risk Essays commissioned in honor of the centenary of the Wharton School, University of Pennsylvania Edited by RICHARD J. HERRING The Wharton School, University of Pennsylvania The right of the University of Cambridge to print and sell all manner of books was granted by Henry VIII in 1534. The University has printed and published continuously since 1584. CAMBRIDGE UNIVERSITY PRESS Cambridge London New York New Rochelle Melbourne Sydney Published by the Press Syndicate of the University of Cambridge The Pitt Building, Trumpington Street, Cambridge CB2 1RP 32 East 57th Street, New York, NY 10022, USA 10 Stamford Road, Oakleigh, Melbourne 3166, Australia © Cambridge University Press 1983 First published 1983 Reprinted 1984 First paperback edition 1986 Library of Congress Cataloging in Publication Data Main entry under title: Managing international risk. Based on essays and perspectives presented at a conference entitled "Managing international risk," held in Philadelphia, Oct. 26-27, 1981, sponsored jointly by the Global Interdependence Center, the Group of Thirty, and the Wharton School, University of Pennsylvania. Includes bibliographical references. Contents: Introduction and overview / Richard J. Herring - Managing risks to the international economic system / Richard N. Cooper - Perspective: political threats to the international economic system / Robert O. Keohane - [etc.] I. International business enterprises - Finance Congresses. 2. International finance - Congresses. 3. Risk management - Congresses. I. Herring, Richard. II. Global Interdependence Center. III. Group of Thirty. IV. Wharton School. HG4027.5.M36 1983 658.1'5 82-19930 ISBN 0 521 25078 1 hard covers ISBN 0 521 31121 7 paperback Transferred to digital printing 2002 Contents List of contributors Acknowledgments Introduction and overview Richard J. Herring 1 Managing risks to the international economic system Richard N. Cooper Introduction: clarifying terms The Great Depression: a catastrophe Rebuilding the international economic system The "breakdown" of the Bretton Woods system Current threats to the international economic system Gradual erosion of the system of cooperation 2 page viii xi 1 23 23 26 30 32 34 50 Perspective: Political threats to the international economic system Robert O. Keohane 53 Perspective: The crisis of exogeneity, or our reduced ability to deal with risk Tommaso Padoa-Schioppa 59 Country risk: economic aspects Jonathan Eaton and Mark Gersovitz Introduction A framework for analyzing government policies toward foreign investment Country risk: default and repud