International Trade Theory and the Role of Law and Politics

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International Trade Theory and the Role of Law and Politics Student’s Name Institution Course Instructor’s Name Date International Trade Theory and the Role of Law and Politics Types of Country Risks generated by Political and Legal Systems Political Systems The first type of country risk due to the political system is the government seizure of corporate assets. The pharmaceutical firms can be at the risk of governments taking over their company assets. These seizures can be conducted without any compensation for the industry. For instance, the Zimbabwean Government can decide to confiscate the assets of the foreign pharmaceutical firms in the country. Again, in some cases, the governments can take over the whole industry with or with no compensation. This has been seen in Bolivia, where the governments nationalize the pharmaceutical industry. Another country risk involves embargoes and sanctions. Sanctions are typically the types of trade barriers, tariffs, import or export quotas, and import duties (Yarbrough & Yarbrough, 2014). The governments can impose the sanctions on the pharmaceutical industries of other countries in the cases of policy or trade dispute that has not been resolved in the international trade. Similarly, the industry is exposed to the risk of embargoes, the official ban on imports from or exports to a given nation, so as to isolate the country’s government and its industry. It is a form of a political punishment for some disapproved acts of policies. Terrorism is another country risk. Terrorism can sometimes be sponsored by governments to achieve a political goal via intimidation, fear, or coercion. The act of terrorism can

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