COUNTRIES IN TRANSITION AND CAPITAL INVESTMENT RISK

For the majority of international investors, country's risk and sovereignty risk are the greatest risks. Country's risk usually includes political and economic uncertainty. Transition countries are characterized by big budget deficit, inflation, domestic currrency appreciation, inconstant exchange terms, low accumulation, limits and market restrictons. Special risk type is market concentration and monopoly. Other factors increasing foerign capital investment in transition countries are payment risk, market risk, operating risk, off-balance sheet risks, consolidation and convergence, money laundering, off-shore business, inadequate prudential control of banks and other financial mediators, outstanding corruption and criminal. Due to sinergetic action of these factors, transition states may be exposed to the risk of international reputation decrease.