Call for Papers
European Journal of International Management
Special Issue on:
"Managing International Political Risk: Arising Challenges for Multinationals in the Post-Covid19 World"
Prof. Dr. Alfredo Jimenez, KEDGE Business School, France
Prof. Dr. Emin Akcaoglu, Beykent University, Turkey
Prof. Dr. Rainer Wehner and Prof. Dr. Harald Bolsinger, FHWS University of Applied Sciences Wuerzburg-Schweinfurt, Germany
The focus for political risk seems to be shifting from developing countries to highly developed ones. Interestingly, for instance, there is a rise in populist and nationalist views among a number of politicians in the western world. When these people are elected, they may bring trade and investment restrictions, higher government spending and lower taxes, resulting in wider fiscal deficits and restrictions on immigration. Surprisingly, some of such views have even been able to gain additional power recently.
Donald Trump was elected as the US president in 2016 by campaigning over such perspectives; and one of the first decisions of his government was abandoning the Trans Pacific Partnership Agreement. Even the future of Transatlantic Trade and Investment Partnership Agreement is not really clear under the Trump administration though the negotiations are still in progress. His policies on free trade, inward foreign direct investment, NATO, foreign policy and immigration, etc. are reflecting a significant shift from traditional approaches in US. The relations between US and EU countries have also been in a general deterioration since Trump came into power.
Another interesting event has been Britain's exit from EU, Brexit, following a referendum in June 2016. After this decision, many Eurosceptic politicians in other European countries celebrated the result, and expected other countries to follow the British example. The recent French presidential elections were a very important stage in shaping such expectations for the future as Marine Le Pen was also running for the presidency, based on an anti-EU campaign. Pro-EU Emmanuel Macron's presidency has currently calmed down such concerns. But, it seems that by the time there is a full recovery from the global financial and economic crisis, those discussions and the risks against the existing establishments will be on the scene.
European affairs were not limited only to these events. For instance, the Ukrainian territory Crimea's annexation by Russia in March 2014 with a military intervention has changed the security position on the European continent significantly. Though there were contradicting views even within EU over the conflict, it now seems that Poland for example has particular concerns due to the unpredictability of Russia, which does not avoid using even military power.
In the late 1980s after the collapse of communist regimes and the end of the cold war, however, there was initially huge optimism for peace and political stability in Europe. Yes, there was a long civil war
in ex-Yugoslavia in the centre of Europe for a very long time; but with the impetus of the end of the cold war, the European Union started an ambitious enlargement process and since then many newly independent or ex-communist countries have either joined the
EU or applied for full-membership. While all such developments were in progress, Russia was forced to accept all these, as she was also busy with her own restructuring process. In 1999, Vladimir Putin first became the prime minister and then the
acting president in Russia. Since then, Russia's standing regarding the world's political events has resembled the Soviet period.
While the western world has been struggling with these developments, developing countries are also experiencing important problems with further implications for the industrial word. One of such major affairs is the civil war in Syria, which started in 2011 and still continues. At the moment, nobody can predict which type of resolution will be the final stage. But even this single event has caused millions of refugees to flow from the region, mainly to Europe. The Syrian refugees have particularly had an impact on neighbouring Turkey, and also on Greece and Germany, not only financially but also regarding social and political aspects.
Another interesting political risk case has been Turkey. Since the coup attempt on 15 July 2016, there have been important political developments in the country. For instance, just after the coup attempt a state of emergency was declared; and then a referendum was held on 16 April 2017 to amend the country's constitution. This was followed by a major structural change in the political structure to replace the existing parliament-based government with a presidential system. As a result, there are serious concerns as to whether Turkey is evolving into an authoritarian regime.
A latest outburst has come from the Middle East. The four Arab countries led by Saudi Arabia first cut off their diplomatic relations and then initiated a boycott against Qatar stating that the government in Doha has links to terrorist groups. The conflict arose less than a month after Donald Trump's visit to Saudi Arabia, where he called for Muslim nations to unite against extremism. This issue was escalated as Iran and Turkey backed Qatar while the other countries increased their pressure. There were serious worries that the dispute could be ended with military action in the regions. But, then the situation calmed down. However, the region is still faced with significant stability and hence security concerns. For instance, as one the most important global energy producers, Saudi Arabia is having internal political clashes in the kingdom’s palace while the oil price has hugely declined and plummeted the oil-rich kingdom’s finances. Saudi Arabia’s stability is not under immediate threat, but there are still questions about the kingdom's longer-term fate.
It is interesting to go through all of these events which are, in fact, far from giving the complete picture. Let us keep in mind that we have not yet even mentioned the acts of global terrorism in major cities in the world. But more importantly, a new event, the recent global Covid-19 outbreak may also significantly increase political risk in many countries, as the pandemic exposes further economic fragilities particularly to developing nations. Only its impact on the global oil prices may be a very interesting example after just mentioning the Saudi case. As said even such a resource-rich country is financially struggling, and has tripled the value-added tax as a cure for the deteriorating fiscal position by also taking the risk of public dissatisfaction and downgrading economic growth.
It is clear that the pandemic has already worsened the existing recessionary tendencies in many counties by significantly decreasing GDPs, and rising unemployment. Therefore, high unemployment and potential dissatisfaction with public services due to burdening fiscal position of governments may even drive social unrest in some countries in the coming quarters. It is also expected that the pandemic may cause tensions regionally and globally that could end up with terrorism, immigration, and hence further instability in a larger framework.
In addition, while lockdowns and rising unemployment decreases the global demand in many industries such as tourism, air travel and related areas, widespread restrictions on large-scale gatherings and mobility has also disrupted many industries’ supply chains. All such developments also expose further risks to multinational companies with regard to business continuity. In this line, according to the Investment Policy Monitor of UNCTAD, as of April 2020 it is expected that the pandemic may drive global foreign direct investment flows down by 40%. It also affects FDI policies of countries though policy response varies. While some countries adopt policy measures to support investors as a cure against contracting production, some others put in place measures to protect their critical infrastructure and industries.
These issues are not only political, for they may have significant economic or business-related consequences. For instance, Brexit has already proved that there will be unexpected outcomes for multinationals' operations in Britain. For example, it is claimed that many banks and financial sector companies based in London are planning to relocate their operations elsewhere in continental European cities such as Frankfurt. Or similarly, as a major direct investor in the world, Germany's political relations with Turkey may affect German multinationals' operations in Turkey. Or, as pointed out, the pandemic has also started to force multinationals to review their investment and operational decisions. It would not be then naive to expect government reactions accordingly. We have not yet even mentioned the trade wars, the heated US-Chinese relations, the Libya affair, the tensions caused by oil and gas exploration in the Mediterranean, etc.
In this environment there are serious concerns among business people, politicians, academics and thought leaders that the world is becoming more insecure due to pandemics, climate change, environmental degradation, global terrorism, nationalist and authoritarian tendencies, etc. Naturally, multinational corporations' FDI activities cannot be isolated from all such developments. Therefore, political risk management will surely be a very interesting area to study these days. In other words, in the current global environment of high political risks and policy uncertainty, it will certainly be valuable to examine the evolution of political risk perceptions of multinationals, and also the tools and techniques they use to skilfully manage such risks. Analysing how investors perceive and deal with these risks will additionally contribute to a better understanding of the role of political risk insurance in the post-crisis investment landscape, and how it can help multinationals' direct investment activities in high-risk regions or countries.
In this respect, this special issue will present research outcomes analysing the current situation and potential future developments regarding political risk management within the framework of foreign direct investment and all other activities of multinational corporations. As an extension of this main theme, the availability and use of political risk insurance may be also evaluated. The special issue will explore both theoretical issues in the field and practical issues in formulating policy and strategy, and it will also pay attention to the issue of employment and growth regarding multinationals and foreign direct investment.
Political risk management and multinationals' activities as a publication area is very significant due to the fast-changing developments in various countries and regions in the world. Therefore, this special issue aims to motivate further research as well as teaching in this particular filed. In addition, the special issue will also surely be useful for practitioners as the area itself is applied due to its very nature.
Suitable topics include, but are not limited, to the following:
Notes for Prospective Authors
Submitted papers should not have been previously published nor be currently under consideration for publication elsewhere. (N.B. Conference papers may only be submitted if the paper has been completely re-written and if appropriate written permissions have been obtained from any copyright holders of the original paper).
All papers are refereed through a peer review process.
All papers must be submitted online. To submit a paper, please read our Submitting articles page.
Manuscripts due by: 30 September, 2020
Notification to authors: 30 October, 2020
Final versions due by: 31 December, 2020
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