What's in a Political Risk? Re-Assessing the Policies and Determinants of Foreign Investments

This dissertation traces the history, methodologies and assumptions surrounding the complex field of political risk analysis (PRA), including attempts at theory-building over the past few decades. It suggests that while the study of politically charged risks has grown to encompass of number of fields and avenues of research—with solid methodological foundations—there is room for further discussion of political risk analysis that takes into consideration the geopolitical realities of the 21st century, specifically in developed economies. For many years, risk analyses often overlooked the potential for political risks in stable developed democracies. Although recent events have guided the field to better contemplate the changing political-economic and social realities in Western democracies, commonly used approaches to the assessment of political risk have hitherto not adequately incorporated new analytical and theoretical tools to more fundamentally consider the fundamentals of political risk in the global North. Through a combination of primary and secondary research, and extensive fieldwork with experts, this project traces the different methodologies behind the study and practice of political risk, and proposes a theoretically informed institutional approach to its analysis. The perspective I put forth appreciates necessary differences in economy types and development levels, the interdependent nature of different types and layers of risk, and the importance of non-quantifiable, qualitative sources of risk. Using an in-depth case study of Italy, I explain how such an approach can work to assess the complex nature of political risk in advanced democracies, and how it can complement the burgeoning advances in the greater field of risk analysis.