The Country Briefings - Research Paper Example

Country Briefing The present discussion will attempt to assess the preference of Italy over China for investment by a company. To gauge this we willprimarily assess the risk involved for investing in Italy vis-a-vis China according to the risk reports by the renowned agencies. We shall also see the preference ranking of the foreign investors and from that we shall try to conclude the worth of the countries as destinations for foreign investment. Italy is a part of the European Union and the Economic and Monetary Union.

The market of the county is well-developed and the country houses a large number of manufacturing units. However the country in the recent years has become less competitive in the global market. One of the major disadvantages of investing in Italy is the highly rigid labor market which has also resulted in a slow growth of the GDP in the last few years. The industries of the country require extensive restructuring to have a high growth rate. Overall the economic risk of the country has been categorized as low by the AMB Country Report.

China on the other hand has exhibited a fast growth rate in the recent years. It has become third biggest economy in the world. The export sector of the country has experienced a fast growth rate in the last decade, thus making it a lucrative destination for foreign investment. The government has also spent substantially on the improvement of the infrastructure. The monetary regulations of the country had followed an expansionary policy. As a result the economy has growth steadily; however there is a chance of increase in the number of non-performing assets.

The country which is extremely dependant on the export sector was affected by the recession of 2008 to 2010. But stimulus programs by the government had a good impact and the country has shown a very good recovery after the economic crisis of the world in 2010 (China, 2010; Italy, 2010) Italy offers a stable political environment. However issues such as labor market rigidities and the unequal income distribution has led to the stunting of the country’s growth prospect. Apart from that large amount of sovereign debts have given rise to chances of sovereign default which increases the risk of the country.

The insurance market of the country is well regulated by the government agencies. The stock exchange of Italy is large compared to the countries in the other parts of the world. The banking sector of the country is good and follows sound practices. The political risk of China has been rated high. The country though a booming economy is still classified as an emerging country. The income inequality of the country is also on the rise. The insurance market of the country is regulated. The country is also liberalizing a section of their financial market.

According to rankings the country risk of China is higher than that of Italy (China, 2010; Italy, 2010). China has been preferred by the investors all around the world. Even the European investors rank China as the best country for investment, over Italy which ranks seventh Investing in a Rebound. However considering the detailed analysis of the country risk, Italy seems a better destination for Investment by the company (Investing in a Rebound, 2010). References China, (2010) AMB Country Risk Report, retrieved on June 6, 2011, from: http://www3.ambest.com/ratings/cr/reports/China.

pdf Italy (2010), AMB Country Risk Report, retrieved on June 6, 2011, from: http://www3.ambest.com/ratings/cr/reports/Italy.pdf Investing in a Rebound (2010), Global Business Policy Council, June 6, 2011, from: http://www.atkearney.com/images/global/pdf/Investing_in_a_Rebound-FDICI_2010.pdf