Political risk analysis and economic reform : investing in the Indian electricity sector

[摘要] ENGLISH ABSTRACT:The definition of political risk and the methodology of its assessment have changed sincethe inception of the discipline midway through the last century. This assignment assessesthe usefulness of a new quantitative technique that uses political constraints and the policypreferences of political actors to construct a measure of political risk. Integrating thefindings of the resulting Political Constraints Index with an analysis of the politicaleconomy of the Indian Electricity Sector, the assignment demonstrates that, contrary to theoriginal interpretations of the index, high levels of political constraints and politicalcompetition may propagate a disabling policy regime and be detrimental to the investor,despite the stated commitment of the incumbent government to policy reform. Theimplication of these findings is that, to avoid incorrect interpretation, the PoliticalConstraint Index should be augmented by a comprehensive qualitative assessment of theindustry in question.

[发布机构] Stellenbosch University