Country Risk in International Investment: Its’ structure and methods of estimation

In this paper, the issues of country risk assessment in economic security and sustainability context are investigated. The main object of research is country risk and its structural components. The scientific paper’s main goal is to analyze valuation methods of country risk from different perspectives and suggest a model for country risk measurement that allows adequately evaluate country risk, economic security and economic sustainability level and dynamics, including structural components and their relationships. The paper approaches several main tasks. First, to highlight the importance of country risk evaluation and its assessment in growing global markets, analyzing causes and elements of country risk based on other scientific researches. Second, to explore and clarify advantages and disadvantages of the methods of country’s risk assessment, as well as to investigate sources of country risk and ways how to manage the risk. Third, to apply quantitative and qualitative methods for analysis, formulate, create and present the model of country’s risk assessment in economic security and sustainability context, which will identify factors, influencing country risk and determine their direct and indirect relationship between each other. The last task is to verify practical suitability of the model of country’s risk assessment by performing empirical analysis all over the world, identifying directions for mitigating risk effects.

country risk analysis, credit ratings, debt, structured qualitative methods, discriminant analysis, k-nearest neighbours (k-NN) classification, distance metrics, classification and regression trees (CART), support vector machine (SVM), discriminant analysis, missing data, Kolomogorov-Smirnov test, Anderson-Darling test, non-parametric methods

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