Country Risk: The Bane of Foreign Investors by Norbert Gaillard

Published date01 June 2021
AuthorGraciela Laura Kaminsky
Date01 June 2021
DOI10.1177/00207020211021565
Subject MatterBook Reviews
relationship is not without its ironies. Nixon and his domestic aides were jealous of
Kissingers favourable press, but in 1973 the beleaguered Nixon sought to distract
attention from the Watergate scandal by promoting Kissinger to Secretary of State and
focusing on the administrations foreign policy successes. After Nixons departure, his
successor, Gerald Ford, was effectively criticized in the 1976 presidential election for
having contracted leadership in foreign policy out to the lone rangerKissinger, and
for the amorality of d´
etente.
While future studies of aspects of Kissingers career will come, and are indeed
welcome, Schwartz has provided a handy compendium of what we know about the
record, with helpful insights of his own. The result will be welcomed by readers
encountering Kissinger for the f‌irst time as well as students of the period.
Norbert Gaillard
Country Risk: The Bane of Foreign Investors
Cham, Switzerland: Springer Nature, 2020. 259 pp. $155.49 (cloth)
ISBN: 978-3-030-45787-7
Reviewed by: Graciela Laura Kaminsky (graciela@gwu.edu), George Washington University
and National Bureau of Economic Research, USA.
The last f‌ifty years have witnessed a variety of crises in both emerging and developed
countries. These crises erupted in waves following international capital f‌low bonanzas.
The f‌irst wave followed the syndicated loan bonanza of the 1970s and early 1980s.
Sovereign defaults started in Mexico in 1982 and spread across developing countries in
Africa, Asia, Eastern Europe, and Latin America, with defaults accompanied by
currency and banking crises. In the 1990s, a new wave of crises in developing countries
spread out across East Asia, Eastern Europe, and Latin America. In contrast, the 2000s
witnessed crises in advanced economies, with Greece defaulting, and Cyprus, Ireland,
Italy, Portugal, and Spain avoiding defaults thanks to the bailouts they received.
Naturally, all these crises stimulated the analysis of country risk, with credit rating
agencies dramatically expanding their activities in assessing sovereign risk and other
raters also providing a broader assessment of political, institutional, as well as overall
business environments. Naturally, the general interest on country risk increased dra-
matically.
1
The questions are many: What is country risk? How is it measured? What
triggers high country risk? How do credit rating agencies assess risk? What indicators
are used to capture the various types of risk?
The new book by Norbert Gaillard, Country Risk: The Bane of Foreign Investors,
provides answers to these questions using both quantitative and historical analyses. The
research is meticulous. Tables and graphs as well as econometric estimations are used to
1. Just to have a metric of this interest, I did a Google search for What is country risk? and obtained 1.6 billion
results.
Book Reviews 349

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