Transcript
This essay will deal with a comparison of two countries’ risk analysis as they would be made by an Italian company that is considering to operate in those markets. I chose to refer to Egypt and Libya, in the period 1990-2010, before the Arab uprisings of 2011: they were both ruled by authoritarian regimes, not having fully implemented a process of economic modernization, both close neighbours for Italy, and they both had the potential to be profitable destination for investments. However, many key internal dynamics were different, as well as external factors: all those factors led to a completely different level of opening towards foreigners, as reinforced by the different kind of relations of those countries with the European Union. My argument will be that the main factor in creating a good business environment stays the political will of the government in charge to liberalize and modernize the political as well as the economic environment. The EU intervention, in the form of intra-regional policies and specifically with the Association Agreement in 2001, indeed facilitated the modernization of Egypt, both politically and economically, nonetheless, the level of risks to be faced by an Italian company in the country is still high. Egypt is still underdeveloped: the differences in term of economic outcomes with Libya are still too few, especially if looking at data from a comprehensive perspective (e.g. size of the markets). Libya provides even more serious hindrances, partly because of the aggravating circumstances of having had pariah status until 2004. The essay will assess what particular political and economic risks are taken into consideration the most by Italian companies, after having presented an overview about the whole region from both perspectives. My conclusions will reinforce the starting point of this essay: Egypt and Libya, though very different in nature, still present a very high level of risk whose causes can be identified primarily in the lack of political will of the previous regimes to liberalize the economy and also the lack of governance capability in implementing effective reforms, necessaries to have a more adequate share in the global market. However, these shortcomings are typical of a process of state building which is partially still in fieri, and this is ascribable to the overall condition of the national institutions and also to some historical factors.
