ASSIGNMENT 4

A. Investigate the country risk of your country

According to David, E, Arthur,S and Michael, M (2008) country risks are those political
risks that originate at the country level but also affect the MNE at the project or corporate
level. There are two main political risk are transfer risk and cultural and institutional
risks. Transfer risk concerns mainly the problem of blocked funds. Cultural and
institution risks concerns from ownership structure, human resource norms, intellectual
property rights and protectionism. Country-specific risks affect all firms, domestic and
foreign, that are resident in a host country.
The United States is one of the most developed countries in the world. This country is
very low levels of economic country risks, political and financial system risk. The United
States has been experiencing its worst financial crisis since the great depression since the
end of 2007. The U.S economy is facing with the decline in economic and unemployment
is forecasted to reach a double digits. There are many strong policy action has been taken,
both monetary and fiscal to recover the economy. In addition, economic performance
shows that there are a decrease in form of tourism revenues, slumping financial services
sectors, and sharp reduction in overseas remittances. Those of problems can be seen that
the country risk which the United States would face to. In 2007, the US housing market
which had been a driving force of the economy, ceased it prolonged upsurge.
Simultaneously, several major US commercial banks, investment banks and mortgage
companies suffered significant financial loss, primarily related to subprime or other high
risk loans. Moreover, important household consumption contribution to the United States
GDP more than 70% so household consumption can be recognized as the potential
benefits and also the potential risk which US government should pay attention on.
Because if this problem may be occurred again, it can affect spread through the US
financial system and developed into global financial crisis and lead most of the world’s
economies into recession. Furthermore, the U.S economy is currently experiencing its
worst economic contraction since at least the early 1980’s with unemployment expected
to reach double digits and GDP reaching negative 3% in 2009. Deficit projections have
reached around $1.4 trillion and total public debt is at $13 trillion. This country is also
currently involved in armed combat in Iraq and Afghanistan which has put strain on the
 relationships between the U.S and much of the international community. The U.S is
currently using expansionary fiscal policy to stimulate the economy and this had led to a
substantial increase in the budget deficit. The potential for investment growth is United
States has become increasingly evident over the past few years, but hard currency
shortages in the region have led to a blockage of funds on the part of local governments.
Companies that wish to invest in United States need to know how to avoid having their
investments tied up unnecessarily .In addition, disruption to complex U.S. relations with
China can move bonds, currencies, stocks and commodities globally. Beijing is the
biggest single holder of U.S. Treasuries, with around $900 billion of them. Some in
Washington have long feared that China could dump the bonds because of a serious
political dispute, bringing prices tumbling down.

B. Investigate any relevant taxation issues in your country

Taxation in the United States is a complex system which may involve payment to many
different levels of government and many methods of taxation. Some relevant taxation
issues in the United States will be presented as the following:
 The alternative minimum tax explains how inflation and tax cuts have caused the
alternative minimum tax to affect more taxpayers each year and describes the
patches that have kept its reach from expanding even further.
 Homeownership lays out the tax provisions that subsidize the costs of owning a
home
 Education Tax Incentives enumerates the tax provisions that help students pay for
college and encourage families to save for education expenses.
 Capital Gains and Dividends explains the special tax treatment given to those two
sources of income.
 Business Taxation describes how the tax code affects corporations and small
businesses.
 Tax Incentives for Economic Development outlines the tax provisions designed to
encourage particular forms of economic development and evaluates their
effectiveness.