Development is and never was a smooth process. Therefore for developing country’s economy numerous partnerships in different sectors take place. An ideal partnership must strengthen the relationship between the countries, their effective governments and the citizens. When the companies of two different countries, but of same industry, form a partnership plan, it should make the government more responsive towards their citizens. Though globalization of businesses has taken a great room in making this all simple, however, firms must abide by the rules and regulations in both the operating countries. Some of the common reasons which affect the partnership among the investors of different countries can be:
- Political System
One of the perceptions is that the businesses must care about the different political systems of the other country. But why should the businesses even care of the political system? It is an excellent point for the host country to accept the investment rather than focusing on their political system. Before considering what political matters are going on, it’s better to let the host company do the partnership with the interested foreign country. This is legally right and fruitful. The legal matters may sometimes become a big issue after the partnership has been signed.
- Corruption
It is a very delicate subject within the premises of any country. Each country prefers to put it out of public’s sight and, of course, other countries too. However, such cases are mostly revealed right away or after the next government take the hold. It restrains the businesses to rethink before investing. And even if the investment is among the governments it might not be as productive for the masses as it should be. While in private scenarios the business pay high taxes. Such huge businesses are typically owned by the politicians and they are corrupt by nature.
- Corrupt Local Businesses
The local businesses also provide immense openings to the foreign investors. The opportunities are beneficial for both the firms, countries, and even the people. But some corrupt workers or owners devastate the partnership inadequately. The joint ventures in this regard are also suffering a lot. Recently a joint venture of France telecom “Titan Orange” and Kuwaiti company “Agility” invested in Iraqi mobile telecom firm “Korek”.
It would be extremely favorable for Iraqi telecom companies in future, if this western investment would continue as per it was signed. But it didn’t. This is how such partnerships are curbing other investments to enter Iraq.
- External Factors
There are several external factors in affecting the partnerships except politics. Some of those are the insurgents, other regional groups (living in a host country), internet facilities and illegal conduct of people. The broadened internet facility has offered the buyers and sellers easy access to one another. Nevertheless, companies are still abiding to pursue the certain rules and regulations. Due to these global businesses, political and legal climate over the countries are estimated.
- Sanctions
The sanctions imposed by US on different countries in different sectors like oil or ornaments are decreasing the sales and investors’ interest. This decrease of trade is leading to the deficit in the economies. The consumers are losing their interest of investment in Iraq and Iran as these two are unable to do any successful trade with China.
Conclusion
It might be convenient and obvious for businesses to prefer operating in less corrupt and democratic countries. However, none can perfectly determine if a country fits in the criterion of democracy. What businesses must spotlight is how the political system is impacting the economy plus the specific firm and industry in which the investment has to be made.