What factors do we have to keep in mind?
What about innovation?
The potential of the country in terms of its natural resources as well as human capital is one of the major factor. When a country is facing crisis we should look into political stability and the policies of the government. Innovation flourishes in terms of crisis so its a good time focus on
Dear Marcelo,
It's a good question. Economic crisis of a country does not 100% reflect or impact on it's business performance. I have seen this trend recently in Sri Lanka few years back, when the country's economy was in deep trouble, which posed the country to get loans from IMF, the country's business sectors continue to do well. In fact, successful businesses try to expand their operations during this time due to land prices are on the declining trend and Government is supportive of investors and so on.
Having said the above, to undertake a business in a country of that situation, the following factors should be considered.
1. Exchange rate fluctuation. This will have a direct impact on the investment as well as the return during post investment.
2. Inflation, rising cost abnormally will have another impact on the employees hiring, their salaries, benefit expectations, raw material prices and so on.
3. Bank interest rates, higher interest rates will have an impact on your bank borrowings and profitability.
4. Country's GDP, too low GDP will have direct impact on the business.
The other factors for consideration could be,
1. Labour availability,
2. Infrastructure,
3. Resources (Raw materials),
4. Countries political and social stability.
etc. etc.
Guess, this input will be of help to you.
Just to touch on innovation, any country which is economically doing well is prone to have innovation in its main stream. Hence, if the country is on a economical crisis, the country's innovation will also be on crisis. Meaning to say, there will be limited or less innovation during the period of economic crisis. However, resources from the country could be better utilized for innovation.
Best Regards.
Sekar Gopal.
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