Page 51 - Theoretical and Practical Interpretation of Investment Attractiveness

Econometric methods for assessing country risk. This method allows solving some
of the issues of previous methods. With its help, it is possible to evaluate certain trends in
economic indicators, which serves as the basis for assessing risks.
In addition, qualitative factors that are not accounted for in statistics but are of great
importance for risk assessment (political, socio-cultural conditions, etc.) remain unexplored.
While econometric analysis is highly objective in nature, the most effective method - a system
that combines quantitative and qualitative methods for assessing both the quantitative and
qualitative aspects of country risk - remains underutilized.
Methods for Assessing Country Risk. Based on the use of both quantitative and
qualitative information, models have been developed, including:
- absolute and relative indicators (statistical-econometric analysis is used to determine
the significance of variables);
- qualitative indicators (such as socio-political development) are included in the
country's rating indices based on expert assessments (both variable indicators and expert
assessments are taken into account). The results obtained are reflected in the final index, with
values typically ranging from 1 to 99.
Assessment of country risk based on statistical analysis. A comprehensive (factors)
assessment of two types of risks is the basis of this method. In other words, it measures the
likelihood of losses and their extent, depending on the risks, events, or scenarios.
Each of the above-mentioned risk assessment methods has its own advantages and
disadvantages. The most important advantage of quantitative expression over the remaining
methods is that it allows for the monitoring and mutual relationship of variables or indicators
in real-time. However, there are no significant disadvantages.
One of the main disadvantages of qualitative assessment is its strong dependence on
the subjective opinions of experts. Currently, the most optimal and widely used methods for
managing risks are those that include qualitative and quantitative approaches, considering
both the most optimal and wide-ranging aspects. It is worth noting that the possibilities for
forecasting specific events based on existing models for assessing country and political risks,
as well as the limitations of the most optimal and comprehensive methods, are becoming more
apparent.
In this regard, the development of reliable models for assessing country risk is crucial.

"Do not argue with fools: they will drag you down to their level and
beat you with experience." - Ramón Gómez de la Serna

1.4. Cluster development in shaping the investment environment attractiveness

The experience of developed countries indicates that the attractiveness of investment
environments in regions is closely related to the formation of clusters and their level of
development. According to research, in regions where the investment environment is
favorable, the development level of clusters is observed, and vice versa. These two economic
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