The relative political and economic
stability of the United States has been an important factor in attracting
foreign buyers. Political and economic instability can increase greatly the
risk of what is already a riskier situation than purely domestic investments or
acquisitions. Acquiring firms must consider the frequency with which the
government changes, how orderly the transfer of power is, and how much
government policies differ from one administration to the next, including the
degree of difference between the dominant political parties. They Must assess
the likelihood of government intervention on the upside and the downside (for
example, subsidies, tax breaks, loan guarantees, and so forth, on the one hand,
all the way to outright expropriation on the other hand).
Desirable economic factors include low, or
at least predictable, inflation. Labor relations are another important
consideration in economic stability. Western European labor unions appear to
have a greater voice in the management of companies than do American unions.