Case Interview Prep

Answer: D - The main reason behind the poor investment is geopolitical instability and less secure property rights.

Key Takeaway: While poor countries promise high capital/labor ratios and the potential for marginally lower costs of production, investments often do not move flock to these countries. The main reason is that poor countries are more likely to be engaged in civil wars or other geopolitical strife that threaten their stability and the ability for investors to protect their operations. Furthermore, due to high corruption, these countries have less secure property rights.