Peren-Clement Index - PCI 2.0

The Peren–Clement index (PCI) is a methodology to analyze country-specific risk for businesses engaged in international trade and direct investment. This index, established in 1998, provides a guideline when deciding which foreign markets offer the possibility for additional business engagement and investment, and to what extent existing engagement or investment can be increased or should be reduced. The PCI can be used as an early detection system, which evaluates probabilities and risks of an investment in a certain foreign market, which are determined by the political situation, its social, economic and judicial environment as well as anticipated future developments in that country. Within the context of an international investment decision, version 2.0 of the PCI, set out herein, describes two essential schools of thought on strategic planning that are commonly known as the resources- and market-focused perspectives. The two perspectives are not mutually exclusive, but rather complement each other in a meaningful way. Within the scope of an international investment decision, companies making foreign direct investments must reconcile both of these perspectives and take them into consideration as complementary elements in their strategic planning. Strategic decision-making geared toward corporate practice is only made possible through a two-dimensional correlation of the economically relevant macro level and the respective aims of a direct investment intended by the individual company. Thus the use of risk indices in business planning for the evaluation of global investments acquires a new quality.