I’m in full study mode now, preparing for the final exam on the way to a Chartered Accountant (CA) desig­nation here in Canada.

I wrote a case yesterday about a company that needed a certain high tech piece of equipment to compete in a global­izing and consol­i­dating industry, and was consid­ering two opportunities.

They could either directly purchase the equipment and stay in Canada, or buy a state-owned company in a South American country who already had the piece of equipment.

Buying in Canada would cost more initially and the projected return of the South American option was signif­i­cantly higher as well.

The critical point of the case, however, was the riskiness of investing in the country. There was no privately-owned land in the country, and there was no guarantee the company wouldn’t be appro­priated by the government later.

Also important to under­standing the case was that the bank wasn’t likely to approve the needed financing without some kind of a collateral, and the assets in the South American country weren’t good collateral, for the reasons noted above.

Sound like a country you’ve heard of? Made me think of Venezuela and Bolivia. And it made me wonder how much investment those two countries are forgoing to pursue the dream of a “socialist paradise.”