[4] The Peren-Clement index 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, economical and judicial environment as well as its predictable or anticipated future developments of that country.
Thereafter, the factors which are to be predicted are deduced and indicators for a prognosis are determined, so that the next step leads to a cause-related and future-oriented risk evaluation.
But practical experience shows that the assessment of country-specific risks for direct investment can not be looked at separately from the particular existing motives.
Empirical analyses show that especially cost- and production-dependent as well as marketing oriented motives dominate the decision for, or against, direct investments.
For a cost-oriented foreign investment one would lay a stronger emphasis upon the cost- and production-oriented factors and the choice of location would be made thereafter.