Country Risk and Fdi

Contents
CERTIFICATE ....................................................................................... Error! Bookmark not defined.

ACKNOWLEDGEMENT ...................................................................... Error! Bookmark not defined.
Introduction............................................................................................................................................ 2
Country Risk and FDI Inflows ......................................................................................................... 3
2.1 Economic Risk ....................................................................................................................... 4
2.2. Financial Risk ........................................................................................................................ 4
2.3 Political Risk ........................................................................................................................... 5
Literature Review ................................................................................................................................. 6
Data and Methodology ........................................................................................................................ 8
Data .................................................................................................................................................... 8
Methodology...................................................................................................................................... 8
The Political Risk Rating ............................................................................................................. 9
The Economic Risk Rating........................................................................................................ 12
The Financial Risk Rating ......................................................................................................... 16
Analysis................................................................................................................................................ 18
Regression Analysis (Panel Wise) .............................................................................................. 18
Model I ......................................................................................................................................... 18
Model II ........................................................................................................................................ 24
Conclusion ........................................................................................................................................... 30
Appendices.......................................................................................................................................... 31
References .......................................................................................................................................... 50
Introduction
Foreign investment could be defined as the transfer of economic resources among
countries by individuals or multinational enterprises (MNEs). “If the transfer is made
through security purchase or short term loans, these types of investments are called
as portfolio investments. On the other hand, If the capital is transferred through a
production center establishment in another country, acquiring an existing production
facility and/or participation in capital increase, these types of investments are called
as FDI” (Arık, et al., 2014).
According to the definition of International Monetary Fund (IMF), “FDI refers to the
investments that Multinational Enterprises make as at least 10% capital partnership
with the investee and for the purposes of establishing long-term relationships with
other countries” (IMF, 1993).
Indirectly, FDI could be considered as a tool for both long-term relationships and
global integration within the capital movements. If compared to short-term loans and
other portfolio investments, FDI is a more consistent investment that creates a value
add for the economy receiving such an investment.
Depending on the criteria relating to the channels through which the FDI is entered
into the country and who are affected by the FDI, it could be said that the effects of
FDI might be different on different economies. However, the general approach is that
Foreign Direct Investments creates and/or increases the manufacturing of goods and
services in an economy by especially leaning towards the new investment areas or
by acquiring the existing firms and hence it could offer more contribution for the
investee economy. The said contribution could be experienced as an intermediation
for the country’s development, increasing the economy’s and existing firms’
managerial capacities and capacities for expanding into new markets, using the
financial resources more efficiently and increasing the employment level in the
economy. Moreover, FDI also makes way for the transfer of technology for the host
country and therefore it also contributes to the Human Capital capacity of the host
country.
Today the globalization has reached to upper levels and hence FDI becomes a very
important factor for the developing countries (which obviously have low levels of
capital accumulation and development facilities). Therefore, such developing
countries try to create a competitive environment in order to attract more and more
FDI and hence to increase the level of welfare and economic development in the
country. Developing countries do so by freeing the trade regimes, by enhancing
economic cooperation and/or by offering privilege incentives for the MNEs. However,
the MNEs that plan to invest their capital and resources in other countries first decide
whether the country (or the sector) is even suitable for the investment, keeping in
consideration the country’s social, cultural, corporate, economic, and financial
conditions. Therefore, FDI depends on many factors.
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A lot of studies have been conducted on the factors affecting the FDI since the trade
barriers have been lifted in the late 80’s. According to the common findings of these
studies, FDI is relatively more likely to be made in open economies, which have high
level of economic growth rate, wide market, low level of labor price and human
capital stock. However, it could be seen that the recent studies which are conducted
related to FDI focus more on the corporate factors. The main findings from such
recent studies show that an improvement in the corporate quality indicators including
high level of bureaucracy quality, political consistency, guarantee of the property
rights, advanced democracy, not having corruption, and not having societal conflict
and threats are as effective as macroeconomic factors for FDI inflows.
Another key concept in the analysis of across border capital movement is the country
risk. Considering that MNEs prefer the countries which offer low risk and high return
levels, it could be said that countries’ risk prims are important guidance for investors.
In the literature review related to country risk analysis, studies relatively focus on the
political risk. However, country risk is not a single component factor. Political
consistency is an important factor affecting the FDI inflows however, economic and
financial uncertainty also impact the investment decisions taken by the investors. In
this study, it is targeted to reveal the relationship between country risk and its
components (economic, financial and political risk), and FDI flows.
Country Risk and FDI Inflows

Risks, which could be defined as the possibility of happening of unexpected
incidents in the future, make it difficult for the investors to make decisions due to
such uncertainties. The risk, which is stemmed from the external environment of the
companies and hence could not be controlled by the companies, is called as
Systematic Risk. Investors are very sensitive to systematic risks since it is very
difficult to oversee and control them. On the other hand, investors prefer non-
systematic (which can be controlled and reduced by taking corrective actions such
as diversification) and measurable risks. All components composing the country risk
is a type of systematic risk and these may very well be a determining factor for FDI
inflow on account of such uncertainties. It is not possible to claim a complete
consensus on how to define the country risk and its components. Although there are
many different approaches in the related literature, country risk is generally
evaluated in the concept of uncertainties, which are created by economic, financial
and political structure of an economy (this approach is also assumed for the purpose
of this study).
For example, according to White & Fan (2006), “country risk could be stated as an
undesired breakdown which is caused by international trade relationships in the
basic performance indicators or strategic targets”. Additionally, country risk could be
categorized into subgroups as economic, financial, political and cultural risks. On the
other hand, Hoti & McAleer (2002) define country risk as that the host country which
takes loan is not able to meet part of or majority of its liabilities. According to the
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authors, country risk could be ordered as the risks caused by economic, financial
and political environment.
2.1 Economic Risk
“Economic risk defines the unexpected developments in the general structure of the
economy in such a way that the international investors may make changes in their
investment projects” (Topal & Gül, 2016). The change in the economic risk level is
measured by the changes in the strengths and weaknesses of the country’s
economy. “If the economy’s strengths are enough to compensate the weaknesses,
this situation could be interpreted as the economic risk is decreased” (PRS, 2014).
Foreign investors prefer those countries which have wider markets in order to take
benefit of large scale of economies. For this reason, as an indicator of market
growth, economic growth and income per capita are among the variables used in
measurement of economic risks. Other economic indicators used to measure the
economic risk are budget deficit, inflation rate and current account balance. If the
budget deficit becomes chronic in a country, it reveals the weaknesses of the country
as increasing the country’s debt stock and indirectly its economic vulnerability. At the
same time, budget deficit affects the country’s investment-saving balance as creating
breakdowns for inflation, current account deficit and foreign trade indicators. On the
other hand, high level of inflation rates decrease the real values of investment and
create low returns to investors so that it causes value losses for future earnings of
investors. Additionally, high level of inflation increases the balance of payment
deficits and increase uncertainties and investment risk. Therefore, any change in the
abovementioned factors is given importance by the foreign capital owners as it may
change the risk perception.
2.2. Financial Risk
“Financial risk is defined as the decrease in ability of country to meet its liabilities
toward abroad” (White & Han, 2006). A country, which has high level of financial risk,
most probably would face a financial crisis. “Its economy’s foreign debt stock, export
income level, current account deficit, international liquidity and exchange rate
consistency are used to determine its financial risk prime” (PRS, 2014).
The increase of a country’s foreign debt stock in the national income increases its
financial risk level as it decreases its ability to meet its foreign liabilities. Foreign
companies are very sensitive to financial risk- they prefer making investment in the
countries which have lower levels of foreign debt stock and indirectly low level of
financial risk. The presence of a chronic current account deficit along with high level
of foreign debt decreases the stability of the exchange rate and affects international
liquidity of the country. In turn, the instability of the exchange rates affect FDIs in a
negative fashion on account of causing serious uncertainties for the outside
investors. A high level of foreign currency inflow is required in order to be able to
close the BOP deficit and sustain the exchange rate stability. This is particularly
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difficult for the countries whose imports are more than their exports because it is
almost impossible to change this outlook in the short run. Therefore, it could be
safely said that ‘financially risky’ economies find it very difficult to attract sufficient
level of FDI.
2.3 Political Risk
Political risk reflects the quality of the corporate structure of a country. Political
inconsistencies a low level of corporate quality indicates higher level of Political risk
and decreases the return on investment for the investors. Political consistency,
bureaucracy quality, social compliance, law superiority, level of corruption, and
democracy are the most important indicators for corporate quality of an economy.
FDI especially include high levels of sunk costs which makes MNEs more sensitive
to uncertainties. Such sunk costs also include the costs paid to establish good
relationships with the host country and the costs to obtain necessary information.
Governmental inconsistency, inability to prevent the property rights, slow

bureaucracy, slow license and permission processes, indicates weak corporate
quality and reflects the political risk level of a country, increase the production costs
of MNEs. Additionally, corruption including in managerial processes such as
exchange controls and tax transactions make it difficult for foreign companies to do
business efficiently as the local competitors due to such unfair advantage to the local
players . All of these are considered as aversive factors for FDI inflows. Therefore,
MNEs are very reluctant to invest their capital and resources in the countries with
high political risk.
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Literature Review
At present, in the globalized and integrated world economy, FDI is considered an
important factor for the sustainable development and growth processes of the less
developed and developing countries i.e. the countries that have low level of savings
and insufficient level of capital accumulation. Although different results could be
found in the various studies conducted in the subject matter, strong proofs are found
showing that the risks carried by the host countries have powerful effects on the
inflow of Foreign Direct Investment. In this section of the study, summary information
about the findings of the studies relating to the subject matter is presented keeping a
chronological order.
On analyzing the determinants of FDI made in Central and East European Countries
from OECD countries, Carstensen and Toubal (2003) reaches the findings that in
addition to traditional determinants including low labor force cost, market potential,
privatization level and qualified labor force, a decrease in the country risk as a
transition-specific factor has a positive effect on the inflow of FDI.
In the studies conducted by Sekkat and Varoudakis (2007), where they worked on
Middle East and North Africa (MENA) countries, they determined that the FDI
increased as an impact of a decrease in the economic and political risk.
Gast and Herrmann (2008) conducted a research on the determinants of FDI. They
reached the findings which show the presence of a negative relationship between
the country risk and Foreign Direct Investment as a result of cross section analysis.
Therefore, researchers concluded that the countries which have high level of political
and economic stability and low level of risk are more attractive in terms of FDI.
As stating that FDI has important roles on integration processes of developing

countries with global economy, Musonera (2008) studied the effects of country risk
factors (economic, financial and political risk) on FDI flows through Sub-Saharan
Africa (SSA) countries. The findings obtained as a result of the analysis show that
FDI inflows depend on the level of host country’s economic, financial and especially
political risk. The researcher, who emphasizes that international investors prefer
making investment on the countries which have low level of risk, claims that the
countries should implement economic policies which may decrease the risk level in
order to attract more FDI.
In the regression analysis conducted by Palacios and Griffin (2011), the correlation
between FDI and 13 risk variables including financial, political and macroeconomic
risks are analyzed for 6 Latin America Countries (Argentina, Brazil, Chile, Colombia,
Mexico and Venezuela). The regression assumption, which was created for this
purpose, concluded a powerful and negative directed correlation between countries’
risk levels and FDI.
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In their studies where they considered 94 countries with different income levels,
Khan and Akbar (2013) analyzed the relationship between political risk and FDI. In
the analysis, 12 different risk component taken from ICRG were used. The empirical
proofs at the end of the analysis show that FDI has negative direction with most of
the political risk indicators of all income groups while it is more powerful on upper-
middle income level countries.
In their studies Ali et al. (2014) analyzed whether financial risk affects FDI inflows to
Pakistan economy. The time series analysis, which was conducted with 4 different
financial risk indicators, it was found out that foreign debt services, exchange rate
and current account had negative effect and efficient use of foreign debt had positive
effect on FDI.
In the empirical literature, on the contrary to above-mentioned studies which

generally show that there is a negative directed relationship between countries’ risk
levels and FDI; there could also found some studies which show that the related
relationship is positive or meaningless. For example, Jiménez (2011), who worked
on FDI movements from South Europe countries to North Africa and central and
west European countries as fresh members of EU, claimed that high level of political
risk was an attractive factor for FDI, on contrary to general approach.
According to Sanjo (2012), who shared a similar idea, the important factor on
investment decision for foreign firms was not the host countries’ high or low level of
risks but whether the market was large enough to make investment. In the countries
where political risk is high, investors would prefer making investment to risky country
if its market size is larger comparing to less risky countries’ market size.
In the time series analysis, which they made for Turkey, Emir et al. (2013) concluded
that the relationship between FDI and country risk differentiate in the short and long
terms. Accordingly, while there is not a meaningful relationship between the related
variables in the short term, FDI is affected from country risk in the long term.
Finally, in the study where Kariuki (2015) researched on FDI determinants for African
union countries, the results were reached that economic risk had negative effects on
FDI while political and financial risks did not have any effects.
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Data and Methodology
Data
In this study, annual data for the year of 2005-2017 belonging to 23 countries
(provided in Appendix-1) are used. Descriptive information about the variables that
have been used in this study is provided in Table-1. FDI statistics (provided in
Appendix 2) are obtained from Organization for Economic Cooperation and
Development (OECD) Database. The statistics related to country risk and
components have been obtained from World Bank Open Database, IMF Database,
Organization for Economic Cooperation and Development (OECD) Database and
PRS-ICRG (Political Risk Services-International Country Risk Guide) which is a
Canada registered risk evaluation firm. As have been focusing on risk evaluation up
to day, PRS Group regularly calculates annually 3 risk index for 140 countries.
Table 1. Descriptions of Variables

Variables Explanation
FDI Foreign direct investments which are made to countries in terms
of dollar currency with current prices.
POL-R Political Risk. As taking values ranging from 0 to 100, its

increase in values shows the decrease in country’s financial risk.
ECO-R Economic Risk. The increase in index value which has value
ranging from 0 to 50 shows the decrease in economic risk
FIN-R Financial Risk. As taking values ranging from 0 to 50, its

increase in values shows the decrease in country’s financial risk.
COUN-R Country Risk. An integrated risk level, calculated as COUN-R =

0,5 x (ECO-R + FIN-R + POL-R). The increase in index value
which can have values in scale of 0-100 shows the decrease in
country risk.
Methodology
Detailed information about ICRG risk methodology is given below:
The International Country Risk Guide (ICRG) rating comprises of 22 variables in
three subcategories of risk i.e. Political Risk, Financial Risk, and Economic Risk.
A separate index is created for each of the subcategories.
The Political Risk Index is based on 100 points, Financial Risk Index is based on 50
points, and Economic Risk Index is based on 50 points. The Composite Country Risk
is obtained by dividing the sum of these 3 indices by two. The composite scores,
8
ranging from zero to 100, are then broken into categories from Very Low Risk (80 to
100 points) to Very High Risk (zero to 49.9 points).
Each component (variable) out of the 22 said variables is assigned a maximum

numerical value (risk points), with the highest number of points indicating the lowest
potential risk for that component and the lowest number (0) indicating the highest
potential risk.
The Political Risk Rating includes 12 weighted variables covering both political and
social attributes. On the other hand, the Financial and Economic Risk Ratings
include five weighted variables, each.
The Political Risk Rating

It is a means of assessing the political stability of the countries. It is done by
assigning risk points to the political risk components. The minimum number of points
that can be assigned to a component is zero, while the maximum number of points
depends on the fixed weight that component is given in the overall political risk
assessment. In every case the lower the risk point total, the higher the risk, and vice
versa.
The components of the Political Risk along with their weights are given in the
following table:
Table 2. Components (and their respective Weights) of Political Risk

Sequence Component Maximum
Points
(Weight)
A Government Stability 12
B Socioeconomic Conditions 12
C Investment Profile 12
D Internal Conflict 12
E External Conflict 12
F Corruption 6
G Military in Politics 6
H Religious Tensions 6
I Law and Order 6
J Ethnic Tensions 6
K Democratic Accountability 6
L Bureaucracy Quality 4
TOTAL 100
Components of Political Risk:
A. Government Stability – 12 Points

It assesses the ability of the government to carry out its declared program(s) as well
as its ability to stay in office. The risk rating assigned to this factor is the sum of three
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subcomponents, each with a maximum score of 4 points and a minimum score of 0
points. A score of 4 points equates to Very Low Risk and a score of 0 points to Very
High Risk.
The subcomponents are:
1. Government Unity
2. Legislative Strength
3. Popular Support
B. Socioeconomic conditions – 12 Points

It assesses the socioeconomic pressures in the society that could act as a constraint
in government action or fuel social dissatisfaction. The risk rating assigned is the
sum of three subcomponents, each with a maximum score of 4 points and a
minimum score of 0 points. A score of 4 points equates to Very Low Risk and a
score of 0 points to Very High Risk.
1. Unemployment
2. Consumer Confidence
3. Poverty
C. Investment Profile – 12 Points

It assesses the factors affecting the risk to investment. The risk rating assigned is the
sum of three subcomponents, each with a maximum score of 4 points and a
minimum score of 0 points. A score of 4 points equates to Very Low Risk and a
score of 0 points to Very High Risk.
1. Contract Viability/Expropriation
2. Profits Repatriation
3. Payment Delays
D. Internal Conflict – 12 Points

It is an assessment of political violence in the country and its actual or potential
impact on the governance. The risk rating assigned is the sum of three
subcomponents, each with a maximum score of 4 points and a minimum score of 0
points. A score of 4 points equates to Very Low Risk and a score of 0 points to Very
High Risk.
1. Civil War/Coup Threat
2. Terrorism/Political Violence
3. Civil Disorder
E. External Conflict – 12 Points

The external conflict measure is an assessment of the risk to the incumbent
government from foreign action. External conflicts can adversely affect foreign
business in many ways such as restrictions on operations, trade and investment
sanctions, distortions in the allocation of economic resources, violent change in the
structure of society etc. The risk rating assigned is the sum of three subcomponents,
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each with a maximum score of four points and a minimum score of 0 points. A score
of 4 points equates to Very Low Risk and a score of 0 points to Very High Risk.
1. War
2. Cross-Border Conflict
3. Foreign Pressures
F. Corruption – 6 Points
This is an assessment of corruption within the political system of a country. Such
corruption is a threat to foreign investment because it reduces the efficiency of
government and business by enabling people to assume positions of power through
patronage rather than ability, it distorts the economic and financial environment, and
it also introduces an inherent instability into the political process.
G. Military in Politics – 6 Points

The military is not elected by anyone. Therefore, its involvement in politics, even at a
peripheral level, is a diminution of democratic accountability.
A full-scale military regime poses the greatest risk. In the short term a military regime
may provide a new stability and thus reduce business risks. However, in the longer
term the risk will almost certainly rise, partly because the system of governance will
be become corrupt and partly because the continuation of such a government is
likely to create an armed opposition.
H. Religious Tensions – 6 Points
Religious tensions may arise due to the domination of the society and/or governance
by a single religious group, the desire of a single group to dominate governance, the
suppression of religious freedom, the desire of a religious group to express its own
identity, separate from the country as a whole.
The risk involved in these situations may range from inexperienced people imposing
inappropriate policies through civil dissent to civil war.
I. Law and Order – 6 Points

“Law and Order” form a single component, but its two elements are assessed
separately, with each element being scored from zero to three points. To assess the
“Law” element, the strength and impartiality of the legal system are considered, while
the “Order” element is an assessment of popular observance of the law. Thus, a
country can enjoy a high rating – 3 – in terms of its judicial system, but a low rating –
1 – if it suffers from a very high crime
J. Ethnic Tensions – 6 Points This component is an assessment of the degree of

tension within a country attributable to racial, nationality, or language divisions.
Lower ratings are given to countries where racial and nationality tensions are high
because opposing groups are intolerant and unwilling to compromise. Higher ratings
are given to countries where tensions are minimal, even though such differences
may still exist.
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K. Democratic Accountability – 6 Points
This is a measure of how responsive government is to its people, on the basis that
the less responsive it is, the more likely it is that the government will fall, peacefully
in a democratic society, but possibly violently in a non-democratic one.
L. Bureaucracy Quality – 4 Points

The institutional strength and quality of the bureaucracy is another shock absorber
that tends to minimize revisions of policy when governments change. Therefore, high
points are given to countries where the bureaucracy has the strength and expertise
to govern without drastic changes in policy or interruptions in government services.
Countries that lack the cushioning effect of a strong bureaucracy receive low points
because a change in government tends to be traumatic in terms of policy formulation
and day-to-day administrative functions.
Assessing Political Risk

In general terms if the points awarded are less than 50% of the total, that component
can be considered as very high risk. If the points are in the 50-60% range it is high
risk, in the 60%-70% range moderate risk, in the 70-80% range low risk and in the
80-100% range very low risk. However, this is only a general guideline as a better
rating in other components can compensate for a poor risk rating in one component.
The Economic Risk Rating

The overall aim of the Economic Risk Rating is to provide a means of assessing a
country’s current economic strengths and weaknesses. In general terms where its
strengths outweigh its weaknesses it will present a low economic risk and where its
weaknesses outweigh its strengths it will present a high economic risk.
These strengths and weaknesses are assessed by assigning risk points to a pre-set
group of factors, termed economic risk components. The minimum number of points
that can be assigned to each component is zero, while the maximum number of
points depends on the fixed weight that component is given in the overall economic
risk assessment. In every case the lower the risk point total, the higher the risk, and
the higher the risk point total, the lower the risk.
The components of the Economic Risk along with their weights are given below:
Table 3. Components (and their respective Weights) of Economic Risk

Points
(Weight)
A GDP per Capita 5
B Real GDP growth 10
C Annual Inflation Rate 10
D Budget Balance as a percentage of GDP 10
E Current Account as a percentage of GDP 15
TOTAL 50
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Components of Economic Risk
A. GDP per Head – 5 Points
The estimated GDP per capita, converted into US dollars, is expressed as a
percentage of the average GDP per Capita of the world. The risk points are then
assigned according to the following scale:
Table 3.1
GDP per Capita
% of Average GDP Capita of the Points
World
250 plus 5
200.0 to 249.9 4.5
150.0 to 199.9 4
100.0 to 149.9 3.5
75.0 to 99.9 3
50.0 to 74.9 2.5
40.0 to 49.9 2
30.0 to 39.9 1.5
20.0 to 29.9 1
10.0 to 19.9 0.5
Up to 9.9 0
B. Real GDP Growth – 10 Points

The annual change in the estimated GDP, at constant 1990 prices, of a given
country is expressed as a percentage increase or decrease. The risk points are then
assigned according to the following scale:
Table 3.2
Real GDP Growth
Change % Points
6 plus 10
5 to 6 9.5
4 to 5 9
3 to 4 8.5
2.5 to 3 8
2 to 2.5 7.5
1.5 to 2 7
1 to 1.5 6.5
0.5 to 1 6
0 to 0.5 5.5
-0.5 to 0 5
-1 to -0.5 4.5
-1.5 to -1 4
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-2 to -1.5 3.5
-2.5 to -2 3
-3 to -2.5 2.5
-3.5 to -3 2
-4 to -3.5 1.5
-5 to -4 1
-6 to-6 0.5
Below -6 0
C. Annual Inflation Rate – 10 Points

The estimated annual inflation rate is calculated as a percentage change. The risk
points are then assigned according to the following scale:
Table 3.4
Annual Inflation Rate
Change % Points
<2 10
2 to 3 9.5
3 to 4 9
4 to 6 8.5
6 to 8 8
8 to 10 7.5
10 to 12 7
12 to 14 6.5
14 to 16 6
16 to 19 5.5
19 to 22 5
22 to 25 4.5
25 to 31 4
31 to 41 3.5
41 to 51 3
51 to 66 2.5
66 to 81 2
81 to 96 1.5
96 to 111 1
111 to 130 0.5
130 plus 0
D. Budget Balance as a Percentage of GDP – 10 Points

The estimated central government budget balance (including grants) for a given year
in the national currency is expressed as a percentage of the estimated GDP for that
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year in the national currency. The risk points are then assigned according to the
following scale:
Table 3.4
Budget Balance
% of GDP Points
4 plus 10
3 to 4 9.5
2 to 3 9
1 to 2 8.5
0 to 1 8
-1 to 0 7.5
-2 to -1 7
-3 to -2 6.5
-4 to -3 6
-5 to -4 5.5
-6 to -5 5
-7 to -6 4.5
-8 to -7 4
-9 to -8 3.5
-10 to -9 3
-12 to -10 2.5
-15 to -12 2
-20 to -15 1.5
-25 to -20 1
-30 to -25 0.5
Below -30 0
E. Current Account as a Percentage of GDP – 15 Points

The estimated balance on the current account of the balance of payments for a given
year is expressed as a percentage of the GDP. The risk points are then assigned
according to the following scale:
Table 3.5
Current Account
% of GDP Points
10 plus 15
8 to 10 14.5
6 to 8 14
4 to 6 13.5
2 to 4 13
1 to 2 12.5
0 to 1 12
15
-1 to 0 11.5
-2 to -1 11
-4 to -2 10.5
-6 to -4 10
-8 to -6 9.5
-10 to -8 9
-12 to -10 8.5
-14 to -12 8
-16 to -14 7.5
-17 to -16 7
-18 to -17 6.5
-19 to -18 6
-20 to -19 5.5
-21 to -20 5
-22 to -21 4.5
-23 to -22 4
-24 to -23 3.5
-25 to -24 3
-27 to -25 2.5
-30 to -27 2
-32.5 to -30 1.5
-35 to -32.5 1
-40 to -35 0.5
Below -40 0
Assessing Economic Risk

As noted above, points are awarded to each risk component on a scale from zero up
to a pre-set maximum. In general terms if the points awarded are less than 50% of
the total, that component can be considered as very high risk. If the points are in the
50-60% range it is high risk, in the 60%-70% range moderate risk, in the 70-80%
range low risk, and in the 80-100% range very low risk. However, this is only a
general guideline as a better rating in other components can compensate for a poor
risk rating in one component.
Overall, an economic risk rating of 0.0% to 24.5% indicates a Very High Risk; 25.0%
to 29.9% High Risk; 30.0% to 34.9% Moderate Risk; 35.0% to 39.9% Low Risk; and
40.0% or more Very Low Risk. Once again, however, a poor economic risk rating
can be compensated for by a better political and/or financial risk rating.
The Financial Risk Rating

The overall aim of the Financial Risk Rating is to provide a means of assessing a
country’s ability to pay its way. In essence, this requires a system of measuring a
country’s ability to finance its official, commercial, and trade debt obligations. This is
16
done by assigning risk points to a pre-set group of factors, termed financial risk
components. The minimum number of points that can be assigned to each
component is zero, while the maximum number of points depends on the fixed
weight that component is given in the overall financial risk assessment. In every case
the lower the risk point total, the higher the risk, and the higher the risk point total the
lower the risk.
The components of the Economic Risk along with their weights are given in the
following table:
Table 4. Components (and their respective Weights) of Financial Risk

Points
(Weight)
A Foreign Debt as a percentage of GDP 10
B Foreign Debt Service as a percentage of Exports 10
C Current Account as a percentage of Exports 15
D Net International Liquidity (Months of Import Cover) 15
E Exchange Rate Stability 10
TOTAL 50
17
Analysis
The relationship between FDI inflows and country risk is analyzed through panel
data analysis. Panel data analysis, which has two dimensions as time series and
cross section, offers advantages as to have many amounts of observation and
freedom degree, to be able to observe the unobservable effects (unit and time
effects) and assumption on complex behavioral models. Below mentioned two
models are assumed in the econometric analysis under this project. In Model (1), the
country risk components (economic, financial and political risk) in the related
countries are regressed against the FDI inflows, and in Model (2), the Composite
country risk in the related countries is regressed against FDI inflows.
Model I: FDIi = β1ECO-Ri + β2FIN-Ri + β3POL-Ri + ɳi + γi + Ɛi (1)
Model II: FDIi = β1COUN-Ri + ɳi + γi + Ɛi (2)
In the model, ɳi represents the unobservable individual effects, γi represents the

unobservable time effects and Ɛi represents the error terms. In the models, ɳi and γi
are assumed to be constant.
Regression Analysis (Panel Wise)

Model I
1. Argentina- For Argentina, Model 1 regression analysis showed a somewhat
significant relationship between FDI inflow and Political Risk but it showed no
significant relationship between FDI and other 2 components of the Country Risk i.e.
Economic and Financial Risk.
Coefficients Standard Error t Stat

Intercept 39061.59696 32256.37553 1.210972911
Political Risk 624.6043163 525.6528776 2.188244834
Economic Risk 250.7724466 474.9754778 0.52796925
Financial Risk 49.41307881 459.3810586 0.107564467
2. Australia- Model 1 regression analysis showed a very strong and significant

positive relationship between FDI inflow and the Political Risk Rating. However, the
relationship between FDI inflow and other two risk components of the Country Risk
i.e. Economic and Financial Risk was not that significant. Also, it showed a strong
relationship between the FDI and the Risk Components in a multivariate regression
analysis.

Intercept 731976.4473 222197.8372 3.294255499
Political Risk 8056.222013 2218.407272 3.631534261
Economic Risk 4552.881291 3427.375713 1.328386985
Financial Risk 5279.568937 2874.078003 1.836960908
18
3. Austria- Model 1 regression analysis did not show a significant relationship
between the FDI and the components of the Country risk, neither individually, nor in
a Multivariate regression analysis.

Intercept -113074.255 110769.2997 1.020808611
Political Risk 922.9544182 1016.575163 0.907905732
Economic Risk 702.7961656 1077.103291 0.652487251
Financial Risk 406.6227365 4137.527514 0.098276745
4. Belgium- Model 1 regression analysis did not show a significant relationship


Intercept 516294.7903 917352.0626 0.562809865
Political Risk 4336.416119 3746.859095 1.157346996
Economic Risk 96.46162419 4239.759744 0.022751672
Financial Risk 25999.52412 22216.70763 1.170268995
5. Brazil- Model 1 regression analysis did not show a significant relationship between
the FDI and the components of the Country risk, neither individually, nor in a
Multivariate regression analysis.

Intercept 188494.1517 268909.3532 -0.70095796
Political Risk 1906.174682 5110.026716 0.373026363
Economic Risk 2066.809478 2858.129152 0.723133689
Financial Risk 5047.677562 5656.616135 0.89234932
6. China- Model 1 regression analysis showed a significant relationship between FDI

inflow and Economic Risk but it showed no significant relationship between FDI and
other 2 components of the Country Risk i.e. Political and Financial Risk.

Intercept 724825.071 1623877.995 0.446354389
Political Risk 6382.669541 3690.386816 1.729539438
Economic Risk 3580.680704 32128.97077 2.111447103
Financial Risk 578.7438158 33255.89407 0.017402744
19
7. Germany- Model 1 regression analysis did not show a significant relationship
a Multivariate regression analysis

Intercept 348802.9297 839932.4377 0.415274984
Political Risk 2663.423576 5449.920639 -0.48870869
Economic Risk 909.830386 3136.740941 0.290055954
Financial Risk -3979.75418 15415.14764 0.258171655
8. Greece- Model 1 regression analysis did not show a significant relationship

a Multivariate regression analysis

Intercept 3493.577435 19675.9993 0.177555273
Political Risk 105.2051899 137.9698261 0.762523175
Economic Risk 74.91677769 90.97445062 0.823492499
Financial Risk 334.085237 712.3519877 0.468988987
9. Hungary- Model 1 regression analysis showed a significant relationship between

FDI inflow and Economic Risk but it showed no significant relationship between FDI
and other 2 components of the Country Risk i.e. Political and Financial Risk.

Intercept 34842.17365 65998.78074 0.52792
Political Risk -283.76128 797.54601 -0.35579
Economic Risk -2037.42903 766.30718 -2.65876
Financial Risk 2107.38578 1093.55607 1.92709
10. India- Model 1 regression analysis showed a significant relationship between FDI
inflow and Political Risk and between FDI inflow and Economic Risk but it showed no
significant relationship between FDI and Financial Risk.

Intercept -29979.089 374728.9323 -0.0800
Political Risk 492.3142 3455.5097 -2.1425
Economic Risk -1367.8305 3100.3414 -2.4412
Financial Risk 2196.5380 6303.5686 0.3485
20
11. Indonesia- Model 1 regression analysis did not show a significant relationship

Intercept 152627.704 104771.610 1.457
Political Risk -871.692 931.368 -0.936
Economic Risk -305.245 1374.674 -0.222
Financial Risk -2016.133 1890.608 -1.066
12. Ireland- Model 1 regression analysis showed a very strong and significant
positive relationship between FDI inflow and the Financial Risk Rating. However, the
relationship between FDI inflow and other two risk components of the Country Risk
i.e. Economic and Political Risk was not that significant. Also it showed a decent
relationship between the FDI and the Risk Components in a multivariate regression
analysis.

Intercept 1217140.7865 626972.3381 -1.9413
Political Risk -2552.6561 3773.4693 -0.6765
Economic Risk 748.6880 3065.6177 0.2442
Financial Risk -31827.2618 18750.9759 -1.9974
13. Japan- Model 1 regression analysis did not show a significant relationship

Intercept 232238.7046 223952.9539 1.0370
Political Risk -2957.8764 2112.1078 -1.4004
Economic Risk 1038.4706 1351.8223 0.7682
Financial Risk -613.6790 3238.8588 -0.1895
14. Mexico- Model 1 regression analysis showed a somewhat significant relationship

between FDI inflow and Political Risk but it showed no significant relationship
between FDI and other 2 components of the Country Risk i.e. Economic and
Financial Risk.

Intercept -7544.6990 72396.7222 -0.1042
Political Risk -1045.4786 876.1204 -2.1933
Economic Risk -369.4884 1046.1232 -0.3532
Financial Risk 2973.2903 3238.9798 0.9180
21
15. Poland- Model 1 regression analysis did not show a significant relationship

Intercept 33717.1284 95917.9076 0.3515
Political Risk -146.5575 802.5038 -0.1826
Economic Risk 1223.9066 865.0483 1.4148
Financial Risk -1558.6361 1457.5860 -1.0693
16. Portugal- Model 1 regression analysis did not show a significant relationship

Intercept 4822.6841 33705.5179 0.1431
Political Risk -114.4127 181.6267 -0.6299
Economic Risk 219.8974 226.9705 0.9688
Financial Risk 44.6653 1094.0471 0.0408
17. Russia- Model 1 regression analysis did not show a significant relationship

Intercept -241972.82 190712.8447 -1.2688
Political Risk 3201.5185 2701.2541 1.1852
Economic Risk -1292.4784 2508.3470 -0.5153
Financial Risk 3523.5742 3104.1179 1.1351
18. South Africa- Model 1 regression analysis showed a somewhat significant

relationship between FDI inflow and Political Risk but it showed no significant
relationship between FDI and other 2 components of the Country Risk i.e. Economic
and Financial Risk.

Intercept -23020.66 18296.3747 -1.2582
Political Risk 1137.3486 549.1678 -2.0710
Economic Risk -641.3020 383.6403 -1.6716
Financial Risk -626.3494 803.8149 -0.7792
22
19. Spain- Model 1 regression analysis did not show a significant relationship

Intercept 332169.6194 184177.6425 1.8035
Political Risk 1527.9794 1187.9508 1.2862
Economic Risk -863.9591 1270.6814 -0.6799
Financial Risk -12410.4306 5248.2929 -2.3647
20. Switzerland- Model 1 regression analysis did not show a significant relationship

Intercept 212842.0671 706937.0878 0.3011
Political Risk -3687.6499 8684.2923 -0.4246
Economic Risk 1987.2312 4465.3794 0.4450
Financial Risk 1619.3483 1792.5301 0.9034
21. Turkey- Model 1 regression analysis did not show a significant relationship

Intercept -19652.49 29635.0539 -0.6631
Political Risk 172.8038 300.8169 0.5744
Economic Risk 504.8348 497.8778 1.0140
Financial Risk 148.9455 925.3617 0.1610
22. United Kingdom- Model 1 regression analysis showed a somewhat significant

relationship between FDI inflow and Financial Risk but it showed no significant
and Political Risk.

Intercept 667788.7838 716766.2211 0.9317
Political Risk 8123.1775 7664.2335 1.0599
Economic Risk -1618.5120 6898.6029 -0.2346
Financial Risk -40343.9423 17594.0211 -2.2930
23
23. United States- Model 1 regression analysis showed a somewhat significant
relationship between FDI inflow and Financial Risk but it showed no significant
and Political Risk.

Intercept 2421872.0333 1845062.8455 1.3126
Political Risk 16693.8214 11319.6937 1.4748
Economic Risk 16611.2148 9420.4548 1.7633
Financial Risk -121666.8982 44718.4370 -2.7207
Model II
1. Argentina- Model 2 regression analysis did not show a significant relationship
between FDI and Composite Country Risk Rating.
Regression Statistics
Multiple R 0.107636442
R Square 0.115856037
Adjusted R Square -0.07827025
Standard Error 3858.941254
Observations 13
2. Australia- Model 2 regression analysis did not show a significant relationship

Multiple R 0.6352
R Square 0.4035
Adjusted R Square 0.3493
Observations 13
3. Austria- Model 2 regression analysis did not show a significant relationship

R Square 0.533587664
Observations 13
4. Belgium- Model 2 regression analysis did not show a significant relationship

24
Multiple R 0.4265
R Square 0.5819
Observations 13
5. Brazil- Model 2 regression analysis did not show a significant relationship between
FDI and Composite Country Risk Rating.
Multiple R 0.1411
R Square 0.5199
Observations 13
6. China- Model 2 regression analysis showed a significant relationship between FDI

and Composite Country Risk Rating.
Multiple R 0.5361
R Square 0.7874
Observations 13
7. Germany- Model 2 regression analysis did not show a significant relationship

Multiple R 0.1664
R Square 0.3277
Observations 13
8. Greece- Model 2 regression analysis did not show a significant relationship

25
Multiple R 0.2485
R Square 0.0617
Observations 13
9. Hungary- Model 2 regression analysis did not show a significant relationship

Multiple R 0.0971
R Square 0.5094
Observations 13
10. India- Model 2 regression analysis showed a significant relationship between FDI
and Composite Country Risk Rating.
Multiple R 0.1235
R Square 0.8153
Observations 13
11. Indonesia- Model 2 regression analysis showed a significant relationship

Multiple R 0.3663
R Square 0.8342
Observations 13
12. Ireland- Model 2 regression analysis did not show a significant relationship
26
R Square 0.056771404
Observations 13
13. Japan- Model 2 regression analysis did not show a significant relationship
Multiple R 0.3718
R Square 0.4383
Observations 13
14. Mexico- Model 2 regression analysis did not show a significant relationship
Multiple R 0.2396
R Square 0.6574
Observations 13
15. Poland- Model 2 regression analysis did not show a significant relationship
Multiple R 0.0396
R Square 0.6016
Observations 13
16. Portugal- Model 2 regression analysis did not show a significant relationship
27
R Square 0.553044545
Observations 13
17. Russia- Model 2 regression analysis did not show a significant relationship
Multiple R 0.3135
R Square 0.5983
Observations 13
18. South Africa- Model 2 regression analysis showed a significant relationship

Multiple R 0.5840
R Square 0.8475
Observations 13
19. Spain- Model 2 regression analysis did not show a significant relationship
Multiple R 0.2902
R Square 0.6842
Observations 13
20. Switzerland- Model 2 regression analysis did not show a significant relationship
28
Multiple R 0.1517
R Square 0.2300
Observations 13
21. Turkey- Model 2 regression analysis did not show a significant relationship
Multiple R 0.1810
R Square 0.3277
Observations 13
22. United Kingdom- Model 2 regression analysis did not show a significant
relationship between FDI and Composite Country Risk Rating.
Multiple R 0.4266
R Square 0.6820
Observations 13
23. United States- Model 2 regression analysis did not show a significant relationship
Multiple R 0.3393
R Square 0.6151
Observations 13
29
Conclusion
In this study, the relationship between country risk and FDI inflows is analyzed.
According to the theoretic studies, foreign investors (firms) try to avoid risk and
uncertainty. Therefore there is a negative relationship between risk and investment
preferences. In the empirical literature review in which the studies conducted in this
subject is mentioned, it could be seen that the theoretic approach that FDI is affected
from country risk in negative means is relatively supported.
Additionally empirical literature findings include that financial risk has weak or
meaningless, and economic and especially political risk have powerful effects on FDI
inflows. With the analysis result in this project report, parallel results are obtained
with the prior studies. The opposite directed relationship between risk and
investment preferences is brought forward with this study in case of the Developing
Countries like India and Indonesia. On the other hand, it was found that in case of
the developed countries (especially European Countries), no such meaningful
relationship was found.
In this study, it is also found that financial risk and economic risk does not have
meaningful effect on FDI inflows in case of most of the countries under the analysis,
while the decrease in level of political risk affect FDI inflows in positive ways for
some of the countries in the consideration set.
According to the findings, it could be said that developing countries should establish
more quality corporate structure and consistent macroeconomic structure in order to
attract more FDI. Therefore, the policies which are implemented in this purpose
make developing countries more attractive for foreign investors as positively
affecting the risk perception.
30
Appendices
Appendix 1. Annual data for the year of 2005-2017 belonging to 23 Countries
1.1 GDP per Capita (as a % of Global Average GDP per Capita)
Countries 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 47% 55% 67% 84% 76% 96% 119% 121% 121% 114% 128% 118% 134%
Australia 317% 336% 382% 462% 398% 484% 582% 633% 634% 581% 528% 465% 502%
Austria 358% 379% 437% 482% 447% 437% 479% 453% 473% 482% 412% 417% 441%
Belgium 345% 362% 414% 452% 419% 414% 445% 417% 434% 442% 376% 385% 404%
Brazil 44% 55% 68% 82% 80% 105% 123% 115% 114% 112% 82% 81% 92%
China 16% 20% 25% 32% 36% 43% 53% 59% 66% 72% 75% 76% 82%
Germany 324% 340% 390% 426% 389% 390% 437% 411% 434% 448% 385% 394% 415%
Greece 210% 231% 269% 298% 277% 251% 242% 207% 204% 203% 169% 167% 174%
Hungary 105% 107% 130% 147% 122% 122% 132% 120% 127% 132% 116% 120% 133%
Indonesia 12% 15% 17% 20% 21% 29% 34% 34% 34% 33% 31% 33% 36%
India 7% 7% 9% 9% 10% 13% 14% 13% 14% 15% 15% 16% 18%
Ireland 475% 507% 572% 571% 486% 454% 487% 457% 483% 517% 576% 598% 647%
Japan 347% 330% 329% 367% 381% 415% 449% 453% 377% 355% 322% 363% 358%
Mexico 75% 83% 88% 91% 73% 84% 92% 93% 97% 99% 87% 79% 83%
Poland 75% 84% 105% 131% 108% 117% 130% 123% 129% 134% 117% 116% 129%
Portugal 175% 185% 212% 231% 215% 210% 216% 192% 202% 206% 180% 185% 197%
Russia 50% 65% 85% 109% 80% 100% 134% 144% 149% 132% 87% 82% 100%
South Africa 49% 51% 56% 53% 54% 68% 74% 70% 64% 60% 54% 49% 57%
Spain 247% 266% 305% 332% 302% 287% 297% 266% 272% 276% 241% 248% 263%
Switzerland 513% 537% 593% 676% 652% 696% 825% 779% 794% 808% 765% 745% 748%
Turkey 69% 75% 91% 101% 84% 100% 106% 109% 117% 113% 102% 101% 98%
United Kingdom 389% 413% 468% 436% 357% 363% 386% 390% 398% 436% 413% 377% 370%
United States 413% 433% 448% 451% 438% 451% 464% 480% 492% 510% 526% 537% 555%
1.2 Real GDP Growth (Annual)

Countries 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 8.85% 8.05% 9.01% 4.06% -5.92% 10.13% 6.00% -1.03% 2.41% -2.51% 2.73% -1.82% 2.85%
Australia 2.99% 2.78% 4.38% 2.53% 1.87% 2.47% 2.67% 3.93% 2.22% 2.54% 2.51% 2.57% 2.24%
Austria 2.45% 3.66% 3.66% 1.17% -3.65% 1.88% 3.03% 0.62% -0.02% 0.78% 1.10% 2.04% 2.72%
Belgium 2.10% 2.51% 3.44% 0.78% -2.25% 2.74% 1.80% 0.23% 0.20% 1.25% 1.72% 1.49% 1.69%
Brazil 3.42% 3.96% 5.94% 5.02% -0.05% 7.54% 4.09% 1.86% 2.98% 0.51% -3.55% -3.44% 1.05%
China 11.40% 12.72% 14.23% 9.65% 9.40% 10.64% 9.54% 7.86% 7.76% 7.31% 6.92% 6.70% 6.90%
Germany 0.87% 3.89% 3.37% 0.81% -5.56% 3.94% 3.72% 0.69% 0.61% 2.18% 1.48% 2.16% 2.46%
Greece 0.60% 5.65% 3.27% -0.34% -4.30% -5.48% -9.13% -7.30% -3.24% 0.74% -0.44% -0.19% 1.51%
Hungary 4.49% 4.04% 0.47% 0.64% -6.56% 0.59% 1.67% -1.51% 2.18% 4.12% 3.48% 2.18% 4.37%
India 9.28% 9.26% 9.80% 3.89% 8.48% 10.26% 6.64% 5.46% 6.39% 7.41% 8.15% 7.11% 6.68%
Indonesia 5.69% 5.50% 6.35% 6.01% 4.70% 6.38% 6.17% 6.03% 5.56% 5.01% 4.88% 5.03% 5.07%
Ireland 5.68% 5.05% 5.26% -4.40% -5.05% 1.88% 3.68% 0.19% 1.34% 8.75% 25.01% 4.91% 7.20%
Japan 1.66% 1.42% 1.65% -1.09% -5.42% 4.19% -0.12% 1.50% 2.00% 0.37% 1.35% 0.96% 1.72%
Mexico 2.55% 4.49% 2.28% 0.88% -5.04% 5.13% 3.67% 3.39% 1.62% 2.81% 3.31% 2.63% 2.31%
Poland 3.49% 6.18% 7.03% 4.25% 2.82% 3.61% 5.02% 1.61% 1.39% 3.32% 3.84% 3.06% 4.81%
Portugal 0.77% 1.55% 2.49% 0.20% -2.98% 1.90% -1.83% -4.03% -1.13% 0.89% 1.82% 1.93% 2.80%
Russia 6.38% 8.15% 8.54% 5.25% -7.82% 4.50% 4.14% 3.66% 1.79% 0.74% -2.83% -0.10% 1.55%
South Africa 5.28% 5.60% 5.36% 3.19% -1.54% 3.04% 3.28% 2.21% 2.49% 1.85% 1.28% 0.57% 1.32%
Spain 3.72% 4.17% 3.77% 1.12% -3.57% 0.01% -1.00% -2.93% -1.71% 1.38% 3.64% 3.17% 2.98%
Switzerland 3.16% 4.08% 4.11% 2.11% -2.23% 2.87% 1.84% 1.01% 1.88% 2.49% 1.27% 1.59% 1.67%
Turkey 8.93% 7.30% 5.01% 0.93% -4.85% 8.88% 10.66% 4.74% 8.92% 4.97% 5.91% 3.22% 7.38%
United Kingdom 3.15% 2.55% 2.55% -0.35% -4.25% 1.71% 1.64% 1.45% 2.05% 2.95% 2.35% 1.79% 1.74%
United States 3.51% 2.85% 1.88% -0.14% -2.54% 2.56% 1.55% 2.25% 1.84% 2.45% 2.88% 1.57% 2.22%
31
1.3 Annual Inflation Rate
Countries 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 9.60% 10.90% 8.80% 8.60% 6.30% 10.50% 9.80% 10.00% 10.62% 38.00% 26.00% 41.00% 25.68%
Australia 2.66% 3.55% 2.36% 4.35% 1.77% 2.86% 3.33% 1.71% 2.45% 2.51% 1.48% 1.28% 1.97%
Austria 2.10% 1.69% 2.20% 3.23% 0.40% 1.69% 3.55% 2.57% 2.12% 1.46% 0.80% 0.97% 2.23%
Belgium 2.54% 2.33% 1.82% 4.49% -0.01% 2.33% 3.35% 2.63% 1.25% 0.49% 0.62% 1.77% 2.22%
Brazil 6.87% 4.18% 3.64% 5.68% 4.89% 5.04% 6.64% 5.40% 6.20% 6.33% 9.03% 8.74% 3.45%
China 1.78% 1.65% 4.82% 5.93% -0.73% 3.17% 5.53% 2.61% 2.57% 2.06% 1.54% 2.12% 1.52%
Germany 1.95% 1.79% 2.26% 2.76% 0.24% 1.15% 2.49% 2.12% 1.60% 0.78% 0.13% 0.38% 1.70%
Greece 3.49% 3.31% 2.99% 4.23% 1.35% 4.70% 3.12% 1.03% -0.85% -1.39% -1.09% 0.01% 1.14%
Hungary 3.56% 3.93% 7.96% 6.04% 4.21% 4.86% 3.93% 5.65% 1.73% -0.23% -0.06% 0.39% 2.35%
India 3.67% 6.75% 5.93% 9.19% 10.62% 9.51% 9.26% 9.91% 9.43% 5.93% 4.90% 4.52% 3.59%
Indonesia 10.45% 13.11% 6.41% 10.23% 4.39% 5.13% 5.36% 4.28% 6.41% 6.39% 6.36% 3.53% 3.81%
Ireland 2.18% 2.68% 2.88% 3.12% -1.69% -1.61% 1.21% 1.90% 0.53% 0.30% -0.03% -0.21% 0.26%
Japan -0.56% 0.23% 0.07% 1.38% -1.36% -0.61% -0.28% -0.03% 0.35% 2.75% 0.81% -0.12% 0.48%
Mexico 3.99% 3.63% 3.97% 5.12% 5.30% 4.16% 3.41% 4.11% 3.81% 4.02% 2.72% 2.82% 6.04%
Poland 2.18% 1.28% 2.46% 4.16% 3.80% 2.58% 4.24% 3.56% 0.99% 0.05% -0.87% -0.66% 2.08%
Portugal 2.13% 3.05% 2.42% 2.65% -0.90% 1.39% 3.55% 2.78% 0.44% -0.16% 0.51% 0.64% 1.56%
Russia 12.69% 9.67% 9.01% 14.11% 11.65% 6.85% 8.44% 5.07% 6.75% 7.82% 15.53% 7.04% 3.68%
South Africa 3.35% 4.62% 7.15% 11.53% 6.60% 4.26% 4.99% 5.62% 5.76% 6.09% 4.58% 6.34% 5.27%
Spain 3.38% 3.56% 2.84% 4.13% -0.24% 2.04% 3.05% 2.44% 1.53% -0.19% -0.63% -0.34% 2.04%
Switzerland 1.17% 1.06% 0.73% 2.43% -0.48% 0.69% 0.23% -0.69% -0.22% -0.01% -1.14% -0.43% 0.53%
Turkey 8.18% 9.60% 8.76% 10.44% 6.25% 8.57% 6.47% 8.89% 7.49% 8.85% 7.67% 7.78% 11.14%
United Kingdom 2.04% 2.35% 2.31% 3.60% 2.18% 3.30% 4.46% 2.80% 2.57% 1.47% 0.05% 0.64% 2.69%
United States 3.37% 3.22% 2.87% 3.81% -0.32% 1.64% 3.14% 2.07% 1.47% 1.61% 0.12% 1.27% 2.14%
1.4 Budget Balance as a percentage of GDP

Countries 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 1.56% 1.83% 1.82% 0.18% -3.89% -4.75% -3.32% -2.53% -1.87% 0.18% -0.13% -1.10% -1.09%
Australia 1.69% 1.64% 0.71% -3.75% -5.50% -4.38% -4.56% -2.86% -2.83% -2.36% -2.24% -1.44% -1.44%
Austria -2.51% -2.54% -1.35% -1.50% -5.33% -4.44% -2.55% -2.19% -1.95% -2.73% -1.05% -1.58% -0.80%
Belgium -2.76% 0.22% 0.07% -1.10% -5.38% -4.00% -4.19% -4.23% -3.13% -3.10% -2.45% -2.43% -0.88%
Brazil -2.78% -4.50% -4.67% -2.74% -4.48% -2.96% -2.54% -2.32% -3.31% -5.88% -7.75% -9.62% -7.75%
China -0.47% 0.82% 2.94% 1.26% 0.13% 1.48% 1.48% 1.27% 0.76% 0.69% -0.87% 0.69% 0.76%
Germany -3.42% -1.72% 0.19% -0.18% -3.23% -4.22% -0.96% -0.03% -0.14% 0.57% 0.78% 0.91% 1.04%
Greece -6.19% -5.95% -6.71% -10.18% -15.14% -11.20% -10.28% -8.87% -13.15% -3.56% -5.61% 0.53% 0.77%
Hungary -7.77% -9.27% -5.02% -3.68% -4.54% -4.48% -5.41% -2.40% -2.61% -2.61% -1.90% -1.65% -2.21%
India -3.96% -3.32% -2.54% -5.99% -6.46% -4.80% -5.91% -4.93% -4.48% -4.10% -3.89% -3.52% -3.53%
Indonesia -0.34% -0.34% -0.34% -0.34% -0.34% -0.34% -1.04% -1.34% -2.07% -1.86% -2.77% -2.40% -2.40%
Ireland 1.59% 2.79% 0.29% -6.99% -13.80% -32.02% -12.78% -8.06% -6.13% -3.61% -1.91% -0.54% -0.25%
Japan -4.41% -2.97% -2.76% -4.12% -9.78% -9.15% -9.09% -8.30% -7.64% -5.38% -3.55% -3.42% 0.00%
Mexico -0.72% -0.97% -0.71% -0.93% -3.08% -2.97% -5.30% -4.72% -4.55% -4.21% -5.16% -2.70% 0.00%
Poland -3.96% -3.56% -1.85% -3.60% -7.25% -7.34% -4.83% -3.71% -4.11% -3.68% -2.70% -2.24% -1.41%
Portugal -6.19% -4.33% -3.01% -3.77% -9.81% -11.17% -7.38% -5.66% -4.84% -7.17% -4.40% -1.97% -2.96%
Russia 3.15% 3.15% 3.15% 3.15% 3.15% 3.15% 3.15% 1.95% -0.19% -2.33% -1.47% -1.47% -1.47%
South Africa -2.31% 0.15% 0.83% -1.74% -3.85% -3.28% -2.48% -3.60% -3.56% -3.84% -3.78% -3.52% -3.99%
Spain 1.21% 2.20% 1.92% -4.42% -10.95% -9.38% -9.64% -10.47% -6.99% -5.97% -5.27% -4.47% -3.08%
Switzerland -0.67% 0.86% 1.61% 1.93% 0.50% 0.36% 0.74% 0.38% -0.43% -0.21% 0.65% 0.38% 1.28%
Turkey 0.00% 0.00% 0.00% 0.00% -6.17% -2.68% -0.74% -0.19% 0.21% 0.24% 1.31% 0.00% 0.00%
United Kingdom -3.15% -2.77% -2.64% -5.15% -10.08% -9.29% -7.50% -8.10% -5.37% -5.38% -4.23% -2.93% -1.80%
United States -4.45% -3.33% -3.99% -7.37% -13.13% -12.43% -11.00% -9.22% -5.82% -5.17% -4.63% -5.30% -4.15%
32
1.5 Current Account as a percentage of GDP
Countries 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 2.77% 2.77% 2.09% 1.48% 2.16% -0.38% -1.01% -0.37% -2.14% -1.62% -2.73% -2.72% -4.96%
Australia -5.95% -5.87% -6.71% -4.78% -4.66% -3.68% -3.08% -4.30% -3.38% -3.07% -4.65% -3.29% -2.57%
Austria 2.26% 3.29% 3.80% 4.49% 2.60% 2.86% 1.63% 1.48% 1.94% 2.47% 1.73% 2.48% 1.95%
Belgium 2.09% 1.90% 1.96% -1.00% -1.09% 1.75% -1.07% -0.05% -0.32% -0.87% -1.03% -0.59% 0.73%
Brazil 1.53% 1.17% 0.08% -1.78% -1.48% -3.60% -2.92% -3.40% -3.22% -4.14% -2.88% -1.32% -0.35%
China 5.79% 8.42% 9.95% 9.15% 4.77% 3.91% 1.80% 2.52% 1.55% 2.26% 2.76% 1.82% 1.36%
Germany 4.60% 5.67% 6.74% 5.59% 5.74% 5.63% 6.12% 7.02% 6.71% 7.44% 8.91% 8.52% 7.96%
Greece -8.87% -11.49% -15.19% -15.11% -12.35% -11.38% -10.00% -3.83% -2.04% -1.63% -0.81% -1.73% -1.75%
Hungary -6.98% -7.05% -7.09% -6.96% -0.81% 0.30% 0.76% 1.74% 3.77% 1.47% 2.71% 6.17% 3.18%
India -1.31% -1.06% -0.66% -2.56% -2.08% -3.42% -3.44% -5.07% -2.54% -1.36% -1.09% -0.55% -1.51%
Indonesia 0.04% 2.72% 2.22% 0.02% 1.83% 0.69% 0.20% -2.66% -3.17% -3.08% -2.03% -1.83% -1.59%
Ireland -3.54% -5.35% -6.51% -6.24% -4.65% -1.20% -1.64% -3.39% 1.55% 1.07% 4.40% -4.16% 8.47%
Japan 3.58% 3.88% 4.71% 2.83% 2.78% 3.87% 2.08% 1.01% 0.90% 0.79% 3.11% 3.84% 4.04%
Mexico 0.00% -0.38% -0.95% -1.53% -0.88% -0.50% -1.06% -1.55% -2.44% -1.87% -2.59% -2.22% -1.64%
Poland -2.61% -3.99% -6.34% -6.67% -3.95% -5.37% -5.20% -3.72% -1.27% -2.08% -0.57% -0.53% 0.16%
Portugal -9.88% -10.68% -9.72% -12.12% -10.42% -10.15% -5.98% -1.78% 1.58% 0.08% 0.12% 0.59% 0.45%
Russia 10.32% 8.89% 5.26% 5.85% 3.76% 4.25% 4.70% 3.22% 1.44% 2.70% 4.93% 1.94% 2.11%
South Africa -3.13% -4.48% -5.38% -5.54% -2.73% -1.50% -2.22% -5.14% -5.79% -5.08% -4.60% -2.78% -2.37%
Spain -7.49% -8.98% -9.63% -9.25% -4.28% -3.92% -3.18% -0.22% 1.52% 1.08% 1.16% 2.26% 1.84%
Switzerland 13.44% 14.30% 10.09% 2.29% 7.29% 14.67% 7.82% 10.66% 11.61% 8.52% 11.24% 9.43% 6.68%
Turkey -4.16% -5.65% -5.38% -4.99% -1.63% -5.64% -8.87% -5.51% -6.69% -4.67% -3.73% -3.84% -5.50%
United Kingdom -2.04% -3.05% -3.58% -4.23% -3.55% -3.38% -1.96% -3.77% -5.15% -4.93% -4.91% -5.22% -3.34%
United States -5.72% -5.83% -4.92% -4.63% -2.58% -2.88% -2.87% -2.64% -2.08% -2.08% -2.24% -2.31% -2.31%
1.6 Foreign Debt as a percentage of GDP

Country Name 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 22.40% 23.60% 30.40% 34.30% 25.70% 21.00% 23.00% 24.20% 25.90% 29.00% 26.10% 34.70% 36.20%
Australia 91.00% 92.26% 93.99% 104.40% 97.94% 92.94% 92.25% 97.58% 107.74% 117.93% 128.99% 126.19% 117.83%
Austria 184.00% 187.11% 195.87% 205.60% 202.54% 203.94% 198.96% 195.14% 187.05% 182.85% 171.94% 164.64% 154.34%
Belgium 292.56% 295.00% 302.50% 323.28% 296.98% 279.17% 285.86% 275.18% 244.88% 259.00% 259.08% 279.23% 258.84%
Brazil 21.99% 18.29% 17.81% 16.29% 17.73% 16.43% 15.86% 18.26% 19.80% 23.13% 30.79% 30.89% 26.97%
China 12.48% 11.76% 10.49% 8.22% 8.78% 12.09% 13.92% 13.33% 15.44% 16.87% 12.03% 12.69% 14.01%
Germany 145.23% 149.00% 150.22% 151.45% 152.97% 160.86% 162.50% 165.08% 149.95% 152.96% 149.93% 150.86% 144.93%
Greece 114.40% 116.83% 133.60% 151.60% 175.80% 185.40% 188.10% 234.40% 237.30% 237.50% 249.00% 244.30% 224.02%
Hungary 96.00% 104.70% 119.27% 154.98% 172.78% 160.92% 180.72% 159.07% 144.40% 147.80% 132.40% 121.30% 103.36%
India 15.09% 17.47% 17.06% 19.25% 19.48% 17.72% 18.51% 21.74% 23.30% 22.71% 23.05% 20.27% 19.76%
indonesia 40.10% 36.40% 32.65% 30.37% 32.09% 26.79% 25.26% 27.49% 29.16% 32.93% 36.09% 34.32% 34.75%
Ireland 682.12% 753.91% 812.13% 1001.40% 1082.68% 1091.47% 1063.27% 950.11% 923.73% 948.52% 866.56% 817.33% 724.69%
Japan 32.00% 34.16% 37.90% 38.80% 39.20% 42.30% 49.20% 52.16% 58.90% 64.10% 67.00% 74.53% 74.56%
Mexico 20.08% 18.07% 18.73% 17.84% 21.43% 23.17% 24.86% 29.49% 32.67% 34.34% 37.32% 40.62% 40.50%
Poland 43.25% 46.25% 47.90% 56.42% 58.26% 65.49% 70.74% 70.10% 69.00% 72.00% 71.00% 76.00% 66.00%
Portugal 175.40% 185.60% 195.10% 202.70% 225.51% 226.73% 218.80% 237.70% 226.94% 235.92% 222.06% 214.14% 209.38%
Russia 33.51% 32.39% 32.76% 25.97% 34.36% 28.28% 27.33% 27.62% 30.14% 27.54% 35.15% 42.08% 32.04%
south africa 20.00% 22.20% 25.70% 26.12% 27.84% 29.62% 28.37% 35.74% 37.92% 41.35% 39.90% 48.10% 49.54%
spain 130.50% 136.58% 144.29% 147.95% 160.74% 156.38% 160.33% 166.17% 160.17% 168.00% 168.40% 166.90% 166.60%
switzerland 220.00% 247.00% 296.00% 223.20% 222.20% 215.60% 219.60% 237.14% 232.40% 251.00% 256.30% 261.91% 268.75%
Turkey 35.00% 38.62% 38.84% 38.40% 43.77% 39.31% 37.03% 39.06% 41.44% 43.86% 47.05% 47.86% 54.13%
United Kingdom 290.00% 314.40% 368.80% 401.20% 371.10% 373.80% 375.50% 359.00% 318.30% 310.60% 288.69% 309.28% 312.03%
United States 75.00% 81.00% 92.90% 93.50% 94.60% 96.80% 99.80% 96.81% 98.23% 98.49% 97.21% 96.35% 97.68%
33
1.7 Foreign Debt Service as a percentage of Exports
Country Name 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 10.75% 13.22% 9.91% 2.52% 8.55% 4.48% 4.18% 5.86% 7.01% 10.47% 15.63% 25.06% 13.36%
Australia 6.17% 8.18% 6.12% 5.39% 7.09% 10.25% 11.78% 14.22% 13.57% 17.15% 30.86% 14.54% 10.43%
Austria 2.91% 2.01% 1.19% 1.02% 1.56% 1.44% 2.94% 3.42% 5.21% 5.51% 9.04% 9.64% 10.66%
Belgium 7.89% 6.14% 5.23% 3.90% 3.82% 2.47% 2.31% 2.09% 2.40% 2.74% 3.85% 3.52% 3.71%
Brazil 46.19% 38.25% 28.05% 23.47% 23.49% 18.37% 18.73% 15.69% 28.09% 22.48% 38.10% 51.25% 36.19%
China 3.38% 2.63% 2.37% 2.07% 2.93% 2.98% 2.91% 3.08% 3.03% 3.01% 4.89% 6.83% 7.62%
germany 5.56% 7.68% 8.02% 8.18% 8.34% 7.88% 8.66% 8.57% 7.99% 7.10% 7.14% 10.04% 11.06%
Greece 15.12% 14.77% 13.38% 5.41% 6.84% 8.61% 10.44% 9.42% 10.99% 17.56% 14.41% 15.34% 16.86%
Hungary 9.55% 8.50% 10.38% 6.14% 4.22% 12.51% 0.39% 0.38% 0.66% 1.38% 1.91% 5.37% 1.48%
India 14.93% 8.64% 15.59% 9.66% 6.02% 6.82% 6.41% 6.70% 8.07% 18.63% 11.21% 17.26% 10.07%
Indonesia 20.90% 25.75% 19.06% 14.48% 19.57% 18.73% 14.41% 16.81% 20.36% 30.72% 31.99% 39.84% 33.96%
Ireland 5.42% 4.30% 4.71% 5.20% 5.80% 4.91% 4.72% 4.85% 4.94% 5.40% 6.21% 7.81% 7.95%
Japan 5.01% 4.41% 3.31% 2.55% 2.07% 2.67% 3.45% 8.55% 3.66% 4.33% 5.30% 4.96% 3.26%
Mexico 15.51% 19.90% 12.73% 11.09% 12.67% 10.11% 11.21% 17.82% 10.16% 11.50% 13.16% 19.44% 14.01%
Poland 24.74% 27.61% 15.45% 18.99% 18.11% 18.71% 14.68% 7.60% 7.68% 8.96% 12.93% 13.07% 11.31%
Portugal 9.52% 6.83% 5.33% 4.50% 5.77% 4.52% 6.91% 16.03% 11.44% 22.06% 16.62% 10.69% 12.35%
Russia 14.19% 13.20% 8.69% 13.85% 24.22% 11.61% 7.25% 7.85% 7.99% 14.48% 23.36% 19.04% 26.00%
South Africa 6.42% 8.68% 4.24% 6.94% 5.95% 5.65% 4.76% 7.86% 10.61% 6.61% 7.77% 13.11% 12.19%
spain 13.74% 8.70% 14.47% 9.57% 6.91% 7.41% 6.61% 7.37% 8.85% 18.08% 11.14% 16.16% 10.69%
Switzerland 6.77% 5.92% 34.08% 15.52% 14.67% 4.74% 3.81% 13.20% 0.54% 0.65% 7.25% 4.44% 1.87%
Turkey 37.40% 32.87% 32.33% 30.13% 41.53% 36.51% 30.84% 26.94% 29.65% 25.83% 27.44% 39.37% 40.22%
united kingdom 13.80% 12.40% 10.15% 9.87% 12.42% 9.74% 8.39% 8.82% 9.23% 9.49% 12.62% 14.57% 14.44%
United States 2.56% 2.12% 2.24% 1.98% 2.34% 2.34% 3.89% 3.64% 3.16% 4.17% 3.82% 3.87% 5.94%
1.8 Current Account as a percentage of Exports

Countries 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 11.95% 13.12% 10.24% 7.64% 11.66% -2.01% -5.54% -2.13% -13.31% -10.75% -19.35% -18.21% -34.62%
Australia -29.90% -29.06% -33.22% -20.78% -23.54% -17.20% -14.33% -21.50% -16.10% -15.35% -24.22% -15.52% -11.84%
Austria 4.65% 6.48% 7.22% 8.44% 5.75% 5.58% 3.02% 2.74% 3.63% 4.63% 3.26% 4.74% 3.63%
Belgium 2.84% 2.51% 2.53% -1.25% -1.57% 2.29% -1.31% -0.06% -0.39% -1.05% -1.27% -0.71% 0.85%
Brazil 10.07% 8.13% 0.60% -13.19% -13.58% -33.03% -25.17% -28.57% -27.52% -37.64% -22.33% -10.56% -2.89%
China 17.13% 23.39% 28.11% 28.15% 19.47% 14.87% 6.79% 9.92% 6.33% 9.38% 12.55% 9.24% 8.05%
Germany -2.13% -3.62% -3.91% -5.99% -1.95% -1.19% -0.58% 1.46% 2.59% 2.41% 2.44% 3.53% 3.35%
Greece 12.20% 13.76% 15.67% 12.85% 15.19% 13.31% 13.66% 15.26% 14.78% 16.32% 19.00% 18.56% 16.94%
Hungary -41.64% -54.20% -67.51% -64.57% -65.00% -51.49% -39.22% -13.34% -6.71% -5.03% -2.56% -5.75% -5.30%
India -11.17% -9.53% -9.10% -8.78% -1.09% 0.37% 0.88% 2.01% 4.40% 1.68% 3.04% 6.88% 3.61%
Indonesia -6.62% -4.88% -3.14% -10.53% -10.10% -15.13% -14.04% -20.69% -10.00% -5.91% -5.51% -2.85% -7.95%
Ireland 0.12% 9.19% 7.90% 0.07% 7.75% 2.84% 0.76% -10.81% -13.26% -13.00% -9.58% -9.58% -7.79%
Japan -4.45% -6.77% -8.06% -7.42% -4.99% -1.17% -1.58% -3.25% 1.50% 0.97% 3.60% -3.46% 7.06%
Mexico 25.57% 24.40% 26.91% 16.26% 22.24% 25.80% 13.96% 6.97% 5.66% 4.51% 17.67% 23.85% 22.82%
Poland 0.00% -1.39% -3.45% -5.52% -3.24% -1.68% -3.42% -4.80% -7.80% -5.86% -7.49% -5.98% -4.36%
Portugal -7.54% -10.53% -16.42% -17.60% -10.62% -13.39% -12.21% -8.38% -2.74% -4.37% -1.15% -1.02% 0.29%
Russia -37.00% -35.72% -31.35% -38.97% -38.45% -33.95% -17.43% -4.72% 4.00% 0.20% 0.30% 1.48% 1.05%
South Africa 31.75% 28.49% 18.85% 20.24% 14.57% 15.74% 16.79% 11.97% 5.58% 9.96% 17.18% 7.55% 8.12%
Spain -11.86% -15.29% -17.24% -15.56% -9.78% -5.24% -7.28% -17.31% -18.68% -16.13% -15.23% -9.06% -7.95%
Switzerland -30.32% -36.06% -37.47% -36.56% -18.85% -15.37% -11.00% -0.72% 4.72% 3.30% 3.53% 6.83% 5.36%
Turkey 24.98% 25.31% 16.46% 3.65% 12.74% 22.92% 11.94% 15.91% 16.15% 13.25% 18.07% 14.33% 10.29%
United Kingdom -19.81% -26.04% -25.38% -21.89% -7.21% -27.65% -39.78% -23.25% -30.00% -19.62% -16.01% -17.45% -22.18%
United States -8.26% -11.42% -14.38% -15.84% -13.55% -11.99% -6.45% -12.65% -17.34% -17.48% -17.92% -18.45% -11.10%
34
1.9 Net International Liquidity (Months of Import Cover)
Countries 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 8.47 7.99 6.96 6.39 8.19 5.85 5.50 4.75 4.38 2.89 3.22 2.79 3.32
Australia 1.90 2.44 2.27 2.99 3.38 1.35 1.55 1.92 1.99 2.19 2.29 2.42 2.47
Austria 0.83 0.63 0.54 0.50 0.55 0.70 0.57 0.51 0.60 0.67 0.72 0.70 0.80
Belgium 0.53 0.43 0.37 0.31 0.34 0.35 0.30 0.50 0.52 0.53 0.53 0.48 0.45
Brazil 2.81 2.84 2.44 2.30 3.78 5.68 5.78 7.01 8.15 10.26 12.60 11.56 11.51
China 1.90 2.09 2.74 3.81 5.28 5.72 6.28 7.39 8.39 8.80 9.87 11.15 10.94
Germany 0.72 0.59 0.52 0.51 0.50 0.45 0.42 0.55 0.56 0.58 0.56 0.53 0.50
Greece 1.08 0.48 0.12 0.06 0.08 0.09 0.07 0.24 0.21 0.19 0.19 0.21 0.26
Hungary 1.01 0.99 1.03 1.23 1.60 1.54 2.13 2.82 2.80 2.75 2.37 2.37 2.12
India 1.08 1.19 1.32 1.22 1.53 1.96 1.54 1.53 1.76 1.73 1.83 1.79 1.86
Indonesia 1.17 1.11 0.98 0.92 1.19 1.30 1.04 1.22 1.77 2.00 2.17 1.97 2.19
Ireland 0.45 0.28 0.17 0.05 0.05 0.05 0.05 0.12 0.11 0.08 0.06 0.05 0.06
Japan 9.42 11.83 13.92 15.03 17.85 16.56 17.01 16.05 16.43 18.04 17.44 17.89 18.29
Mexico 1.33 1.30 1.29 1.57 1.83 1.70 1.80 1.76 2.12 2.40 2.53 2.68 2.92
Poland 1.58 1.39 1.24 1.42 1.75 1.98 1.81 2.28 2.67 2.54 2.65 2.43 2.22
Portugal 1.55 0.73 0.59 0.44 0.30 0.19 0.21 0.35 0.47 0.27 0.27 0.31 0.48
Russia 1.38 1.72 2.15 2.95 6.76 8.08 6.08 5.51 5.77 6.39 9.23 9.24 7.11
South Africa 0.56 0.47 0.82 1.22 1.74 1.91 1.81 1.97 2.06 2.32 2.27 2.40 2.47
Spain 1.05 0.52 0.30 0.27 0.34 0.32 0.35 0.54 0.58 0.92 0.94 0.91 1.02
Switzerland 2.85 2.95 3.07 2.10 2.18 2.22 2.10 4.52 9.14 12.40 20.13 19.77 21.57
Turkey 1.22 1.30 1.20 1.89 2.52 2.42 2.07 2.03 2.18 2.13 2.67 2.86 2.66
United Kingdom 0.71 0.56 0.61 0.65 0.72 0.76 0.70 0.84 1.02 1.14 1.20 1.21 1.29
United States 0.44 0.41 0.39 0.33 0.36 0.33 0.35 0.56 0.56 0.60 0.58 0.54 0.50
1.10 Changes in Exchange Rate (Year on Year)

Countries 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 0.14% 5.17% 1.38% 1.55% 18.00% 5.01% 5.49% 10.39% 20.32% 47.92% 14.34% 59.84% 12.23%
Australia -6.50% 1.45% -10.02% -0.25% 7.55% -14.98% -11.10% -0.31% 7.25% 7.05% 20.02% 1.05% -2.97%
Austria 0.50% -0.87% -8.28% -6.57% 5.42% 4.86% -4.77% 8.21% -3.21% 0.13% 19.63% 0.22% -1.88%
Belgium 0.50% -0.87% -8.28% -6.57% 5.42% 4.86% -4.77% 8.21% -3.21% 0.13% 19.63% 0.22% -1.88%
Brazil -16.07% -10.64% -10.48% -5.80% 9.00% -12.01% -4.89% 16.74% 10.39% 9.14% 41.39% 4.93% -8.59%
China -1.28% -2.70% -4.58% -8.66% -1.70% -0.89% -4.56% -2.31% -1.84% -0.86% 1.37% 6.70% 1.73%
Germany 0.50% -0.87% -8.28% -6.57% 5.42% 4.86% -4.77% 8.21% -3.21% 0.13% 19.63% 0.22% -1.88%
Greece 0.50% -0.87% -8.28% -6.57% 5.42% 4.86% -4.77% 8.21% -3.21% 0.13% 19.63% 0.22% -1.88%
Hungary -1.54% 5.41% -12.72% -6.27% 17.56% 2.77% -3.31% 11.96% -0.63% 3.98% 20.09% 0.78% -2.52%
India -2.65% 2.74% -8.74% 5.21% 11.26% -5.53% 2.06% 14.50% 9.66% 4.15% 5.12% 4.74% -3.09%
Indonesia 8.57% -5.62% -0.20% 6.10% 7.12% -12.51% -3.52% 7.03% 11.45% 13.42% 12.85% -0.61% 0.54%
Ireland 0.50% -0.87% -8.28% -6.57% 5.42% 4.86% -4.77% 8.21% -3.21% 0.13% 19.63% 0.22% -1.88%
Japan 1.87% 5.52% 1.25% -12.22% -9.47% -6.19% -9.08% -0.02% 22.32% 8.55% 14.25% -10.12% 3.10%
Mexico -3.56% 0.01% 0.27% 1.85% 21.41% -6.49% -1.69% 6.00% -3.01% 4.07% 19.23% 17.77% 1.41%
Poland -12.57% -4.08% -10.80% -12.97% 29.51% -3.37% -1.72% 9.92% -2.95% -0.19% 19.46% 4.62% -4.16%
Portugal 0.50% -0.87% -8.28% -6.57% 5.42% 4.86% -4.77% 8.21% -3.21% 0.13% 19.63% 0.22% -1.88%
Russia -1.79% -3.86% -5.92% -2.85% 27.71% -4.32% -3.25% 4.96% 3.23% 20.55% 58.78% 10.04% -12.99%
South Africa -2.17% 6.49% 4.03% 17.26% 2.58% -13.61% -0.82% 13.07% 17.60% 12.41% 17.56% 15.29% -9.35%
Spain 0.50% -0.87% -8.28% -6.57% 5.42% 4.86% -4.77% 8.21% -3.21% 0.13% 19.63% 0.22% -1.88%
Switzerland 3.75% 0.72% -4.31% -9.75% 0.46% -4.14% -14.86% 5.63% -1.17% -1.19% 5.02% 2.39% 0.00%
Turkey -4.00% 6.25% -8.75% -0.08% 19.05% -3.03% 11.44% 7.22% 6.01% 14.97% 24.26% 11.03% 20.79%
United Kingdom 10.00% -1.27% -7.92% 8.80% 18.01% 0.78% -3.55% 1.44% 1.11% -5.00% 7.73% 13.13% 4.86%
United States 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
35
Appendix 2. FDI statistics for the year of 2005-2017 belonging to 23 Countries
2.1 FDI Inflows (million USD)

Countries 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 5265 5537 6473 9726 4017 11333 10840 15324 9822 5065 11759 3260 11517
Australia -28223 26331 41475 46687 31668 36442 58907 59540 56273 40968 20466 47753 46363
Austria 10778 4888 25492 7254 9397 2728 10820 4003 5813 4800 1295 -8068 10897
Belgium 34351 58926 93448 -13830 60966 43233 78329 6518 25188 -12392 23536 50971 -5765
Brazil 15066 18822 34585 45058 25949 77687 97422 82060 59089 63846 49514 52751 67583
China 104109 124082 156249 171535 131057 243703 280072 241214 290928 268097 242489 174750 168224
Germany 47421 55686 80227 8114 23807 65646 67573 28190 12796 -3005 22804 12321 29859
Greece 623 5358 2112 4490 2437 330 1144 1741 2817 2683 1268 2762 3612
Hungary 7711 6817 3952 6314 1998 2195 6315 14427 3404 7806 -14805 -5772 2834
India 7269 20029 25228 43406 35581 27397 36499 23996 28153 34576 44008 44458 39966
Indonesia 8337 4914 6929 9318 4878 13771 19241 19138 18817 21811 16641 3921 21927
Ireland -31670 -5545 24712 -16421 25717 42807 23566 46940 46616 37417 215829 39377 -1249
Japan 2778 -6503 22548 24418 11939 -1252 -1757 1732 2303 10622 -2251 11388 10428
Mexico 26013 21116 32476 29446 18184 27333 25354 21949 48860 29423 35213 30025 31038
Poland 9723 18379 21663 13857 11892 12799 18290 7130 2734 17509 11819 17329 8879
Portugal 4360 7227 3086 2099 1282 1507 5997 8951 2443 3099 9060 6843 6744
Russia 14375 37442 54922 75856 27752 31668 36868 30188 53397 29152 11858 37176 25954
South Africa 6683 303 6764 8172 8614 4015 3785 4403 8296 5772 1729 2235 1325
Spain 27187 32624 71660 78438 13632 40331 32412 24667 52161 33330 25228 39261 7532
Switzerland -949 43740 32445 15205 28945 28750 25857 28969 646 9352 80407 60688 38999
Turkey 10031 20185 22047 19851 8585 9086 16136 13743 13565 12813 18659 13033 10852
United Kingdom 182894 147396 176864 91798 89796 58180 42196 55626 51673 24704 39189 196034 101290
United States 116656 247328 227715 318449 157737 210544 242155 211467 217274 211985 481502 486039 292076
2.2 FDI Inflows (as a Percentage of GDP)

Countries 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 2.62 2.36 2.23 2.66 1.19 2.66 2.04 2.64 1.6 0.89 1.82 0.59 1.81
Australia -3.71 3.22 4.22 4.42 3.13 2.81 3.82 3.75 3.65 2.8 1.64 3.66 3.26
Austria 3.41 1.45 6.56 1.69 2.35 0.7 2.51 0.98 1.35 1.09 0.34 -2.06 2.62
Belgium 8.87 14.38 19.81 -2.67 12.58 8.94 14.86 1.31 4.84 -2.33 5.17 10.9 -1.17
Brazil 1.69 1.7 2.48 2.66 1.56 3.52 3.72 3.33 2.39 2.6 2.75 2.94 3.29
China 4.55 4.51 4.4 3.73 2.56 3.99 3.7 2.82 3.03 2.56 2.19 1.56 1.4
Germany 1.66 1.85 2.33 0.22 0.7 1.92 1.8 0.8 0.34 -0.08 0.67 0.35 0.81
Greece 0.25 1.96 0.66 1.27 0.74 0.11 0.4 0.71 1.17 1.13 0.65 1.43 1.8
Hungary 6.82 5.91 2.83 4 1.53 1.68 4.49 11.28 2.52 5.57 -12.05 -4.59 2.04
India 0.87 2.11 2.09 3.38 2.63 1.6 2 1.31 1.52 1.7 2.09 1.96 1.53
Indonesia 2.67 1.23 1.47 1.67 0.84 1.82 2.15 2.09 2.06 2.45 1.93 0.42 2.16
Ireland -14.96 -2.39 9.16 -5.97 10.88 19.27 9.91 20.85 19.51 14.44 74.14 13.03 -0.38
Japan 0.06 -0.14 0.5 0.48 0.23 -0.02 -0.03 0.03 0.04 0.22 -0.05 0.23 0.21
Mexico 2.96 2.16 3.09 2.65 2.02 2.58 2.15 1.83 3.83 2.24 3.01 2.79 2.7
Poland 3.18 5.33 5.05 2.6 2.7 2.67 3.46 1.42 0.52 3.21 2.48 3.68 1.69
Portugal 2.21 3.47 1.28 0.8 0.53 0.63 2.45 4.14 1.08 1.35 4.54 3.33 3.1
Russia 1.75 3.51 3.92 4.24 2.11 1.93 1.8 1.37 2.32 1.41 0.87 2.9 1.7
South Africa 2.59 0.11 2.26 2.85 2.91 1.07 0.91 1.11 2.26 1.65 0.54 0.76 0.38
Spain 2.35 2.58 4.84 4.8 0.91 2.82 2.18 1.85 3.83 2.42 2.1 3.17 0.57
Switzerland -0.23 10.15 6.76 2.74 5.35 4.92 3.7 4.34 0.09 1.32 11.84 9.07 5.74
Turkey 2 3.65 3.26 2.6 1.33 1.18 1.94 1.57 1.43 1.37 2.17 1.51 1.27
United
7.24 5.46 5.73 3.16 3.75 2.37 1.6 2.08 1.88 0.81 1.35 7.37 3.86
Kingdom
United States 0.89 1.79 1.57 2.16 1.09 1.41 1.56 1.31 1.3 1.22 2.66 2.61 1.51
36
Appendix 3. Individual Variable Ratings for the year of 2005-2017 belonging to 23
Countries
3.1 Government Stability

Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 8.54 10.17 9.83 7.17 5.88 5.67 7.38 7.33 5.08 5.33 7.13 7.38 7.50
Australia 10.04 10.29 9.21 10.46 10.50 8.46 5.13 5.21 6.71 6.42 6.58 6.92 7.10
Austria 7.54 6.96 7.75 7.46 9.50 8.96 7.54 6.63 6.50 6.71 6.50 5.88 5.60
Belgium 8.00 8.29 6.50 7.58 8.38 7.71 7.00 7.08 7.50 6.71 7.46 7.00 6.80
Brazil 7.38 7.75 8.33 8.75 9.08 8.88 7.58 8.21 7.17 6.33 5.08 5.54 5.94
China 11.00 11.00 11.00 10.67 10.50 10.25 8.46 8.17 9.00 8.88 8.88 7.54 7.00
Germany 6.79 9.13 9.63 10.00 9.67 6.92 5.88 8.25 8.38 8.79 8.17 7.58 7.08
Greece 9.00 9.00 8.63 6.92 6.50 6.92 6.00 6.00 4.92 5.21 6.71 5.96 5.78
Hungary 7.71 7.83 7.08 4.88 4.04 7.25 8.33 6.63 6.92 7.83 7.79 8.13 8.20
India 7.75 7.67 7.54 6.33 8.21 8.42 5.83 5.33 6.08 7.75 7.88 8.21 8.41
Indonesia 7.04 7.13 7.54 7.08 8.75 7.75 7.67 5.83 4.88 6.00 6.54 6.92 7.42
Ireland 8.50 8.46 8.38 9.17 7.42 5.75 7.38 6.46 4.96 6.58 7.04 6.29 6.00
Japan 9.29 9.08 6.88 5.58 5.58 6.63 6.17 5.83 8.21 7.21 8.50 8.54 8.64
Mexico 6.13 6.58 8.63 8.92 8.13 6.50 8.08 7.67 8.08 7.33 6.21 6.63 6.95
Poland 6.13 7.04 5.75 8.38 8.54 7.96 7.67 7.04 5.79 5.96 6.50 7.63 7.63
Portugal 8.33 8.54 8.46 8.58 8.25 6.67 6.00 6.29 5.33 6.04 6.54 7.00 7.40
Russia 11.00 11.00 11.21 11.42 10.46 9.63 8.42 7.33 7.08 8.13 8.58 8.50 8.49
South Africa 10.46 9.00 8.29 7.13 7.46 7.17 6.75 6.63 6.67 6.88 7.50 6.50 6.55
Spain 8.08 8.38 8.04 8.33 7.96 7.08 5.21 7.00 6.50 6.50 6.71 6.04 6.84
Switzerland 9.00 9.00 9.21 9.00 8.50 8.50 8.50 8.88 9.00 9.00 9.00 9.00 9.00
Turkey 10.00 9.92 9.08 8.04 7.96 8.25 8.38 7.50 7.33 6.75 6.88 7.71 8.71
United Kingdom 8.25 7.46 7.88 7.58 6.54 7.67 7.58 7.08 7.04 7.25 8.46 7.83 7.03
United States 9.13 7.67 6.17 7.42 10.00 8.33 7.92 8.96 7.33 6.50 7.88 8.17 8.67
3.2 Socioeconomic Conditions

Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 4.83 5.21 5.38 5.08 5.00 5.17 5.08 5.00 5.00 5.00 5.04 5.42 5.82
Australia 9.79 9.67 10.29 9.21 9.38 10.00 9.33 9.04 9.17 9.08 8.54 9.13 9.63
Austria 8.38 8.21 8.50 9.25 9.04 9.50 10.08 10.00 9.54 9.13 8.92 8.38 8.08
Belgium 8.38 8.50 8.50 8.29 8.42 8.71 7.96 7.50 7.92 8.58 8.75 8.63 8.53
Brazil 5.00 5.00 5.00 6.25 6.58 7.00 7.13 7.67 7.38 7.00 6.13 6.17 6.22
China 8.33 8.75 8.88 7.79 7.71 8.00 7.13 7.04 7.04 7.00 7.00 7.38 7.78
Germany 7.00 7.00 7.71 8.00 8.21 8.75 8.79 8.58 9.00 9.29 9.63 10.00 10.00
Greece 7.17 7.38 7.96 7.67 7.58 6.75 5.79 5.21 4.08 4.38 5.00 5.38 5.88
Hungary 7.50 7.38 7.00 7.00 6.92 6.50 6.50 6.50 6.54 6.88 7.17 7.58 7.88
India 4.17 5.04 5.00 5.00 5.00 4.67 4.50 4.50 4.75 5.00 5.00 5.50 5.90
Indonesia 4.00 5.96 6.67 5.67 5.75 6.29 6.50 5.92 6.00 6.00 5.79 5.67 5.67
Ireland 10.50 10.50 10.50 9.17 7.79 7.75 7.50 7.50 7.50 8.13 8.96 9.00 9.00
Japan 9.13 9.96 9.42 8.17 8.42 8.83 8.29 8.50 9.29 9.46 9.00 9.04 9.04
Mexico 8.00 8.00 8.50 8.38 7.42 7.00 6.67 6.67 7.00 6.54 6.54 6.58 6.58
Poland 5.50 5.50 5.96 6.21 6.58 7.00 7.00 6.75 6.00 6.00 6.96 7.33 7.63
Portugal 8.00 8.04 8.50 8.21 7.79 7.67 6.75 6.29 5.75 6.79 7.00 8.00 8.80
Russia 6.50 6.50 6.58 6.79 5.79 5.50 5.50 5.79 5.96 5.67 5.88 6.00 6.20
South Africa 4.00 4.04 4.29 4.00 4.42 4.50 4.50 4.50 4.50 4.50 4.50 4.04 3.90
Spain 8.17 8.50 8.50 7.92 6.04 5.58 5.50 5.50 5.17 5.58 6.71 6.04 5.94
Switzerland 10.50 10.50 10.50 10.50 10.08 9.50 10.17 10.50 10.50 10.50 10.38 10.17 9.94
Turkey 6.50 6.50 6.50 6.50 5.83 5.50 6.08 6.58 7.00 6.08 6.04 6.13 6.23
United Kingdom 10.42 10.00 10.00 8.67 7.71 8.33 8.46 8.00 8.21 8.79 9.50 9.17 8.97
United States 8.42 9.38 8.96 8.00 8.29 8.29 8.21 8.67 8.54 8.58 9.00 9.67 10.17
37
3.3 Investment Profile
Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 6.54 6.63 6.50 6.38 5.50 5.08 6.17 6.00 6.17 6.21 6.25 7.79 7.79
Australia 12.00 12.00 12.00 12.00 12.00 11.25 10.50 10.50 10.67 11.21 12.00 12.00 12.00
Austria 12.00 12.00 12.00 12.00 12.00 11.46 11.17 8.67 8.00 9.13 9.50 9.50 9.50
Belgium 11.50 11.50 11.50 11.25 10.50 10.17 9.50 7.92 8.00 8.00 8.00 8.58 8.58
Brazil 7.50 7.50 7.50 7.29 7.00 7.08 7.83 7.58 7.50 7.58 7.25 7.00 7.00
China 7.21 7.29 7.08 7.00 7.00 6.50 6.58 7.08 7.50 6.25 6.00 6.00 6.00
Germany 12.00 12.00 12.00 11.88 11.50 11.50 11.25 10.92 11.00 11.00 11.00 11.00 11.00
Greece 10.33 10.50 10.50 10.50 10.50 7.46 7.00 6.54 7.21 7.00 7.38 8.63 8.63
Hungary 11.58 11.50 11.42 11.00 10.83 9.38 9.42 7.50 7.50 8.13 8.92 9.92 9.92
India 9.33 8.92 8.50 8.50 8.50 8.50 8.50 7.71 7.50 7.50 8.08 8.67 8.67
Indonesia 6.75 9.13 9.00 9.00 9.00 8.88 7.54 7.33 7.50 8.50 7.42 7.71 7.71
Ireland 12.00 12.00 12.00 11.92 10.67 9.92 9.08 7.50 7.58 9.21 11.50 12.00 12.00
Japan 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.00 11.46 11.50 11.50 11.50 11.50
Mexico 10.83 10.50 10.50 9.75 9.50 9.50 9.50 9.50 10.00 9.50 7.58 7.42 7.42
Poland 11.50 11.04 11.00 11.33 11.50 11.50 11.13 9.42 9.00 9.50 9.50 9.08 9.08
Portugal 12.00 12.00 12.00 11.92 11.50 10.17 7.17 6.50 6.50 6.50 8.17 8.75 8.75
Russia 9.00 8.88 8.67 9.50 9.50 9.50 9.50 8.92 8.50 7.67 7.50 8.00 8.00
South Africa 11.00 10.71 10.50 10.50 10.00 9.50 9.50 9.50 9.38 7.42 7.29 7.63 7.63
Spain 12.00 12.00 12.00 11.92 11.08 10.42 9.58 6.71 6.92 8.50 8.88 9.50 9.50
Switzerland 11.96 12.00 12.00 11.92 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50
Turkey 8.00 8.00 8.00 7.67 7.50 7.50 7.50 7.58 7.25 6.04 6.00 6.50 6.50
United Kingdom 12.00 12.00 12.00 11.63 10.50 10.92 10.88 8.50 8.71 11.08 11.96 11.71 11.71
United States 11.67 12.00 12.00 11.75 11.71 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00
3.4 Internal Conflict

Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 9.83 10.00 10.00 9.88 10.00 9.58 9.33 8.96 8.67 8.54 8.75 9.21 9.69
Australia 9.75 9.29 9.50 10.00 10.00 10.00 10.00 10.00 10.00 10.00 9.50 9.50 9.50
Austria 11.50 11.50 11.50 11.50 11.50 11.46 11.29 11.00 11.00 11.00 10.83 9.58 8.48
Belgium 11.50 11.50 11.50 11.50 11.50 11.50 11.33 10.92 10.63 10.63 9.08 8.88 8.67
Brazil 10.50 10.25 10.00 10.00 10.00 9.71 9.50 9.96 9.42 8.58 8.75 8.75 8.75
China 10.33 10.00 10.25 9.63 9.33 9.25 8.79 8.83 8.50 7.42 7.00 7.08 7.17
Germany 11.00 10.92 11.00 11.08 11.00 10.92 10.00 10.46 10.50 10.50 10.38 9.58 8.85
Greece 9.50 9.08 8.71 8.83 7.92 8.04 8.08 8.04 8.00 8.33 9.63 9.13 8.65
Hungary 11.21 10.83 10.50 10.88 11.00 11.00 10.58 10.50 10.79 11.00 10.75 10.29 9.85
India 8.42 7.58 6.92 6.50 7.00 6.46 6.00 6.08 6.50 6.42 6.79 6.50 6.22
Indonesia 8.54 9.00 9.00 8.63 8.46 8.42 8.29 8.00 8.25 8.46 8.50 8.50 8.50
Ireland 11.50 11.50 11.50 11.50 9.50 8.96 8.75 9.00 9.00 9.04 9.83 10.00 10.17
Japan 10.50 10.50 10.50 10.50 10.50 10.04 10.00 10.00 10.00 10.00 10.00 10.00 10.00
Mexico 10.00 10.04 9.88 9.00 8.50 8.50 8.50 8.67 8.50 8.00 8.04 8.29 8.55
Poland 9.50 9.50 9.50 9.92 10.00 9.96 9.50 9.50 9.63 10.00 10.42 10.42 10.42
Portugal 9.50 9.50 9.50 9.50 9.50 9.50 9.00 9.00 9.00 9.00 9.42 9.75 10.10
Russia 7.92 8.00 8.00 8.00 7.79 7.75 7.54 7.71 7.50 7.46 7.25 7.50 7.76
South Africa 9.00 9.00 9.25 9.50 9.63 9.46 9.50 9.33 9.13 9.00 9.00 9.00 9.00
Spain 9.54 10.54 9.50 9.21 9.00 8.54 7.71 7.50 7.67 7.71 8.88 9.25 9.64
Switzerland 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00
Turkey 9.58 7.75 8.00 8.00 7.96 7.54 7.50 7.50 7.21 7.00 6.92 6.38 5.88
United Kingdom 9.92 9.50 9.46 9.67 9.67 9.42 8.75 8.50 8.50 8.83 10.00 9.71 9.43
United States 10.33 10.00 10.00 10.46 10.50 10.00 10.00 10.00 10.00 10.00 10.42 10.50 10.58
38
3.5 External Conflict
Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 9.88 10.00 9.96 9.50 9.50 9.50 9.50 9.50 9.50 9.50 9.50 9.50 9.50
Australia 10.38 9.63 9.50 9.50 9.92 10.00 10.67 11.00 11.00 11.00 11.00 11.00 11.00
Austria 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50
Belgium 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50
Brazil 11.00 11.00 10.63 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50
China 10.04 9.42 9.58 10.00 9.96 9.38 9.33 9.50 8.92 8.00 8.00 7.50 7.50
Germany 10.08 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50
Greece 10.50 10.50 10.50 10.17 10.00 10.00 10.08 10.50 10.50 10.50 10.50 10.50 10.50
Hungary 10.50 10.29 10.00 10.38 10.50 10.50 10.50 10.04 10.00 10.00 10.00 10.00 10.00
India 9.54 9.83 10.00 10.00 9.96 9.50 9.50 9.50 9.50 9.29 9.00 9.00 9.00
Indonesia 10.67 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 9.75 9.50 9.50 9.50
Ireland 11.00 11.00 11.38 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50
Japan 9.17 9.04 9.33 9.50 9.50 9.38 9.00 9.00 8.88 9.46 9.50 9.50 9.50
Mexico 11.00 11.00 11.00 11.00 11.00 10.88 10.50 10.50 10.50 10.50 10.50 10.50 10.50
Poland 10.00 9.54 9.50 10.75 11.00 10.54 10.50 10.50 10.50 10.50 10.50 10.50 10.50
Portugal 10.00 10.00 9.75 9.50 9.50 9.50 9.50 9.50 9.50 9.50 9.50 9.50 9.50
Russia 9.17 9.21 8.54 7.54 7.17 9.00 9.00 9.00 9.00 7.33 6.54 6.50 6.50
South Africa 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50
Spain 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
Switzerland 11.29 11.00 11.00 11.00 10.58 10.50 10.50 10.50 10.50 10.50 10.50 10.50 10.50
Turkey 9.25 8.50 7.92 7.75 7.50 7.50 7.50 7.50 7.17 7.00 7.00 7.50 7.50
United Kingdom 7.00 7.00 7.00 6.83 6.50 7.83 8.83 9.50 9.50 9.50 9.50 9.50 9.50
United States 7.71 7.79 7.08 9.13 9.96 9.67 9.58 10.50 10.33 9.83 9.88 10.00 10.00
3.6 Corruption
Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.17 2.00 2.00 2.00 2.00 2.00
Australia 5.00 4.63 4.50 4.50 4.50 4.88 5.00 4.67 4.50 4.50 4.50 4.50 4.50
Austria 5.00 5.00 5.00 5.00 5.00 5.00 4.92 4.50 4.50 4.50 4.50 4.50 4.50
Belgium 4.00 3.71 3.50 3.50 5.00 5.00 5.00 5.00 5.00 4.96 4.50 4.50 4.50
Brazil 1.83 1.96 2.00 2.33 3.00 3.00 3.00 2.67 2.50 2.46 2.00 2.00 2.00
China 2.00 1.88 2.13 2.50 2.50 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
Germany 4.54 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Greece 2.67 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.04 2.50 2.50 2.50
Hungary 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
India 2.50 2.50 2.50 2.50 2.50 2.50 2.00 2.50 2.50 2.50 2.50 2.50 2.50
Indonesia 1.00 2.33 3.04 3.58 3.83 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Ireland 3.67 3.88 3.50 3.50 3.50 3.50 3.50 3.83 4.00 4.04 4.50 4.50 4.50
Japan 3.50 3.50 3.00 3.00 3.00 4.25 4.50 4.50 4.50 4.50 4.50 4.50 4.50
Mexico 2.00 2.00 2.00 2.00 2.29 2.50 2.33 2.00 2.00 1.92 1.50 1.50 1.50
Poland 2.13 2.50 2.50 2.50 2.50 2.50 2.50 2.83 3.00 3.04 3.50 3.50 3.50
Portugal 4.00 4.00 4.00 4.00 4.00 4.00 4.00 3.67 3.50 3.54 4.00 4.00 4.00
Russia 2.00 2.00 2.00 2.00 2.00 2.00 2.00 1.67 1.50 1.50 1.50 1.50 1.50
South Africa 2.17 2.50 2.50 2.50 2.50 2.88 2.96 2.50 2.50 2.50 2.50 2.50 2.50
Spain 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 3.96 3.50 3.50 3.50
Switzerland 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.83 5.00 5.00 5.00 5.00 5.00
Turkey 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.04 2.50 2.50 2.50
United Kingdom 4.50 4.29 4.00 4.00 4.00 4.00 4.00 4.33 4.50 4.54 5.00 5.00 5.00
United States 5.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 3.71 3.58 4.50 4.50 4.50
39
3.7 Military in Politics
Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 4.33 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50
Australia 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Austria 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Belgium 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Brazil 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
China 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Germany 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Greece 4.58 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Hungary 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
India 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Indonesia 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50
Ireland 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Japan 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Mexico 4.50 4.50 4.50 4.50 4.50 4.50 4.08 3.67 3.50 3.38 3.00 3.00 3.00
Poland 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Portugal 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Russia 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.08 4.00 4.00 4.00 4.00 4.00
South Africa 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Spain 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Switzerland 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Turkey 4.00 3.17 2.17 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
United Kingdom 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
United States 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
3.8 Religious Tensions

Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Australia 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Austria 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Belgium 5.00 5.00 4.54 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50
Brazil 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
China 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 4.83 4.00 4.00 4.00 4.00
Germany 6.00 6.00 6.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Greece 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Hungary 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50
India 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50
Indonesia 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Ireland 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Japan 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50
Mexico 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50
Poland 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Portugal 6.00 6.00 5.54 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50
Russia 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50
South Africa 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Spain 4.83 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50
Switzerland 5.00 5.00 4.71 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50
Turkey 5.00 5.00 4.67 4.04 4.00 4.00 4.00 4.00 4.00 4.00 4.00 3.75 3.75
United Kingdom 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
United States 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50
40
3.9 Law and Order
Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 3.00 2.50 2.50 2.50 2.50 2.50 2.50 2.42 2.00 2.00 2.00 2.00 2.00
Australia 5.88 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50
Austria 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Belgium 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Brazil 2.50 2.50 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
China 4.50 4.50 4.50 4.50 4.50 4.08 3.63 3.50 3.50 3.50 3.50 3.50 3.50
Germany 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Greece 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50
Hungary 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
India 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.38 4.50 4.50
Indonesia 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 2.54 2.50 2.50
Ireland 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Japan 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Mexico 3.00 3.00 3.00 2.96 2.04 2.00 2.00 1.58 1.88 1.83 1.50 1.50 1.50
Poland 4.25 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50
Portugal 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Russia 4.00 4.00 4.00 4.00 4.00 4.00 4.00 3.50 3.00 3.00 3.00 3.00 3.00
South Africa 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.38 2.00 2.00 2.00 2.00
Spain 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Switzerland 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Turkey 4.50 4.50 4.50 4.50 4.50 3.83 3.50 3.50 3.50 3.38 3.00 3.00 3.00
United Kingdom 5.50 5.50 5.50 5.50 5.50 5.50 5.29 5.00 5.00 5.00 5.00 5.00 5.00
United States 5.00 5.00 4.71 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
3.10 Ethnic Tensions

Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Australia 3.50 3.96 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Austria 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Belgium 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Brazil 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
China 4.83 4.50 4.50 4.50 4.00 3.50 3.50 3.50 3.50 3.50 3.50 3.50 3.50
Germany 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Greece 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Hungary 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
India 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50
Indonesia 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
Ireland 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50
Japan 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50
Mexico 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Poland 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Portugal 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Russia 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
South Africa 4.00 4.00 4.00 4.00 4.00 3.63 3.50 3.50 3.50 3.50 3.50 3.50 3.50
Spain 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Switzerland 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Turkey 2.50 2.50 2.50 2.50 2.46 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
United Kingdom 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
United States 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
41
3.11 Democratic Accountability
Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.33 4.00 4.00 4.00 4.00 4.00
Australia 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Austria 5.00 5.21 5.50 5.63 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Belgium 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Brazil 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
China 1.00 1.00 1.21 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50
Germany 5.58 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Greece 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Hungary 6.00 6.00 6.00 6.00 6.00 5.92 5.50 5.50 5.50 5.50 5.50 5.50 5.50
India 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Indonesia 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 4.75 4.00 4.00 4.00
Ireland 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Japan 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Mexico 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 5.83 4.08 4.00 4.00
Poland 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Portugal 6.00 6.00 6.00 6.00 6.00 6.00 6.00 5.58 5.50 5.50 5.50 5.50 5.50
Russia 3.50 3.25 3.00 2.50 2.50 2.50 2.00 2.00 2.00 2.00 2.00 2.00 2.00
South Africa 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Spain 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Switzerland 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Turkey 5.50 5.50 5.21 5.00 5.00 4.75 4.08 4.00 3.71 3.88 4.00 3.75 3.75
United Kingdom 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
United States 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
3.12 Bureaucracy Quality

Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Australia 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Austria 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Belgium 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Brazil 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
China 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
Germany 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Greece 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Hungary 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
India 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Indonesia 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
Ireland 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Japan 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Mexico 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 2.83 2.50 2.50 2.50
Poland 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Portugal 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Russia 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
South Africa 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
Spain 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Switzerland 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Turkey 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
United Kingdom 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
United States 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
42
3.13 GDP per Capita
COUNTRIES 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 2 2.5 2.5 3 3 3 3.5 3.5 3.5 3.5 3.5 3.5 3.5
Australia 5 5 5 5 5 5 5 5 5 5 5 5 5
Austria 5 5 5 5 5 5 5 5 5 5 5 5 5
Belgium 5 5 5 5 5 5 5 5 5 5 5 5 5
Brazil 2 2.5 2.5 3 3 3.5 3.5 3.5 3.5 3.5 3 3 3
China 0.5 0.5 1 1.5 1.5 2 2.5 2.5 2.5 2.5 3 3 3
Germany 5 5 5 5 5 5 5 5 5 5 5 5 5
Greece 4.5 4.5 5 5 5 5 4.5 4.5 4.5 4.5 4 4 4
Hungary 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5
Indonesia 0.5 0.5 0.5 1 1 1 1.5 1.5 1.5 1.5 1.5 1.5 1.5
India 0 0 0 0 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5
Ireland 5 5 5 5 5 5 5 5 5 5 5 5 5
Japan 5 5 5 5 5 5 5 5 5 5 5 5 5
Mexico 3 3 3 3 2.5 3 3 3 3 3 3 3 3
Poland 2.5 3 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5
Portugal 4 4 4.5 4.5 4.5 4.5 4.5 4 4.5 4.5 4 4 4
Russia 2 2.5 3 3.5 3 3 3.5 3.5 3.5 3.5 3 3 3.5
South Africa 2 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2 2.5
Spain 4.5 5 5 5 5 5 5 5 5 5 4.5 4.5 5
Switzerland 5 5 5 5 5 5 5 5 5 5 5 5 5
Turkey 2.5 2.5 3 3.5 3 3 3.5 3.5 3.5 3.5 3.5 3.5 3
United Kingdom 5 5 5 5 5 5 5 5 5 5 5 5 5
United States 5 5 5 5 5 5 5 5 5 5 5 5 5
3.14 Real GDP Growth

COUNTRIES 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 10 10 10 9 0.5 10 10 4 7.5 2.5 8 3.5 8
Australia 8 8 9 8 7 7.5 8 8.5 7.5 8 8 8 7.5
Austria 7.5 8.5 8.5 6.5 1.5 7 8.5 6 5 6 6.5 7.5 8
Belgium 7.5 8 8.5 6 3 8 7 5.5 5.5 6.5 7 6.5 7
Brazil 8.5 8.5 9.5 9.5 5 10 9 7 8 6 1.5 2 6.5
China 10 10 10 10 10 10 10 10 10 10 10 10 10
Germany 6 8.5 8.5 6 0.5 8.5 8.5 6 6 7.5 6.5 7.5 7.5
Greece 6 9.5 8.5 5 1 0.5 0 0 2 6 5 5 7
Hungary 9 9 5.5 6 0 6 7 3.5 7.5 9 8.5 7.5 9
Indonesia 10 10 10 8.5 10 10 10 9.5 10 10 10 10 10
India 9.5 9.5 10 10 9 10 10 10 9.5 9.5 9 9.5 9.5
Ireland 9.5 9.5 9.5 1 0.5 7 8.5 5.5 6.5 10 10 9 10
Japan 7 6.5 7 4 0.5 9 5 7 7.5 5.5 6.5 6 7
Mexico 8 9 7.5 6 0.5 9.5 8.5 8.5 7 8 8.5 8 7.5
Poland 8.5 10 10 9 8 8.5 9.5 7 6.5 8.5 8.5 8.5 9
Portugal 6 7 7.5 5.5 2.5 7 3.5 1 4 6 7 7 8
Russia 10 10 10 9.5 0 9 9 8.5 7 6 2.5 5 7
South Africa 9.5 9.5 9.5 8.5 3.5 8.5 8.5 7.5 7.5 7 6.5 6 6.5
Spain 8.5 9 8.5 6.5 1.5 5.5 4.5 2.5 3.5 6.5 8.5 8.5 8
Switzerland 8.5 9 9 7.5 3 8 7 6.5 7 7.5 6.5 7 7
Turkey 10 10 9.5 6 1 10 10 9 10 9 9.5 8.5 10
United Kingdom 8.5 8 8 5 1 7 7 6.5 7.5 8 7.5 7 7
United States 8.5 8 7 5 2.5 8 7 7.5 7 7.5 8 7 7.5
43
3.15 Inflation Rate
COUNTRIES 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 7.5 7 7.5 7.5 8 7 7.5 7 7 3.5 4 3 4
Australia 9.5 9 9.5 8.5 10 9.5 9 10 9.5 9.5 10 10 10
Austria 9.5 10 9.5 9 10 10 9 9.5 9.5 10 10 10 9.5
Belgium 9.5 9.5 10 8.5 10 9.5 9 9.5 10 10 10 10 9.5
Brazil 8 8.5 9 8.5 8.5 8.5 8 8.5 8 8 7.5 7.5 9
China 10 10 8.5 8.5 10 9 8.5 9.5 9.5 9.5 10 9.5 10
Germany 10 10 9.5 9.5 10 10 9.5 9.5 10 10 10 10 10
Greece 9 9 9.5 8.5 10 8.5 9 10 10 10 10 10 10
Hungary 9 9 8 8 8.5 8.5 9 8.5 10 10 10 10 9.5
Indonesia 9 8 8.5 7.5 7 7.5 7.5 7.5 7.5 8.5 8.5 8.5 9
India 7 6.5 8 7 8.5 8.5 8.5 8.5 8 8 8 9 9
Ireland 9.5 9.5 9.5 9 10 10 10 10 10 10 10 10 10
Japan 10 10 10 10 10 10 10 10 10 9.5 10 10 10
Mexico 9 9 9 8.5 8.5 8.5 9 8.5 9 8.5 9.5 9.5 8
Poland 9.5 10 9.5 8.5 9 9.5 8.5 9 10 10 10 10 9.5
Portugal 9.5 9 9.5 9.5 10 10 9 9.5 10 10 10 10 10
Russia 6.5 7.5 7.5 6 7 8 7.5 8.5 8 8 6 8 9
South Africa 9 8.5 8 7 8 8.5 8.5 8.5 8.5 8 8.5 8 8.5
Spain 9 9 9.5 8.5 10 9.5 9 9.5 10 10 10 10 9.5
Switzerland 10 10 10 9.5 10 10 10 10 10 10 10 10 10
Turkey 7.5 7.5 7.5 7 8 7.5 8 7.5 8 7.5 8 8 7
United Kingdom 9.5 9.5 9.5 9 9.5 9 8.5 9.5 9.5 10 10 10 9.5
United States 9 9 9.5 9 10 10 9 9.5 10 10 10 10 9.5
3.16 Budget Balance as a percentage of GDP

COUNTRIES 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 8.5 8.5 8.5 8 6 5.5 6 6.5 7 8 7.5 7 7
Australia 8.5 8.5 8 6 5 5.5 5.5 6.5 6.5 6.5 6.5 7 7
Austria 6.5 6.5 7 7 5 5.5 6.5 6.5 7 6.5 7 7 7.5
Belgium 6.5 8 8 7 5 6 5.5 5.5 6 6 6.5 6.5 7.5
Brazil 6.5 5.5 5.5 6.5 5.5 6.5 6.5 6.5 6 5 4 3 4
China 7.5 8 9 8.5 8 8.5 8.5 8.5 8 8 7.5 8 8
Germany 6 7 8 7.5 6 5.5 7.5 7.5 7.5 8 8 8 8.5
Greece 4.5 5 4.5 2.5 1.5 2.5 2.5 3.5 2 6 5 8 8
Hungary 4 3 5 6 5.5 5.5 5 6.5 6.5 6.5 7 7 6.5
Indonesia 6 6 6.5 5 4.5 5.5 5 5.5 5.5 5.5 6 6 6
India 7.5 7.5 7.5 7.5 7.5 7.5 7 7 6.5 7 6.5 6.5 6.5
Ireland 8.5 9 8 4.5 2 0 2 3.5 4.5 6 7 7.5 7.5
Japan 5.5 6.5 6.5 5.5 3 3 3 3.5 4 5 6 6 8
Mexico 7.5 7.5 7.5 7.5 6 6.5 5 5.5 5.5 5.5 5 6.5 8
Poland 6 6 7 6 4 4 5.5 6 5.5 6 6.5 6.5 7
Portugal 4.5 5.5 6 6 3 2.5 4 5 5.5 4 5.5 7 6.5
Russia 9.5 9.5 9.5 9.5 9.5 9.5 9.5 8.5 7.5 6.5 7 7 7
South Africa 6.5 8 8 7 6 6 6.5 6 6 6 6 6 6
Spain 8.5 9 8.5 5.5 2.5 3 3 2.5 4.5 5 5 5.5 6
Switzerland 7.5 8 8.5 8.5 8 8 8 8 7.5 7.5 8 8 8.5
Turkey 8 8 8 8 4.5 6.5 7.5 7.5 8 8 8.5 8 8
United Kingdom 6 6.5 6.5 5 2.5 3 4 3.5 5 5 5.5 6.5 7
United States 5.5 6 6 4 2 2 2.5 3 5 5 5.5 5 5.5
44
3.17 Current Account as a percentage of GDP
COUNTRIES 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 13 13 13 12 13 11 11 11 10 11 10 10 10
Australia 10 10 9 10 10 10 10 10 10 10 10 10 10
Austria 13 13 13 13 13 13 12 12 12 13 12 13 12
Belgium 13 12 12 11 11 12 11 11 11 11 11 11 12
Brazil 12 12 12 11 11 10 10 10 10 10 10 11 11
China 13 14 14 14 13 13 12 13 12 13 13 12 12
Germany 13 13 14 13 13 13 14 14 14 14 14 14 14
Greece 9 8 7 7 8 8 9 10 10 11 11 11 11
Hungary 9 9 9 9 11 12 12 12 13 12 13 14 13
Indonesia 11 11 11 10 10 10 10 10 10 11 11 11 11
India 12 13 13 12 12 12 12 10 10 10 10 11 11
Ireland 10 10 9 9 10 11 11 10 12 12 13 10 14
Japan 13 13 13 13 13 13 13 12 12 12 13 13 13
Mexico 12 11 11 11 11 11 11 11 10 11 10 10 11
Poland 10 10 9 9 10 10 10 10 11 10 11 11 12
Portugal 9 8 9 8 8 8 10 11 12 12 12 12 12
Russia 15 14 13 13 13 13 13 13 12 13 13 12 13
South Africa 10 10 10 10 10 11 10 10 10 10 10 10 10
Spain 9 9 9 9 10 10 10 11 12 12 12 13 12
Switzerland 15 15 15 13 14 15 14 15 15 14 15 14 14
Turkey 10 10 10 10 11 10 9 10 9 10 10 10 10
United Kingdom 10 10 10 10 10 10 11 10 10 10 10 10 10
United States 10 10 10 10 10 10 10 10 10 10 10 10 10
3.18 Foreign Debt as a percentage of GDP

COUNTRIES 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 8 8 7 7 7.5 8 8 8 7.5 7.5 7.5 7 6.5
Australia 3 3 3 2.5 3 3 3 3 2.5 2 1.5 1.5 2
Austria 0.5 0.5 0.5 0 0 0 0.5 0.5 0.5 0.5 0.5 0.5 0.5
Belgium 0 0 0 0 0 0 0 0 0 0 0 0 0
Brazil 8 8.5 8.5 8.5 8.5 8.5 8.5 8.5 8.5 8 7 7 7.5
China 9 9 9 9.5 9.5 9 9 9 8.5 8.5 9 9 9
Germany 1 1 0.5 0.5 0.5 0.5 0.5 0.5 1 0.5 1 0.5 1
Greece 2 2 1 0.5 0.5 0.5 0.5 0 0 0 0 0 0
Hungary 3 2.5 2 0.5 0.5 0.5 0.5 0.5 1 1 1 1.5 2.5
India 6 6.5 7 7 7 7.5 7.5 7.5 7.5 7 6.5 7 7
Indonesia 8.5 8.5 8.5 8.5 8.5 8.5 8.5 8 8 8 8 8 8.5
Ireland 0 0 0 0 0 0 0 0 0 0 0 0 0
Japan 7 7 6.5 6.5 6.5 6 5.5 5 5 4.5 4.5 4 4
Mexico 8 8.5 8.5 8.5 8 8 8 7.5 7 7 6.5 6 6
Poland 6 5.5 5.5 5 5 4.5 4 4 4.5 4 4 4 4.5
Portugal 0.5 0.5 0.5 0 0 0 0 0 0 0 0 0 0
Russia 7 7 7 7.5 7 7.5 7.5 7.5 7 7.5 6.5 6 7
South Africa 8 8 7.5 7.5 7.5 7.5 7.5 6.5 6.5 6 6.5 5.5 5.5
Spain 1 1 1 1 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5
Switzerland 0 0 0 0 0 0 0 0 0 0 0 0 0
Turkey 7 6.5 6.5 6.5 6 6.5 6.5 6.5 6 6 5.5 5.5 5
United Kingdom 0 0 0 0 0 0 0 0 0 0 0 0 0
United States 4 3.5 3 3 3 3 3 3 3 3 3 3 3
45
3.19 Foreign Debt Service as a percentage of Exports
COUNTRIES 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 9 8.5 9 10 9.5 10 10 9.5 9.5 9 8.5 7 8.5
Australia 9.5 9.5 9.5 9.5 9.5 9 9 8.5 8.5 8 6.5 8.5 9
Austria 10 10 10 10 10 10 10 10 9.5 9.5 9 9 9
Belgium 9.5 9.5 9.5 10 10 10 10 10 10 10 10 10 10
Brazil 4.5 5.5 7 7.5 7.5 8 8 8.5 7 7.5 5.5 4 6
China 10 10 10 10 10 10 10 10 10 10 10 9.5 9.5
Germany 9.5 9.5 9.5 9.5 9.5 9.5 9.5 9.5 9.5 9.5 9.5 9 9
Greece 8.5 8.5 8.5 9.5 9.5 9.5 9 9 9 8 8.5 8.5 8.5
Hungary 9 9.5 9 9.5 10 9 10 10 10 10 10 9.5 10
India 8 7 8 8.5 8 8 8.5 8.5 8 6.5 6.5 5.5 6
Indonesia 8.5 9.5 8.5 9 9.5 9.5 9.5 9.5 9.5 8 9 8 9
Ireland 9.5 10 10 9.5 9.5 10 10 10 10 9.5 9.5 9.5 9.5
Japan 9.5 10 10 10 10 10 10 9.5 10 10 9.5 10 10
Mexico 8.5 8 9 9 9 9 9 8 9 9 8.5 8 8.5
Poland 7.5 7 8.5 8 8 8 8.5 9.5 9.5 9.5 9 8.5 9
Portugal 9 9.5 9.5 10 9.5 10 9.5 8.5 9 7.5 8.5 9 9
Russia 8.5 8.5 9.5 8.5 7.5 9 9.5 9.5 9.5 8.5 7.5 8 7
South Africa 9.5 9.5 10 9.5 9.5 9.5 10 9.5 9 9.5 9.5 8.5 9
Spain 8.5 9.5 8.5 9 9.5 9.5 9.5 9.5 9.5 8 9 8.5 9
Switzerland 9.5 9.5 6 8.5 8.5 10 10 8.5 10 10 9.5 10 10
Turkey 5.5 6.5 6.5 6.5 5 6 6.5 7 6.5 7 7 5.5 5.5
United Kingdom 8.5 9 9 9 9 9 9.5 9.5 9 9 9 8.5 8.5
United States 10 10 10 10 10 10 10 10 10 10 10 10 9.5
3.20 Current Account as a percentage of Exports

COUNTRIES 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 13 13 13 13 13 12 11 12 11 11 10 10 9
Australia 9 9 9 10 10 10 11 10 10 10 10 10 11
Austria 12 13 13 13 13 13 12 12 12 12 12 12 12
Belgium 12 12 12 12 12 12 12 12 12 12 12 12 12
Brazil 13 13 12 11 11 9 9 9 9 8 10 11 12
China 14 14 15 15 14 13 13 13 13 13 13 13 13
Germany 12 12 12 11 12 12 12 12 12 12 12 12 12
Greece 13 13 14 13 14 13 13 14 13 14 14 14 14
Hungary 8 7 5 6 6 7 8 11 11 11 12 11 11
India 11 11 11 11 12 12 12 12 12 12 12 13 12
Indonesia 11 12 12 11 11 10 11 10 11 11 11 12 11
Ireland 12 13 13 12 13 12 12 11 11 11 11 11 11
Japan 12 11 11 11 12 12 12 12 12 12 12 12 13
Mexico 15 14 15 14 14 15 13 13 13 12 14 14 14
Poland 12 12 12 11 12 12 12 12 11 11 11 11 12
Portugal 11 11 10 10 11 11 11 11 12 12 12 12 12
Russia 8 8 9 8 8 9 10 12 12 12 12 12 12
SouthAfrica 15 15 14 14 13 14 14 13 13 13 14 13 13
Spain 11 10 10 10 11 11 11 10 10 10 10 11 11
Switzerland 9 8 8 8 10 10 11 12 12 12 12 13 13
Turkey 14 15 14 12 13 14 13 14 14 13 14 13 13
UnitedKingdom 10 9 9 10 11 9 8 10 9 10 10 10 10
UnitedStates 11 11 11 10 11 11 11 11 10 10 10 10 11
46
3.21 Net International Liquidity as Months of Import Cover
COUNTRIES 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 3.5 3.5 3.5 3.5 3.5 3 3 2.5 2.5 1.5 2 1.5 2
Australia 1 1.5 1.5 1.5 2 1 1 1 1 1.5 1.5 1.5 1.5
Austria 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5
Belgium 0.5 0 0 0 0 0 0 0 0.5 0.5 0.5 0 0
Brazil 1.5 1.5 1.5 1.5 2 3 3 3.5 3.5 4 4.5 4 4
China 1 1.5 1.5 2 3 3 3.5 3.5 3.5 3.5 4 4 4
Germany 0.5 0.5 0.5 0.5 0.5 0 0 0.5 0.5 0.5 0.5 0.5 0
Greece 1 0 0 0 0 0 0 0 0 0 0 0 0
Hungary 1 0.5 1 1 1 1 1.5 1.5 1.5 1.5 1.5 1.5 1.5
India 1 1 1 1 1 1 1 1 1 1 1 1 1
Indonesia 1 1 0.5 0.5 1 1 1 1 1 1 1.5 1 1.5
Ireland 0 0 0 0 0 0 0 0 0 0 0 0 0
Japan 4 4 4.5 5 5 5 5 5 5 5 5 5 5
Mexico 1 1 1 1 1 1 1 1 1.5 1.5 1.5 1.5 1.5
Poland 1 1 1 1 1 1 1 1.5 1.5 1.5 1.5 1.5 1.5
Portugal 1 0.5 0.5 0 0 0 0 0 0 0 0 0 0
Russia 1 1 1.5 1.5 3.5 3.5 3.5 3 3 3.5 4 4 3.5
SouthAfrica 0.5 0 0.5 1 1 1 1 1 1.5 1.5 1.5 1.5 1.5
Spain 1 0.5 0 0 0 0 0 0.5 0.5 0.5 0.5 0.5 1
Switzerland 1.5 1.5 2 1.5 1.5 1.5 1.5 2.5 4 4.5 5 5 5
Turkey 1 1 1 1 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5
UnitedKingdom 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 1 1 1 1 1
UnitedStates 0 0 0 0 0 0 0 0.5 0.5 0.5 0.5 0.5 0
3.22 Exchange Rate Stability

COUNTRIES 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 10 10 10 10 9 10 10 9 8 5.5 9 5 9
Australia 9.5 10 9 10 10 8 9 10 10 10 8 10 10
Austria 10 10 9 9.5 10 10 10 10 10 10 9 10 10
Belgium 10 10 9 9.5 10 10 10 10 10 10 9 10 10
Brazil 8 9 9 9.5 10 9 10 9 9 10 5.5 10 9
China 10 10 10 9 10 10 10 10 10 10 10 10 10
Germany 10 10 9 9.5 10 10 10 10 10 10 9 10 10
Greece 10 10 9 9.5 10 10 10 10 10 10 9 10 10
Hungary 10 10 8 9.5 9 10 10 9 10 10 8 10 10
India 10 10 9 10 9 9.5 10 9 10 10 10 10 10
Indonesia 10 9.5 10 10 10 8 10 10 9 9 9 10 10
Ireland 10 10 9 9.5 10 10 10 10 10 10 9 10 10
Japan 10 10 10 9 9 9.5 9 10 8 10 9 9 10
Mexico 10 10 10 10 8 9.5 10 10 10 10 9 9 10
Poland 8 10 9 8 7 10 10 10 10 10 9 10 10
Portugal 10 10 9 9.5 10 10 10 10 10 10 9 10 10
Russia 10 10 9.5 10 7 10 10 10 10 8 5 9 8
SouthAfrica 10 10 10 9 10 8 10 9 9 9 9 9 9
Spain 10 10 9 9.5 10 10 10 10 10 10 9 10 10
Switzerland 10 10 10 9 10 10 8 10 10 10 10 10 10
Turkey 10 10 9 10 9 10 9 10 10 9 8 9 8
UnitedKingdom 9 10 9 10 9 10 10 10 10 10 10 9 10
UnitedStates 10 10 10 10 10 10 10 10 10 10 10 10 10
47
Appendix 4. Political Risk Rating for the year of 2005-2017 belonging to 23 Countries
Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 68.96 71.00 70.67 67.00 64.88 64.00 66.46 65.21 61.92 62.08 64.17 66.79 67.80
Australia 88.33 86.96 86.50 87.17 87.79 86.08 82.13 81.92 83.54 83.71 83.63 84.54 85.23
Austria 85.92 85.38 86.75 87.33 89.54 88.88 87.50 83.29 82.04 82.96 82.75 80.33 78.65
Belgium 83.88 84.00 81.54 82.13 83.79 83.08 80.79 78.42 79.04 78.88 77.79 77.58 77.08
Brazil 65.71 65.96 65.46 67.13 68.17 68.17 67.54 68.58 66.46 64.46 61.71 61.96 62.41
China 69.25 68.33 69.13 68.08 67.00 64.46 60.92 61.13 61.29 57.04 56.38 55.00 54.95
Germany 82.00 85.54 86.83 86.46 85.88 83.58 81.42 83.71 84.38 85.08 84.67 83.67 82.44
Greece 77.25 76.96 76.79 74.58 73.00 69.67 67.46 66.79 65.21 65.96 70.21 70.58 70.43
Hungary 80.00 79.33 77.50 75.63 74.79 76.04 76.33 72.17 72.75 74.83 75.63 76.92 76.85
India 63.71 63.54 62.46 60.83 63.17 62.04 58.33 57.63 58.83 60.46 61.63 62.88 63.20
Indonesia 53.50 59.54 61.25 59.96 61.79 60.33 59.00 56.08 55.63 56.96 54.79 55.29 55.79
Ireland 89.67 89.83 89.75 89.25 82.88 79.88 80.21 78.29 77.04 81.00 85.83 85.79 85.67
Japan 83.08 83.58 80.63 78.25 78.50 80.63 79.46 78.83 82.33 82.13 83.00 83.08 83.18
Mexico 72.96 73.13 75.50 74.00 70.88 68.88 69.17 67.75 68.96 66.17 59.96 60.42 61.00
Poland 75.00 75.63 74.71 79.58 80.63 79.96 78.79 76.54 74.42 75.50 77.88 78.96 79.26
Portugal 83.83 84.08 83.75 83.21 82.04 79.00 73.92 72.33 70.58 72.38 75.63 78.00 79.55
Russia 67.08 66.83 66.00 65.75 63.21 63.88 61.96 59.50 58.04 56.25 55.75 56.50 56.95
South Africa 70.63 69.25 68.83 67.63 68.00 67.13 66.71 65.96 65.54 63.29 63.79 62.67 62.58
Spain 79.63 80.92 79.54 78.88 75.58 73.13 69.50 68.21 67.75 69.75 72.17 71.83 72.92
Switzerland 89.25 89.00 88.92 88.42 86.67 86.00 86.67 87.71 88.00 88.00 87.88 87.67 87.44
Turkey 69.33 65.83 63.04 60.50 59.21 57.38 57.04 56.67 55.67 52.17 52.33 53.21 53.81
United Kingdom 83.58 81.75 81.83 79.88 76.42 79.67 79.79 76.92 77.46 81.00 85.42 83.92 82.63
United States 81.75 80.33 77.42 80.25 83.96 81.79 81.21 83.63 81.42 80.00 83.17 84.33 85.42
Appendix 5. Economic Risk Rating for the year of 2005-2017 belonging to 23

Countries
COUNTRIES 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 41 41 41.5 39.5 30.5 36.5 38 32 35 28.5 33 27 32.5
Australia 41 40.5 40.5 37.5 37 37.5 37.5 40 38.5 39 39.5 40 39.5
Austria 41.5 43 43 40.5 34.5 40.5 41 39 38.5 40.5 40.5 42.5 42
Belgium 41.5 42.5 43.5 37.5 34 40.5 37.5 36.5 37.5 38.5 39.5 39 41
Brazil 37 37 38.5 38.5 33 38.5 37 35.5 35.5 32.5 26 26.5 33.5
China 41 42.5 42.5 42.5 42.5 42.5 41.5 43.5 42 43 43.5 42.5 43
Germany 40 43.5 45 41 34.5 42 44.5 42 42.5 44.5 43.5 44.5 45
Greece 33 36 34.5 28 25.5 24.5 25 28 28.5 37.5 35 38 40
Hungary 34.5 33.5 31 32.5 28.5 35.5 36.5 34 40.5 41 42 42 41.5
Indonesia 36.5 35.5 36.5 32 32.5 34 34 34 34.5 36.5 37 37 37.5
India 36 36.5 38.5 36.5 37.5 38.5 38 36 34.5 35 34 36.5 36.5
Ireland 42.5 43 41 28.5 27.5 33 36.5 34 38 43 45 41.5 46.5
Japan 40.5 41 41.5 37.5 31.5 40 36 37.5 38.5 37 40.5 40 43
Mexico 39.5 39.5 38 36 28.5 38.5 36.5 36.5 34.5 36 36 37 37.5
Poland 36.5 39 39 36 34.5 35.5 37 35.5 36.5 38 39.5 39.5 41
Portugal 33 33.5 36.5 33.5 28 32 31 30.5 36 36.5 38.5 40 40.5
Russia 43 43.5 43 41.5 32.5 42.5 42.5 42 38 37 31.5 35 39.5
South Africa 37 38.5 38 35 30 36.5 36 34.5 34.5 33.5 33.5 32 33.5
Spain 39.5 41 40.5 34.5 29 33 31.5 30.5 35 38.5 40 41.5 40.5
Switzerland 46 47 47.5 43.5 40 46 44 44.5 44.5 44 44.5 44 44.5
Turkey 38 38 38 34.5 27.5 37 38 37.5 38.5 38 39.5 38 38
United Kingdom 39 39 39 34 28 34 35.5 34.5 37 38 38 38.5 38.5
United States 38 38 37.5 33 29.5 35 33.5 35 37 37.5 38.5 37 37.5
48
Appendix 6. Financial Risk Rating for the year of 2005-2017 belonging to 23 Countries
COUNTRIES 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 43.5 43 42.5 43.5 42.5 43 42 41 38.5 34.5 37 30.5 35
Australia 32 33 32 33.5 34.5 31 33 32.5 32 31.5 27.5 31.5 33.5
Austria 33 34 33 33 33.5 33.5 33 33 32.5 32.5 31 32 32
Belgium 32 31.5 30.5 31.5 32 32 32 32 32.5 32.5 31.5 32 32
Brazil 35 37.5 38 38 39 37.5 38.5 38.5 37 37.5 32.5 36 38.5
China 44 44.5 45.5 45.5 46.5 45 45.5 45.5 45 45 46 45.5 45.5
Germany 33 33 31.5 31 32.5 32 32 32.5 33 32.5 32 32 32
Greece 34.5 33.5 32.5 32.5 34 33 32.5 33 32 32 31.5 32.5 32.5
Hungary 31 29.5 25 26.5 26.5 27.5 30 32 33.5 33.5 32.5 33.5 35
India 36 35.5 36 37.5 37 38 39 38 38.5 36.5 36 36.5 36
Indonesia 39 40.5 39.5 39 40 37 40 38.5 38.5 37 38.5 39 40
Ireland 31.5 33 32 31 32.5 32 32 31 31 30.5 29.5 30.5 30.5
Japan 42.5 42 42 41.5 42.5 42.5 41.5 41.5 40 41.5 40 40 42
Mexico 42.5 41.5 43.5 42.5 40 42.5 41 39.5 40.5 39.5 39.5 38.5 40
Poland 34.5 35.5 36 33 33 35.5 35.5 37 36.5 36 34.5 35 37
Portugal 31.5 31.5 29.5 29.5 30.5 31 30.5 29.5 31 29.5 29.5 31 31
Russia 34.5 34.5 36.5 35.5 33 39 40.5 42 41.5 39.5 35 39 37.5
SouthAfrica 43 42.5 42 41 41 40 42.5 39 39 39 40.5 37.5 38
Spain 31.5 31 28.5 29.5 31 31 31 30.5 30.5 29 29 30.5 31.5
Switzerland 30 29 26 27 30 31.5 30.5 33 36 36.5 36.5 38 38
Turkey 37.5 39 37 36 34.5 38 36.5 39 38 36.5 36 34.5 33
UnitedKingdom 28 28.5 27.5 29.5 29.5 28.5 28 30 29 30 30 28.5 29.5
UnitedStates 35 34.5 34 33 34 34 34 34.5 33.5 33.5 33.5 33.5 33.5
Appendix 7. Composite Country Risk Rating for the year of 2005-2017 belonging to 23
Countries
COUNTRIES 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Argentina 76.73 77.50 77.33 75.00 68.94 71.75 73.23 69.10 67.71 62.54 67.08 62.15 67.65
Australia 80.67 80.23 79.50 79.08 79.65 77.29 76.31 77.21 77.02 77.10 75.31 78.02 79.11
Austria 80.21 81.19 81.38 80.42 78.77 81.44 80.75 77.65 76.52 77.98 77.13 77.42 76.33
Belgium 78.69 79.00 77.77 75.56 74.90 77.79 75.15 73.46 74.52 74.94 74.40 74.29 75.04
Brazil 68.85 70.23 70.98 71.81 70.08 72.08 71.52 71.29 69.48 67.23 60.10 62.23 67.20
China 77.13 77.67 78.56 78.04 78.00 75.98 73.96 75.06 74.15 72.52 72.94 71.50 71.72
Germany 77.50 81.02 81.67 79.23 76.44 78.79 78.96 79.10 79.94 81.04 80.08 80.08 79.72
Greece 72.38 73.23 71.90 67.54 66.25 63.58 62.48 63.90 62.85 67.73 68.35 70.54 71.46
Hungary 72.75 71.17 66.75 67.31 64.90 69.52 71.42 69.08 73.38 74.67 75.06 76.21 76.67
India 68.10 67.27 67.48 65.17 66.33 67.02 65.67 64.81 65.92 66.73 67.31 68.19 68.35
Indonesia 64.25 68.27 69.63 67.73 69.65 67.92 68.50 65.29 64.31 64.48 63.65 65.40 66.15
Ireland 81.83 82.92 81.38 74.38 71.44 72.44 74.35 71.65 73.02 77.25 80.17 78.90 81.34
Japan 83.04 83.29 82.06 78.63 76.25 81.56 78.48 78.92 80.42 80.31 81.75 81.54 84.09
Mexico 77.48 77.06 78.50 76.25 69.69 74.94 73.33 71.88 71.98 70.83 67.73 67.96 69.25
Poland 73.00 75.06 74.85 74.29 74.06 75.48 75.65 74.52 73.71 74.75 75.94 76.73 78.63
Portugal 74.17 74.54 74.88 73.10 70.27 71.00 67.71 66.17 68.79 69.19 71.81 74.50 75.52
Russia 72.29 72.42 72.75 71.38 64.35 72.69 72.48 71.75 68.77 66.38 61.13 65.25 66.97
SouthAfrica 75.31 75.13 74.42 71.81 69.50 71.81 72.60 69.73 69.52 67.90 68.90 66.08 67.04
Spain 75.31 76.46 74.27 71.44 67.79 68.56 66.00 64.60 66.63 68.63 70.58 71.92 72.46
Switzerland 82.63 82.50 81.21 79.46 78.33 81.75 80.58 82.60 84.25 84.25 84.44 84.83 84.97
Turkey 72.42 71.42 69.02 65.50 60.60 66.19 65.77 66.58 66.08 63.33 63.92 62.85 62.40
UnitedKingdom 75.29 74.63 74.17 71.69 66.96 71.08 71.65 70.71 71.73 74.50 76.71 75.46 75.32
UnitedStates 77.38 76.42 74.46 73.13 73.73 75.40 74.35 76.56 75.96 75.50 77.58 77.42 78.21
49
References
1. PRS. (2014). International Country Risk Guide Methodology. East Syracuse,

NY: PRS Group.
2. Lee, K.Y., & Naknoi, K. (2014). Exchange rates, borrowing costs, and exports:
Firm-level evidence, University of Connecticut Department of Economics,
Working Paper, No: 2014-18.
3. IMF. (1993). Balance of Payments Manual. Washington: International
Monetary Fund.
4. Baltagi, B.H. (2014). Econonometric Analysis of Panel Data, 5th Edition
5. https://data.worldbank.org
6. http://data.imf.org
7. https://guides.tricolib.brynmawr.edu/icrg
8. https://data.oecd.org
9. stats.oecd.org
10. https://tradingeconomics.com
11. https://www.ceicdata.com
12. govdata360.worldbank.org
13. https://www.focus-economics.com/economic-indicator/external-debt
50

Country Risk and Fdi

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Contents

CERTIFICATE ....................................................................................... Error! Bookmark not defined.

Country Risk and FDI Inflows

2.1 Economic Risk

2.2. Financial Risk

2.3 Political Risk

Governmental inconsistency, inability to prevent the property rights, slow

As stating that FDI has important roles on integration processes of developing

In the empirical literature, on the contrary to above-mentioned studies which

Table 1. Descriptions of Variables

POL-R Political Risk. As taking values ranging from 0 to 100, its

FIN-R Financial Risk. As taking values ranging from 0 to 50, its

COUN-R Country Risk. An integrated risk level, calculated as COUN-R =

Each component (variable) out of the 22 said variables is assigned a maximum

The Political Risk Rating

Table 2. Components (and their respective Weights) of Political Risk

Components of Political Risk:

A. Government Stability – 12 Points

B. Socioeconomic conditions – 12 Points

C. Investment Profile – 12 Points

D. Internal Conflict – 12 Points

E. External Conflict – 12 Points

G. Military in Politics – 6 Points

I. Law and Order – 6 Points

J. Ethnic Tensions – 6 Points This component is an assessment of the degree of

L. Bureaucracy Quality – 4 Points

Assessing Political Risk

The Economic Risk Rating

Table 3. Components (and their respective Weights) of Economic Risk

B. Real GDP Growth – 10 Points

C. Annual Inflation Rate – 10 Points

D. Budget Balance as a Percentage of GDP – 10 Points

E. Current Account as a Percentage of GDP – 15 Points

Assessing Economic Risk

The Financial Risk Rating

Table 4. Components (and their respective Weights) of Financial Risk

Model I: FDIi = β1ECO-Ri + β2FIN-Ri + β3POL-Ri + ɳi + γi + Ɛi (1)

Model II: FDIi = β1COUN-Ri + ɳi + γi + Ɛi (2)

In the model, ɳi represents the unobservable individual effects, γi represents the

Regression Analysis (Panel Wise)

Coefficients Standard Error t Stat

2. Australia- Model 1 regression analysis showed a very strong and significant

Coefficients Standard Error t Stat

Coefficients Standard Error t Stat

4. Belgium- Model 1 regression analysis did not show a significant relationship

Coefficients Standard Error t Stat

Coefficients Standard Error t Stat

6. China- Model 1 regression analysis showed a significant relationship between FDI

Coefficients Standard Error t Stat

Coefficients Standard Error t Stat

8. Greece- Model 1 regression analysis did not show a significant relationship

Coefficients Standard Error t Stat

9. Hungary- Model 1 regression analysis showed a significant relationship between

Coefficients Standard Error t Stat

Coefficients Standard Error t Stat

Coefficients Standard Error t Stat

Coefficients Standard Error t Stat

Coefficients Standard Error t Stat

14. Mexico- Model 1 regression analysis showed a somewhat significant relationship

Coefficients Standard Error t Stat

Coefficients Standard Error t Stat

Coefficients Standard Error t Stat

Coefficients Standard Error t Stat