Category Archives: Consumer spending

Political Risk to Investment in Iran: Sanctions, Inflation, Protectionism, War, Bonyads, and the IRGC

Journal of Political Risk, Vol. 1, No. 7, November 2013.

Figure 1: Foreign Investment in Iran and its Neighboring Countries, March 19, 2012-March 19, 2013. Data Source: The Government of the Islamic Republic of Iran News.

Figure 1: Foreign Investment in Iran and its Neighboring Countries, March 19, 2012-March 19, 2013. Data Source: The Government of the Islamic Republic of Iran News.

By Reza Yeganehshakib

Despite a tumultuous recent political history that includes revolution, war and sanctions, relations between Iran and the West are improving and Western investors are increasingly interested. But, Iran’s politics cause sanctions, and the economy suffers from inflation. Protectionist laws are on the books, and in some cases economic crimes are punishable by death. Regardless of warming relations with the West, Iran has in the past reneged on its agreements, and war is still a risk with non-Western bordering countries and regional powers. The Iranian Revolutionary Guard Corps (IRGC) has nationalized foreign investments in the recent past, and the politically powerful revolutionary foundations known as Bonyads control large segments of the most lucrative investment sectors.

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Stalemate in Egypt: Expect Years of Insurgency vs. Autocracy

Journal of Political Risk, Vol. 1, No. 6, October 2013.

Map of Egypt. Source: University of Texas.

Map of Egypt. Source: University of Texas.

By Anders Corr, Ph.D.

Egypt is on the verge of being engulfed by a long-term insurgency. After a brief period of democratization following the Arab Spring, the world’s most populous Arab country has returned to a popular military dictatorship. General Sisi will likely lead the country, either as power behind the President, or as President himself. The primary difference between the Egypt of Sisi and the Egypt of the pre-Arab-Spring Mubarak will be a function of the overthrow of the democratic Islamism of President Morsi. A new outraged minority with pro-democracy and pro-Islamist beliefs fielded popular protests, and was repressed with lethal force. A significant minority of that minority will now divert their energy towards terrorism and organized insurgency. Continue reading →

Political Risk in Europe: A Quantitative Index Based on Measures of Corruption, Market Distortion, and the Shadow Economy

Journal of Political Risk, Vol. 1, No. 5, September 2013.

Figure 1: Political Risk in Europe 2012

Figure 1: Political Risk in Europe 2012. The index arranges the countries relative to one another. The separate values would change if more cases are added to the sample.

By Stoycho P. Stoychev, Ph.D.

This paper proposes a quantitative index of political risk in Europe, based for the first time on corruption, market distortion, and the shadow economy. It is constructed upon the idea that within a continuum between rule of law and corruption, the levels of political risk vary greatly. Institutional statistical data are used to allow for reliability in time and cross-country comparison. As a proof of reliability, the resulting scores are highly correlated with other applied indices of political risk. A major advantage of the proposed index, however, is that it differentiates between developed countries, which is not possible with existing risk indices. Continue reading →

Political Risk in The Gambia: Crime, Terrorism, Monetary Instability, Small Business Flight, and Protectionism

Journal of Political Risk, Vol. 1, No. 4, August 2013.

Figure 1: Comparison of Gambia and Sierra Leone on the Ease of Doing Business in 2013. Data Source: World Bank. [1]

Figure 1: Comparison of Gambia and Sierra Leone on the Ease of Doing Business in 2013. Data Source: World Bank. [1]

By Anders Corr, Ph.D., and Naheed Vadsaria

Political risk in the tiny West African state of “The Gambia” is high.  Named after the small river around which its borders fluctuate, the country hosts a dictatorship established in a 1994 coup. The country also hosts Hizbollah operatives who conduct international financial transactions, and is one of the top African cocaine transshipment points to Europe. Local businesses are considering fleeing to Sierra Leone to escape a raft of seemingly arbitrary and protectionist laws promulgated by the President for potentially personal reasons. Continue reading →

Protests in Latin America: impact on investment, the economy, and political stability

Figure 1: Economic data for Argentina, Brazil, Chile, Costa Rica and Venezuela. Sources: Worldbank 2012, Index Mundi and Agencia Brasil.

Figure 1: Economic data for Argentina, Brazil, Chile, Costa Rica and Venezuela. Sources: Worldbank 2012, Index Mundi and Agencia Brasil.

Journal of Political Risk, vol. 1, no. 3, July 2013.

By Evodio Kaltenecker

Over the last twelve months, it would seem that the habitants of Latin America and the Caribbean are particularly adept at protesting against their leaders and institutions, especially in Brazil, Chile and Costa Rica. Over a one-year period, Brazilian, Chilean and Costa Rican  government officers witnessed hundreds of thousands of citizens protesting issues such as crime, corruption, and the lack of low-cost quality public services.

Although there are many differences among the movements, the similarities are striking. First, protesters target problems that have significant impact in their lives: education, transportation and political inefficiency. Second and counter-intuitively, those countries have all enjoyed economic booms recently. Finally, all three countries face important elections in the near-term future. Continue reading →