Investing & Political Instability
There is a relationship between a country’s political instability and businesses’ decisions to invest in that country. The map below uses two thoroughly-researched and celebrated indices to examine these sub-factors – investment freedom and political instability – and their ranges across the globe.
The first index is the “2011 index of Economic Freedom,” compiled by the Heritage Foundation and the Wall Street Journal. It measures ten sub-factors, including investment freedom. The ranking in this category is based on a variety of quantifiable elements, including national treatment of foreign investment, restrictions on land ownership and sectoral investment, and foreign exchange and capital controls.
The second index, the Institute for Economics and Peace’s “Global Peace Index, uses 23 indicators to measure what contributes to peace – defined as the absence of violence – in a country. Political instability, or the degree to which political institutions are able to support the needs of its citizens, businesses and overseas investors, is one of these indicators.
While this is not intended to be a comprehensive illustration of the prospects for peace through commerce, we attempt to illustrate the association between investment freedom and political instability across the globe.