Modelling Country Risk of Zambia

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Journal of Political Risk, Vol. 12, No. 8, August 2024

Simon Muwando1
University of Lusaka

Victor Gumbo2
University of Botswana

Gelson Tembo3
University of Zambia

 

Abstract

The world has experienced a dramatic increase in the flow of transnational investments following increased internationalization and globalization of firms in the previous decade. Country risk exposure is a cause for concern for all the institutions that are engaged in multinational trade and finance. The main objective of this study was to model the Zambia’s country risk. A mixed method with concurrent research design was employed. An autoregressive distributed lag technique was employed on annual data from the 1994 to 2018 period. Country beta was used as a proxy for indicating country risk. The findings of the study revealed that the main determinants of country risk of Zambia in the short run are beta, current account balance, political risk, unemployment rate, and short-term interest rates. In the long run, country risk of Zambia is mainly influenced by current account balance, betas, political risk and unemployment rate. Effective policies need to be implemented by authorities to manage persistent current account deficits and political risk.

Key Terms: country risk; country risk analysis; internationalization; globalization; autoregressive distributed lag; Zambia; globalization

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A review of Political Risk: Facing the Threat of Global Insecurity in the Twenty-First Century

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Journal of Political Risk, Vol. 12, No. 6, June 2024

Ndzalama Mathebula
University of Johannesburg
The image shows the cover of a book titled "Political Risk: Facing the Threat of Global Insecurity in the Twenty-First Century." The authors listed at the top are Condoleezza Rice and Amy Zegart. The cover features a globe, cracked open in the middle, revealing a fragmented and divided world map. At the bottom, there is a quote from Eric Schmidt, the former CEO of Google, praising the book as "Smart. Informative. Overdue." The overall design is clean, with a predominantly white background and blue and black text.

Source: Weidnfeld&Nicolson

The book Political Risk: Facing the Threat of Global Insecurity in the Twenty-First Century by Condoleezza Rice and Amy Zegart provides a remarkable overview of the political risk discipline, demonstrating its evolution and growing literature. The ten-chapter book is carefully curated to identify the importance of stakeholders understanding political risk and its evolution in the present century. The writings presented in the book are relevant, but not limited to, businesspersons, government actors, international relations practitioners, corporate personnel, policymakers, organizations, and students – especially given the rate at which the world is changing.

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Italy’s New Government: Business as Usual

Posted on by Assistant Editor

Journal of Political Risk, Vol. 11, No. 1, January 2023

Lorenzo Ammirati

The image depicts a poster with a stylized black-and-white illustration of a woman wearing a military-style uniform and cap, reminiscent of fascist propaganda art. The background features the Italian flag with vertical green, white, and red stripes. Below the image, in bold black and red text, is the label "MUSS-MELONI", which is a play on the names of Benito Mussolini, the Italian fascist dictator, and Giorgia Meloni, the Italian politician. The image appears to be a piece of street art or protest art, criticizing Meloni by drawing a parallel between her and Mussolini.

Poster of Giorgia Meloni, leader of the Brothers of Italy Party, 2022. Source: Duncan Cumming via Flickr.

Nationalist identarian right-wing party Fratelli d’Italia (“Brothers of Italy”) was the only major Italian party to oppose former European Central Bank President Mario Draghi’s “national unity” coalition government which governed Italy between February 2021 and September 2022. Among the key campaign promises made by Fratelli d’Italia’s leader and current Italian Prime Minister Giorgia Meloni during the electoral campaign of September 2022 was a break with the economic policies of the Draghi government. However, the first Italian female Prime Minister has thus far demonstrated the opposite orientation.

In fact, Meloni’s sphere of decision making on economic policy is severely limited. Italy’s extremely high levels of public debt (above 150% of GDP) coupled with weak trust from financial markets and the European Union’s tight fiscal rules make it very costly (both financially and reputationally) for any Italian government to finance new public policies. Additionally, investments are currently mainly being made through the European Union’s Recovery Instrument, an ad-hoc fund created after the COVID-19 pandemic which lends money for EU approved projects, greatly constraining the power of the Italian government.

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One Step Forwards, Two Steps Back: Women Tango with Reproductive Rights

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Journal of Political Risk, Vol. 10, No. 9, September 2022

The image shows two women holding a large green banner with the text "RiseUp4AbortionRights" written in bold white letters. They are standing in front of the White House, which is visible in the background. The image appears to be taken during a protest or demonstration advocating for abortion rights. The women are smiling, and the atmosphere suggests an organized and peaceful protest.

RiseUp4AbortionRights protest in Lafayette Square, September 2022. Source: Victoria Pickering via Flickr.

Stephanie Wild
University of Cape Town

It is often assumed that progress is linear. This assumption is seen when looking at human rights. The usual formula begins with an activist group. Members of civil society take action to change injustices that they see within society. At the point where civil disobedience and protest becomes unmanageable, government officials are pressured into making legislative changes. From there, a societal mind-shift occurs. At this stage, disenfranchisement becomes frowned upon. This is the formula to progress. However, the reality is not so straight-forward. Rather, progress ebbs and flows. It is in flux. 

This is keenly seen when looking at the world’s attitude towards women’s rights and bodily autonomy. For one, the US is now reversing the steps forward taken by feminist activists in the 1970s. More specifically, in 1973 the US Supreme Court ruled that the Texas ban on abortion was unconstitutional. This case, known as Roe v. Wade, paved the way forward. The ruling did not only apply to Texas. Rather, any undue state restriction on abortion became unconstitutional. On June 24th, 2022 this all changed. The US Supreme Court overturned Roe v. Wade, which removed 50 years of legal protection for women seeking safe abortions. Due to legislation in place prior to the 1973 ruling, abortion was automatically outlawed in many states as a result of the overturning. Other states took action to implement bans. As a result, abortion is now banned across a number of US states, namely Idaho, Oklahoma, Texas, Arkansas, Missouri, Wisconsin, Louisiana, South Dakota, Mississippi, Alabama, Tennessee, and Kentucky. The consequence is that women today find themselves fighting the same battle fought by the activists of the early 1970s.  Continue reading →

China’s Sharp Power

Posted on by Assistant Editor

Journal of Political Risk, Vol. 10, No. 8, August 2022

A series of paintings of communist leaders, including Vladimir Lenin, Karl Marx and Mao Zedong, lined up along a Hong Kong road.

A series of paintings of communist leaders lined up along a Hong Kong road, 2016. Source: Flickr.

Roman Štěpař
Charles University

If we understand geopolitics as a “representation of space”, then the Indo-Pacific region can be seen as an emerging geopolitical hotbed in which major powers struggle not only for control but also for discourse of values and worldviews. In this particular geopolitical competition of values and mindsets, a sharp power is gradually gaining prominence, and in the Indo-Pacific region, China is at the center of the action.

After the collapse of the Soviet Union, the lessons of Gorbachev’s “failure” were passed on to Chinese citizens. They denounced Moscow’s ideological neglect for this catastrophe and warned that it was possible that it would happen in China as well. Chinese foreign policy has as a result been transformed. After 40 years of remarkable rise, China has now clearly demonstrated its desire to lead the world by reasserting itself in a position that its leaders consider “historically correct.”

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