Italy’s New Government: Business as Usual

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

Lorenzo Ammirati

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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Political Risk to the Mining Sector in South Africa

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

Randfontein Mine, Johannesburg, November 2014. Source: Paul Raad via Flickr.

Ndzalama Cleopatra Mathebula 
Institute of Risk Management South Africa

Generally defined, political risk is the expected cost or loss incurred by a business due to political decisions, events, and actions. With the evolution of the discipline, it is not only government or organizations that can generate  political risks, but also labour unions and civil society that can emanate risks. The South African mining sector includes abundant political risk yet is an attractive investment destination given its large platinum, gold, and coal reserves.

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Modelling the Country Risk of Zambia

Journal of Political Risk, Vol. 10, No. 3, March 2022

Simon Muwando
University of Lusaka

Victor Gumbo
University of Botswana

Gelson Tembo
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 is modelling Zambia’s country risk. A mixed method with concurrent research design was employed. Personal interviews were the main instrument for collection of primary data and snowball sampling was used to select the interviewees. Secondary data was collected from the Lusaka Stock Exchange (LSE), Ministry of Finance, Bank of Zambia and Central Statistical Office. An autoregressive distributed lag technique was employed on annual data for the 1994 to 2018 period. This approach was chosen as it works best for small samples. The findings of the study revealed that the short run drivers for country risk of Zambia are beta, current account balance, political risk, unemployment rate and weighted short term interest rates. Current account balance was found to positively affect country risk while beta, political stability, and weighted short term interest rates negatively influence it.  The study findings established that the long run determinants of country risk of Zambia are current account balance, betas, political risk, and unemployment rate. From the study findings, current account balance positively influences country risk of Zambia whereas beta, and political stability negatively influence country risk of Zambia. The study concluded that the major determinant of country risk of Zambia in the short run and long run is current account balance as it has significant positive influence. Effective policies need to be implemented by authorities to manage or reduce persistent current account deficits and political risk, in order to manage country risk.

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Politics in the De-politicised: TikTok as a Source of China’s Soft Power

Journal of Political Risk, Vol. 9, No. 11, November 2021

TikTok logo. Public domain, via Wikimedia Commons.

Zuza Nazaruk

Last year’s “TikTok war” revealed unprecedented hostility of the US government towards the Chinese tech newcomer. The seemingly innocuous software was developed by ByteDance, a Chinese unicorn companyTikTok is a sister app of Douyin, created for the Chinese market. Both apps allow users to share and watch short videos. In July 2020, then-President Donald Trump accused TikTok of a series of breaches, the most serious of which was sharing user data with the Chinese Communist Party (CCP) (Levine, 2020). Yet, some experts, including Adam Segal from the Council of Foreign Relations, considered the near-ban a smokescreen to hinder the growth of the most globally successful Chinese app to date (Campbell, 2020). In 2020, TikTok was the most downloaded app globally, with 89 million new users just in the US (Geyser, 2021). To date, 23% of Americans use or have watched TikTok, with an average American user having spent 14.3 hours monthly on the app in 2020 (Tankovska, 2021).

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Emerging Market Index: An Interview with Life + Liberty’s Perth Tolle

Journal of Political Risk, Vol.9, No. 11, November 2021

Perth Tolle, the founder of Life + Liberty Indexes and the creator of the Freedom 100 EM Index.

Anders Corr, Ph.D.
Publisher of the Journal of Political Risk

This JPR interview with Perth Tolle, founder of Life + Liberty Indexes and creator of the Freedom 100 EM Index, was conducted via email between 14 September 2021 and the 25 November 2021. 

Corr: Can you please explain what your ETF is for those who have no financial experience?

Tolle: An ETF, or exchange traded fund, is a tradable basket of securities, similar to a mutual fund. But unlike mutual funds, ETFs trade on exchanges, and are known for their transparency, tax efficiency, and lower cost.

Most ETFs track an index. And most indexes are market capitalization weighted – where the biggest companies,  and countries, by their market capitalization, get the biggest allocations in the index.

There are three main categories of country classifications for global stocks – developed markets (DM), emerging markets (EM) and frontier markets (FM). Continue reading