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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Myanmar: A Fight For Democracy Against the February 1 Coup

Journal of Political Risk, Vol. 9, No. 3, March 2021

This article is by an anonymous university student in Myanmar (Burma) who is currently supporting the pro-democracy social movements there against the February 1 coup. Anonymity has been granted to the author due to the threat against his person that might result from a byline.

Pro-democracy protesters in Myanmar (Burma) following the February 1, 2021 coup.

On March 15th, the Global Centre for the Responsibility to Protect (GCR2P) announced that they moved Myanmar (Burma) to the “Current Crisis” category, as populations here face crimes against humanity perpetrated by military coup leaders, known as the Junta. That followed the  the March 2 announcement by civil society groups of the Myanmar Military as a terrorist group. Their legitimacy and tactics are, in fact, those of terrorists rather than a government, as they have attacked democratically-elected government officials, and shot randomly into people’s homes in an attempt to quell a rising social movement in defense of President U Win Myint, Daw Aung San Suu Kyi, other government officials, and civil society leaders. Continue reading

“Winning” the Geopolitical Competition with China

Journal of Political Risk, Vol. 9, No. 2, February 2021

Source: Wikimedia

Randall H. Cook
Consultant

By all accounts, the U.S.-China strategic competition is alive and well.  The news that China displaced the United States in 2020 as the world’s preferred destination for Foreign Direct Investment (FDI) was followed closely by publication of a new “Longer Telegram” proposing a U.S. whole of government strategy to contain PRC Premier Xi Jinping’s ambition to realign the geopolitical structure with China as the new fulcrum.  The Biden Administration has sharply changed tack from its predecessor on a range of policies.  But on China, there is remarkable continuity.  The Trump Administration reset the U.S. strategic paradigm and there will be no going back.  Complex interdependent engagement is out; realist bipolar competition is the name of the new (but really, a back to the future sort of) game.

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Geopolitics and the Western Pacific: An Interview with Leszek Buszynski

The book cover of Geopolitics and the Western Pacific: China, Japan and the US, by Dr. Leszek Buszynski. Routledge, 2019.

Journal of Political Risk, Vol. 7, No. 6, June 2019

This interview with Dr. Leszek Buszynski, author of Geopolitics and the Western Pacific: China, Japan and the U.S. (Routledge, 2019), took place by email with Dr. Anders Corr between May 31 and June 12.

Anders: What are some of your recommendations in the book?

Leszek: The recommendations are in the final chapter and have been written from the perspective of Australia as a a middle power and ally of the US.  Basically, the U.S. relies excessively on military power to counter China but this is creating the fear of a US-China clash in the region from which China benefits, particularly within ASEAN.  Scuttling the Trans-Pacific Partnership (TPP) was a mistake because it is a way of bringing together the states of the region into cooperation with the U.S., Japan and Australia in a way which would offset Chinese influence.

Anders: Don’t you think that China is also creating fear with its military buildup? Wouldn’t countries like Japan and South Korea be even more fearful if they did not have the U.S. military there to protect them?

Leszek: This is not the issue, the answer is of course. But without a broader US presence in the region, one that is not just military based, regional countries such as those in ASEAN would feel the pressure to gravitate to China.  China has a way of undermining the U.S. presence and its alliance system by playing on regional fears of conflict and instability, the Philippines under Rodrigo Duterte is a case in point. America has to counteract that. Continue reading

US-China Trade War: Time is on the Side of the US

Journal of Political Risk, Vol. 7, No. 5, May 2019

Ho-fung Hung
Johns Hopkins University

The US-China trade war has unfolded for nearly a year now. After some false hope of a quick deal, China’s backpedaling in May from earlier promises to stop requiring a technology transfer from US firms in China, and to do more to protect intellectual property, obliterated such hope. Trump’s reaction of raising new tariffs on Chinese goods, followed by China’s retaliation in kind, led to an escalation.

Bipartisan Support of Trade War with China

This escalation of the trade war, interestingly, has not unleashed criticism of President Trump in the US. Sources from the US negotiation team and those from its Chinese counterparts both verified China’s last-minute withdrawal of earlier commitments. There is little doubt that Beijing rather than Trump is to be blamed for this re-escalation. Trump’s strong response to the Chinese backpedaling instead got rare bipartisan support. Congress Democrats are on the same side with the President, judging by Senate Minority Leader Chuck Schumer tweet, “Hang tough on China, President @realDonaldTrump. Don’t back down. Strength is the only way to win with China.”[1]

Figure 1. China’s External Financial Position. (Source: World Bank)

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