Expanding the Business? Beware of Zambia, Argentina, Nepal, Qatar . . .

Ten countries are most likely to experience an increase in deterioration in peace within the next two years, according to the 2014 Global Peace Index (GPI) report produced by The Institute for Economics and Peace (IEP).

They are Zambia, Haiti, Argentina, Chad, Bosnia and Herzegovina, Nepal, Burundi, Georgia, Liberia and Qatar. This forecast is useful input for companies that already operate in these markets or plan to expand there, allowing them time to prepare risk-mitigation plans and take other precautionary steps, such as insurance coverage. 

The good news is that Singapore, Taiwan, Japan, Australia and New Zealand are ranked in the top 30 most peaceful regions. Asia is home to the world's largest number of peaceful markets after Europe and North America.

But the Philippines, ranked 137 out of 162 countries, saw a deterioration in its “relations with neighboring countries” score because of ongoing tensions with China in the South China Sea dispute. 

Economic cost

The price tag on the global economy of the deterioration in peace conditions is estimated at US$9.8 trillion or 11.3 % of the GDP in the last year – an increase of US$179 billion year-on-year. This figure includes upward revisions of China’s military expenditure and the number and intensity of internal conflicts. According to the GPI report,  11.3% of last year’s GDP is equal to twice the size of the 54 countries in the African economy.

“This is resulting in very real costs to the world economy; increases in global economic impact of violence and its containment are equivalent to 19% of global economic growth from 2012 to 2013,” said Steve Killelea, Founder and Executive Chairman of the IEP.

“To put this in perspective, this is around US$1,350 per person. The danger is that we fall into a negative cycle: low economic growth leads to higher levels of violence, the containment of which produces lower economic growth.”

The GPI report measured the peace and violence to assess the relative probability (90% historical accuracy) of countries that are at risk of deteriorating in peace (or improvement). It examined 162 countries for their on-going domestic and international conflicts, safety and security in society and their militarization by taking into account 22 indicators.  

Regional outlook

Europe and North America have been generally peaceful, with Scandinavian countries performing very well on the peace indicators. South America scored above the global average with Argentina (despite being in the top ten at-risk markets), Bolivia and Paraguay having improved the most compared with Colombia and Venezuela, which lag at the bottom.

Sub-Sahara Africa and South Asian countries have experienced the largest deterioration in peace conditions. The decline is blamed on terrorist activity, the number of conflicts and the number of refugees and displaced persons.  

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