Author Archives: admin

Chinese Political and Economic Influence in the Philippines: Implications for Alliances and the South China Sea Dispute

Figure 1: China and Philippines: Military Expenditure and Energy Use, 1989-2011

Figure 1: China and Philippines: Military Expenditure and Energy Use, 1989-2011. Shortly after most US forces left the Philippines in 1991-2, Chinese military expenditure and activity in the South China Sea increased dramatically. Data source: Correlates of War Project.

Journal of Political Risk, Vol. 1, No. 3, July 2013.

By Anders S. Corr, Ph.D., and Priscilla A. Tacujan, Ph.D.

The Philippine government is constitutionally required to craft an independent foreign policy, but it must accelerate cooperation with foreign powers to do so effectively.  China’s growing militarization and energy consumption are fast out-pacing the meager military spending and energy consumption of the Philippines (See Figure 1). This makes China, more so than the Philippines, willing to risk military conflict over disputed energy resources, fishing areas, and transportation routes in the South China Sea. Continue reading

Protests in Latin America: impact on investment, the economy, and political stability

Figure 1: Economic data for Argentina, Brazil, Chile, Costa Rica and Venezuela. Sources: Worldbank 2012, Index Mundi and Agencia Brasil.

Figure 1: Economic data for Argentina, Brazil, Chile, Costa Rica and Venezuela. Sources: Worldbank 2012, Index Mundi and Agencia Brasil.

Journal of Political Risk, vol. 1, no. 3, July 2013.

By Evodio Kaltenecker

Over the last twelve months, it would seem that the habitants of Latin America and the Caribbean are particularly adept at protesting against their leaders and institutions, especially in Brazil, Chile and Costa Rica. Over a one-year period, Brazilian, Chilean and Costa Rican  government officers witnessed hundreds of thousands of citizens protesting issues such as crime, corruption, and the lack of low-cost quality public services.

Although there are many differences among the movements, the similarities are striking. First, protesters target problems that have significant impact in their lives: education, transportation and political inefficiency. Second and counter-intuitively, those countries have all enjoyed economic booms recently. Finally, all three countries face important elections in the near-term future. Continue reading

Political Risk to the Mining Industry in Tanzania

Data Source: African Economic Outlook, National Accounts of Tanzania Mainland.

Data Source: African Economic Outlook, National Accounts of Tanzania Mainland.

Journal of Political Risk, Vol. 1, No. 2, June 2013.

By Ilan Cooper and Nathan Stevens

Long considered an anchor of East African stability, Tanzania has recently made headlines for aggressive expansion of its mining and extractive industries. In what might be considered growing pains, economic prosperity has strained government and civilian relations, and is increasingly testing the governance skills of Tanzania’s Ministries. Adverse investment laws, widening religious conflict, and proliferation of small arms and light weapons, however, tarnish Tanzania’s image as a peaceful and prosperous republic. Continue reading

Political Risk in Latin America and the Caribbean: smart move from nimble players, a few populists, and a giant that misses one more opportunity

Pol vs Cred GDP

Political vs. Credit Risk in Latin America and the Caribbean. Data source: International Monetary Fund and Standard & Poor’s, 12/2012.

Journal of Political Risk, Vol. 1, No. 2, June 2013.

By Evodio Kaltenecker

The latest events in Latin America and the Caribbean provide good examples of the current political and economic tone in the region. On one hand, small and mid-sized economies such as Peru, Colombia, Chile and Mexico are working towards the advancement of the Pacific Alliance – an economic group whose agenda includes free trade and economic integration. On the other hand, a group of not-so-small economies still linger with populist recipes for government intervention, nationalization of companies, and manipulation of published government economic data. Continue reading

Brazilian Growth Prospects: the Politics of Inflation, Taxes, and Infrastructure

Journal of Political Risk, Vol. 1, No. 1, May 2013.

by James R. Hunter

Brazil has been the hot investment ticket internati

IPCA Rate of Inflation. Data source: Banco Central do Brasil.

IPCA Rate of Inflation. Data source: Banco Central do Brasil.

onally for six to eight years. The common wisdom is that it has outgrown its “country of the future” label and has become a country of the post-2008 financial crisis. Investors now expect Brazil to grow into a first-world economy. Not so fast. While annual growth between 2005 and 2010 was consistently above 5%, it has stagnated since mid-2011. In 2012, its GDP grew a paltry 0.9% — the weakest of the five BRICS countries. It is time to take a cold look at whether the political factors promoting growth in Brazil between 2005 and 2010 are still operational. Continue reading

Protectionist clauses in the Philippine Constitution restrict foreign direct investment

Journal of Political Risk, Vol. 1, No. 1, May 2013.

Asia Foreign Direct Investment, 2003-2012.

Asia Foreign Direct Investment, 2003-2012.

Author: Priscilla Tacujan, Ph.D.

With the investment-grade credit rating granted by Fitch Ratings in March, an improved international business reputation, and sound fiscal management, the Philippines is poised to become the next foreign direct investment (FDI) destination of Asia.  Other conditions for a robust investment climate are in place: a large market, skilled human capital, youthful population, and strategic location that connects population centers across Asia. Also, the Philippines is increasingly open to international trade. By 2015, Southeast Asia will have the advantage of a single market through the Association of Southeast Asian Nations Economic Community (ASEAN).  According to data provided in the World Economic Forum’s Global Enabling Trade Report 2012, the country’s macroeconomic fundamentals are strong, making it attractive to at least a fraction of the foreign investors concerned over the Euro crisis.

Despite the improvement in the Philippine investment climate, the Philippine Constitution (1987) still has an antiquated article that supports laws restricting foreign ownership of property to 40% (Article XII), with minor adjustments and deviations by subsequent legislation. Removing the clause, and improving access and protections of foreign-owned business, would lead to a quantum leap in FDI and Philippine economic growth. Small changes to legislation are not enough. The Constitution needs to be changed in order to fully welcome foreign investors to the Philippines. Continue reading

Russian weapons delivery in Syria likely met with cooling of East-West relations

Russian naval vessel in Sevastopol. May 2009. Credit: Pavel Parmenov.

Russian naval vessel in Sevastopol. May 2009. Credit: Pavel Parmenov.

Journal of Political Risk, Vol. 1, No. 1, May 2013.

By Anders Corr, Ph.D.

Russia has deployed at least a dozen warships near the coast of Syria in the past few months, the largest Russian naval deployment since the end of the Cold War. Yesterday, Russia delivered sophisticated radar-guided Yakhont anti-ship cruise missiles to Assad’s Syrian forces. The Russian actions are strategically offensive to the United States, as well its European and Israeli allies. They are meant to dissuade Israel, the US, and Europe from increased involvement. The anti-ship weapons, in particular, are offensive weapons that could be used by Assad’s Syrian forces to attack NATO naval platforms necessary for intervention in Syria  (WSJNYT).

Russian actions with respect to Syria complicate the war from a primarily internal issue, to one over international influence between aspirant global and regional hegemons. Because the weapons delivery could be seen to counter Western military actions in the region, they have already increased US congressional criticism of Russia. Such criticism will likely increase in future, especially if the weapons are used against Western assets. This strategic offense to Western military commanders will lead them to more strongly support military options. Ironically, the Russian action increases pressure on Western political leaders to order intervention. Continue reading

Philippine Growth Prospects: Shopping Malls as Positive Indicator

By Priscilla Tacujan, Ph.D.

The Mall of Asia, in Manila, Philippines, is the 4th-largest shopping mall in the world. Photo credit: Ivan Tykhy, 2012.

The Mall of Asia, in Manila, Philippines, is the 4th-largest shopping mall in the world. Photo credit: Ivan Tykhy, 2012.

Just a few years ago, the Philippines was dubbed as “the sick man of Asia.”  Today, it is a regional star, with its stellar economic performance at 6.6% in 2012, coming second only to China’s 7.8%.  Standard & Poor’s (S&P) elevated the country’s credit rating from “stable” to “positive,” and may, according to the Philippine Finance Minister, soon get an investment grade that will enable it to attract even more foreign direct investment (FDI).  Likewise, the World Bank has for the third time upgraded the country’s growth forecast.  Its stock market is one of the best performers in the region.  According to HSBC estimates, if current trends hold up, the Philippines by 2050 can become the 16th largest economy in the world, a giant leap from its current ranking of 44th.

Private investments, especially in the retail industry, are creating major contributions to the country’s economic success, including the modest shopping mall.  Shopping malls are proliferating in towns and cities far beyond Metro Manila.  According to data provided by the Philippine Retailers Association, shopping malls account for about 15% of the country’s GNP and 33% of the entire services sector.  They employ about 18% of the Philippine labor force, translating into about 5.25 million employed Filipinos. Continue reading

Syria Strategy: Add Fuel to the Fire

Bomb crater in Serekaneye, Syria. Photo Credit: Fatih Polat., March 22, 2013.

Bomb crater in Serekaneye, Syria. Photo Credit: Fatih Polat., March 22, 2013.

By Anders Corr, Ph.D.

The US and NATO could be pursuing a strategy of adding fuel to the fire in Syria. The Government of Syria has been allied with Iran, and irritated the US and NATO from a nonproliferation perspective, for a long time. The US has consequently wanted to destabilize the Syrian Government. Now, that wish has been met. The Syrian Government is in a counterinsurgency against rebels that are closely allied with Al Qaeda. Other than humanitarian considerations, the US and NATO should be quietly overjoyed that two enemies are fighting. Continue reading

Expect increased Islamist instability in Bangladesh

By Anders Corr, Ph.D. On Sunday and Monday in Dhaka and Chittagong, Bangladesh, from 70,000 to 200,000 Islamist protesters called for adoption of Islamic law (Sharia) by the secular government. The government responded with force to related road blockages, violent riots, and primitive thrown explosives. The government use of force included some live fire, and a total of approximately 37 killed over two days. That number will likely rise, and thrice that number were likely wounded. The largest opposition party, which is allied with the Islamists, called for a 2-day general strike (WSJ, NYT, CNN, WP, AJ). Footage of the protests is below, courtesy of Associated Press.

The effects of such force will be to increase the number and militancy of islamists in Bangladesh. A minority will likely turn to more subversive violence, such as terrorist assassinations, extortion, and bombings. Such action and reaction by the government and protesters has no obvious resolution in sight. Combined with Islamist anger at continuing legal proceedings against prominent Islamist politicians and public anger at mounting factory deaths, the last two days is likely a turning point for Bangladesh’s stability — in a decidedly negative direction. At least some of this increasing unrest may soon target foreign visitors, investments, and suppliers in the country.

JPR Blog