Comparative Political and Economic Vulnerability: A Composite-Index Approach

This study develops the Political and Economic Vulnerability Score (PAVS), a composite index for assessing cross-country differences in macro-financial and institutional vulnerability. Drawing on publicly available World Bank data, the index combines 13 indicators across financial, macroeconomic, external-liquidity, and governance dimensions for 30 economies during 2000–2020. The empirical analysis uses 516 complete country-year observations to examine cross-sectional variation, the sensitivity of country rankings to alternative weighting schemes, and the persistence of vulnerability over time. The results show marked differences in average PAVS across the sample. Vietnam, Mexico, Italy, Turkey, and Spain record the highest average scores, whereas Saudi Arabia, Singapore, Norway, Switzerland, and Japan record the lowest. The baseline equal-dimension index is broadly consistent with an alternative equal-indicator specification: the Pearson correlation between country-year scores is 0.8048, and the Spearman correlation between country rankings is 0.7989. Nevertheless, ranking changes for China, Japan, and the Russian Federation indicate that selected country assessments are sensitive to weighting choices. PAVS also displays substantial temporal persistence, with a correlation of 0.9303 between current and prior-year scores across 479 consecutive observations. The findings demonstrate the usefulness of a transparent composite-index approach for comparative analysis of country vulnerability.