How Does Geopolitical Risk Shape Investment Flows? Some Evidence from the IMF Using our ICRG Series
I’m often asked by my private clients about investment destinations and how types of country risk affecting FDI flows. This is part of the now longstanding discussion over various ‘push and pull’ factors.
The IMF’s Working Paper series has done an incredible job on this score and has done an equally admirable job of using our data to illuminate some of the specific factors.
In the Fund’s 2025 Article IV Consultation (1st Review) of El Salvador’s Extended Fund Facility, the authors use our ICRG data to show that political and economic stability risk indicators display increasingly significant impacts on FDI trend inflows. And that improvements in law and order indicators have strong positive effects, generating cumulative FDI gains exceeding 0.1 percentage points of GDP in FDI trend inflows over a year.
Have a look when time permits: https://www.imf.org/en/Publications/CR/Issues/2025/07/15/El-Salvador-2025-Article-IV-Consultation-First-Review-Under-the-Extended-Fund-Facility-and-568621
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Moving beyond current opinions, a seasoned look into the most pressing issues affecting geopolitical risk today.
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