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financial strength of a country - best indicators

 
 
mella
 
Reply Mon 29 Dec, 2014 09:23 am
Dear economics experts,

I am trying to derive an indicator of countries' financial strength, particularly with respect to how well they can absorb shocks caused by natural disasters (e.g., hurricanes or earthquakes). In your opinion, what would be the key economic numbers / determinants one should use to construct such an indicator? I figure GDP per capita could be an important parameter, maybe also government debt, a country's gross savings or total reserves... Since I am not an economist, I would greatly appreciate any help and "expert guesses" on this - ideally, the data needed should be globally available (e.g. World Bank data).

Thank you very much and best regards,
mella
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Type: Question • Score: 1 • Views: 943 • Replies: 4
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cicerone imposter
 
  1  
Reply Mon 29 Dec, 2014 10:34 am
@mella,
You're on the right tract; do some research on the areas you have mentioned.
I would also add interest rate and stability of the government as important components. Good luck.
mella
 
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Reply Tue 30 Dec, 2014 03:11 am
@cicerone imposter,
Thank you very much for your reply!
My problem is that there are a lot of indicators one could use (as I mentioned: savings, debt, reserves, GDP/capita, cash surplus or deficit etc.), but it is not clear what exactly their meaning / relevance is when it comes to assessing a country's financial strength (e.g., the national debt of the U.S. is enormous, but I doubt that this would impair the country's ability to respond to natural disasters in terms of financing the recovery) - so I would be happy about any suggestions on how to prioritize or weigh the indicators.

Best,
mella
roger
 
  1  
Reply Tue 30 Dec, 2014 03:53 am
@cicerone imposter,
All that, and take a look at power generation. It's hard to hide and gives strong clues to the current state of the economy. Of course, it predicts exactly nothing.
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cicerone imposter
 
  1  
Reply Tue 30 Dec, 2014 12:30 pm
@mella,
The problem with trying to tie down an answer with so many variables that influences any economy, all one can do is to provide an 'example' country to analyze how it will perform. Even then, it's an impossible task because economies continue to remain in flux that changes the character of any one countries performance.
Try to approach it with the country's GDP (strength of the per capita economy), the variety of products and services produced, interest rate, the social benefits of the country, the stability of its government, and how it can attract outside investments.
How any country can survive natural disasters is a very different scenario.
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