POLITICAL/REGULATORY ENVIRONMENT
DEFINITION: Political stability as it relates to regulatory environment of supply chain; clarity and enforcement of regulations; government and public support for foreign investment and foreign business operations; levels of protectionism and inequalities between domestic and foreign interests; transparency of regulatory process and enforcement; effectiveness of regulatory redress / adjudication process; level of official and unofficial corruption; arbitrariness of regulatory enforcement; level of support within the government to eliminate corruption.
How frequently do government economic policies change?
_X__Very rarely – gradual adjustments based on changing economic conditions
___Occasionally – with discussion/debate building up before policy changes
___Frequently – large adjustments in economic policies based on political, social or economic considerations
___Arbitrarily – changes come with little warning, often extreme swings in policies, relatively unpredictable
[1/7 points]
Are regulations clear and transparent, and equally enforced?
___Regulation enforcement strongly favors export-based industries
_X__Regulations are clear, open and available. Selective enforcement extremely rare.
___Regulations open to interpretation. Enforcement can be selective.
___Regulations opaque, enforcement often arbitrary.
[1/7 points]
Are regulations enforced evenly across the country?
___Central regulations are equally applied and enforced
_X__Some regional variations, directed by the center, fairly clearly defined
___Some regions setting their own regulations, center minimally influential in those areas
___Weak central authority or select enforcement, local governments or authorities make their own rules
[1/7 points]
Is there a separate regulatory environment for foreign run operations?
_X__ Foreign ventures strongly encouraged. Offered preferential tax rates, ease of regulatory approval
___ Foreign ventures on equal footing with domestic ventures, or given only selective concessions or incentives
___ Foreign ventures subject to strong protectionist bias via selective enforcement or public pressure
___ Foreign ventures discouraged or not allowed
[1/7 points]
How stable is the political system?
_X__ Stable, established system. Government change is not regime change, and system is in place for orderly transition between governments
___ Moderately stable – government has changes in party that result in differences in policies, sometimes significant shifts. Governments can frequently change based on popularity or policies.
___ Autocratic - Government either doesn’t change, or changes infrequently, though individual leaders may shift and modify policies. Small potential for a major shift, but would require a significant event to trigger it.
___ Developing, untested, weak – the political system is in its early phase, has undergone a major transition recently, or is facing the high risk of a major system transition in the near future. Regime change can occur frequently
___ Collapsed or chaotic government – regime is unreliable or non-existent. Policies are random, unenforceable or non-existent.
[1/7 points]
Is country prone to sudden protectionist swings to defend national products?
_X__ Rarely or of only selective or minor significance
___ Discussion of protectionism a common political tool, but with little practical application
___ Selective protectionism commonly applied, via public pressure, regulations or through multilateral bodies
___ Strong protectionist tendencies, vocal and applied economic nationalism
___ Nationalized economy, strong isolationist tendencies
[0.75/7 points]
Do this state’s customs services meaningfully inhibit trade in and of themselves
___Country incorporates free trade zones into its custom’s regime to facilitate transfer of goods
_X__Minimal hassles
___Bureaucratic and cumbersome
___Explicitly designed to complicate trade
[0.5/7 points]
Does this state place significant tariff and/or non-tariff barriers to its exports?
_X__None to minimal
___Yes, but the tariffs’ impact in terms of cost and/or time is either minor or the tariffs only affect a limited amount of the state’s exports
___Yes, a majority of the this state’s exports are regularly impacted in terms of cost and/or time
___Yes, such tariffs are the primary source of government income
[0.75/7 points]