Steve Killelea
Chairman, Institute for
Economics and Peace
3rd November 2010
ISTAT, Rome
www.economicsandpeace.org
The Institute for
Economics and Peace
www.economicsandpeace.org
What Does IEP Do?
Policy
Promote and inform public debate with a view to impact public policy by providing an accessible and
high quality forum for discussion through debates, seminars, lectures, dialogues and conferences.
Education
Present educators with solid empirical data to further study the impacts of peace on economies.
Stimulate the study of the issues by others, and help draw the work of those in related fields.
Analysis
Lead research and rigorous theoretical and empirical analysis around the economies of peace and
the Peace Industry. Collaborate with experts internationally.
Consulting
Develop strategic expertise in the area of peace economics, and conduct client sponsored research
for commercial businesses, foundations and other organizations.
E-publishing
Publish research results and policy recommendations widely and freely, including annual release of
the Global Peace Index.
www.economicsandpeace.org
The Global Peace Index
www.economicsandpeace.org
Motivation for focus on Peace
Major challenge facing humanity is
sustainability
Challenges are global, urgent and require
unparalleled co-operation
Peace is the prerequisite for solving these
problems
www.economicsandpeace.org
Why an Index?
Never been done before
Peace is poorly understood
Peace should and can be measured
Through measuring peace its texture can be
analysed
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Global Coverage
Canada,
United States of America
Argentina, Bolivia, Brazil,
Chile, Colombia, Costa Rica,
Cuba, Dominican Republic,
Ecuador, El Salvador, Guatemala,
Guyana, Haiti, Honduras, Jamaica,
Mexico, Nicaragua, Panama,
Paraguay, Peru, Trinidad and
Tobago, Uruguay, Venezuela
www.economicsandpeace.org
Albania, Armenia, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus,
Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Ireland,
Italy, Kazakhstan, Latvia, Lithuania, Luxembourg, Macedonia, Moldova, Montenegro, Netherlands, Norway,
Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey,
Turkmenistan, Ukraine, United Kingdom, Uzbekistan
Algeria, Angola, Bahrain, Botswana, Burkina
Faso, Burundi, Cameroon, Central African Republic, Chad,
Congo (Brazzaville), Cote d' Ivoire, Democratic Republic of the
Congo, Egypt, Equatorial Guinea, Ethiopia, Gabon, Gambia,
Ghana, Iran, Iraq, Israel, Jordan, Kenya, Kuwait, Lebanon,
Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Morocco,
Mozambique, Namibia, Nigeria, Oman, Qatar, Rwanda, Saudi
Arabia, Senegal, Sierra Leone, Somalia, South Africa, Sudan,
Swaziland, Syria, Tanzania, Tunisia, Uganda, United Arab
Emirates, Yemen, Zambia, Zimbabwe
Afghanistan, Australia,
Bangladesh, Bhutan,
Cambodia, China, India,
Indonesia, Japan, Laos,
Malaysia, Mongolia,
Myanmar, Nepal, New
Zealand, North Korea,
Pakistan, Papua New
Guinea, Philippines,
Singapore, South Korea,
Sri Lanka, Taiwan,
Thailand, Vietnam
Defining Peace
Peace is more than the absence of war. The
perfect state would have no police, jails or crime
Defined peace as the “Absence of Violence”
This definition allows for measurements of both
internal and external peacefulness
“Positive Peace” is uncovered via statistical
analysis with other data sets, indexes and
attitudinal surveys
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23 Indicators
5 measures of ongoing conflict such as: number of
conflicts fought 2003-2008 and number of deaths from
organised conflict
10 measures of societal safety and security including:
number of displaced people, potential for terrorist acts,
number of homicides, number of jailed population
8 measures of militarisation such as: military expenditure,
number of armed service personnel, ease of access to
small weapons Visits to www.visionofhumanity.org doubled
since last year
Weighted on a 1-5 scale
Overall score weighted 60% for internal peace and 40% for
external peace
www.economicsandpeace.org
23 Indicators
Uses both quantitative and qualitative
indicators
Sourced from highly respected organisations
Estimated by EIU analysts where data is
missing
Weighted on a 1-5 scale
Overall score weighted 60% for internal peace
and 40% for external peace
www.economicsandpeace.org
23 Indicators
weight
4
3
4
3
3
5
3
4
4
4
2
indicator
Perceptions of criminality in society
Number of internal security officers and police 100,000 people
Number of homicides per 100,000 people
Number of jailed population per 100,000 people
Ease of access to weapons of minor destruction
Level of organized conflict (internal)
Likelihood of violent demonstrations
Level of violent crime
Political instability
Respect for human rights
Volume of transfers of major conventional weapons, as recipient
(Imports) per 100,000 people
www.economicsandpeace.org
23 Indicators
weight
1
5
2
2
2
3
3
2
4
5
5
5
indicator
Potential for terrorist acts
Number of deaths from organized conflict (internal)
Military expenditure as a percentage of GDP
Number of armed services personnel per 100,000 people
Financial support to UN Peacekeeping missions
Aggregate number of heavy weapons per 100,000 people
Volume of transfers of major conventional weapons as supplier
(exports) per 100,000 people
Military capability/sophistication
Number of displaced people as a percentage of the population
Relations with neighboring countries
Number of external and internal conflicts fought
Estimated number of deaths from organized conflict (external)
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Global Support
The Index has been endorsed by hundreds of individuals
and organizations, including Nobel Laureates, government
officials, renowned academics and business leaders.
They include: HH Dalai Lama; Kofi Annan; Archbishop
Desmond Tutu; President Martti Ahtisaari; Betty Williams;
Muhammad Yunus; Amnesty International; President Jimmy
Carter; Professor Joseph Stiglitz; Sir Mark Moody-Stuart; Her
Majesty Queen Noor of Jordan; His Royal Highness Prince El
Hassan bin Talal of Jordan; Sir Richard Branson and Ted
Turner
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Partners and Uses
Inclusion in SIPRI Yearbook
Case Study for Cranfield University
Inclusion in World Bank data sets and website
Inclusion in OECD website
Partnership with Aspen Institute to promote research outputs
Used in the Ibrahim Index of African Governance
Used in Building Blocks of Peace education curricula of IEP
Inclusion in UNDP Users Guide to Measuring Fragility and Conflict
Inclusion in UN University materials for studies worldwide
Foundation for Global Symposium of Peaceful Nations
Inclusion in Inter-American Development Bank governance indicators
database
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GPI Methodology
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Defining Peace
NEGATIVE PEACE

Absence of war or
conflict

If the country is not
involved in violent
conflicts with
neighbouring states or
suffering internal wars
it has achieved a
state of peace
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POSITIVE PEACE

A more complete
evaluation of peace
should account for the
conditions which are
favourable to its
emergence

Freedom, human rights
and justice are included
CULTURE OF PEACE
 The UN has defined a
culture of peace as
one involving values,
attitudes and
behaviours that:
 reject violence,
 prevent conflicts by
addressing root
causes
 solve problems
through dialogue and
negotiation
and measuring it
Two objectives
Rank the nations of the
world by their relative states
of peace and facilitate crosscountry comparisons
Quantify and measure
the importance and
possible causality of a
range of potential drivers
that may create peaceful
societies
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Measures
 scoring model
 index ranking 149
nations across 23
indicators
 correlate and
statistically analyze data
sets, attitudinal surveys
and indexes to identify
potential determinants of
peace
Outcome
Methodologically sound and
unbiased measurement of
peace. Provides the raw
material for a worldwide
debate on peace
Methodology
Improved year on year
Comparative data available for 2007 to 2010
2010 improvements:
 Heavy Weapons
Sought expert opinion from SIPRI – now sourced form
Military Balance (IISS) and the UN Register of
Conventional Arms
Categories weighed by destructive capability
 Displaced Persons
Previously only refugees counted
IDP’s data sourced form Internal Displacement
Monitoring Centre
-
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GPI 2010 Results
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The Results
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The Results
The 10 Most Peaceful Countries
Rank
Country
1
New Zealand
1.188
2
Iceland
1.212
3
Japan
1.247
4
Austria
1.290
5
Norway
1.322
6
Ireland
1.337
7
Denmark
1.341
7
Luxembourg
1.341
9
Finland
1.352
10
Sweden
1.354
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Score
The Results
The 10 Least Peaceful Countries
Rank
Country
149
Iraq
3.406
148
Somalia
3.390
147
Afghanistan
3.252
146
Sudan
3.125
145
Pakistan
3.050
144
Israel
3.019
143
Russia
3.013
142
Georgia
2.970
141
Chad
2.964
140
DRC
2.925
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Score
A Less Peaceful World?
Majority of the 23 indicators that constitute the index have risen,
indicating an overall decline in the level of peace
The most marked increases in the sum of scores have been in:
The number of homicides per 100,000 people
The likelihood of violent demonstrations
The potential for terrorist attacks
Most of the overall increases in these three indicators were confined to relatively
few countries
Political instability has also increased slightly across the world. This proved
to be the most influenced indicator – changes were registered in just over
60% of the countries
The most marked decreases in aggregate scores have been in:
The measure of the respect for human rights – slight improvement overall
Estimated number of deaths from organized conflict (external)
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The Study of Peace
Top 5 Risers
Country
Score, 2010
Ch. In score, 2009-10
Rank, 2010
Ch. In rank 2009-10
Ethiopia
2.444
-0.107
127
+6
Mauritania
2.389
-0.088
123
+6
Hungary
1.495
-0.080
20
+7
Lebanon
2.639
-0.078
134
+3
Haiti
2.270
-0.060
114
+7
Top 5 Fallers
Country
Score, 2010
Cyprus
2.013
0.276
76
-25
Russia
3.013
0.264
143
-2
Philippines
2.574
0.247
130
-10
Georgia
2.970
0.234
142
-3
Syria
2.274
0.225
115
-18
www.economicsandpeace.org
Ch. In score, 2009-10
Rank, 2010
Ch. In rank 2009-10
Risers and Fallers Since 2009
Top 5 Risers
-0.107 Ethiopia
Change in rank: +6
Sharp drop in the number of Ethiopian fatalities resulting from external
conflict. Decrease in military expenditure as a % of GDP. Improved
assessment of the respect for human rights.
-0.088 Mauritania
Change in rank: +6
Fall in the assessment of internal conflict and violent demonstrations.
Improvement in relations with neighbouring countries.
-0.080 Hungary
Change in rank: +7
Drop in latest published data on homicide rates. Improved assessment
of the respect of human rights.
-0.078 Lebanon
Change in rank: +3
Fall in the perceptions of criminality in society. Falls in the level of
organised conflict and violent demonstrations. Increase in political
stability and assessment of the respect for human rights. Decrease in
the number of deaths from internal conflict.
-0.060 Haiti
Change in rank: +7
Reduction in violent demonstrations and greater respect for human
rights. Drop in the number of fatalities from internal conflict.
www.economicsandpeace.org
Risers and Fallers Since 2009
Top 5 Fallers
+0.276 Cyprus
Change in rank: -25
Changes to our measurement methodologies for two series, aggregate number of
heavy weaponry and refugees (now includes internally displaced people) are the
major contributors to change.
+0.264 Russia
Change in rank: -2
Increase in violent demonstrations and political instability. Increase in measure of
heavy weaponry. Increase in number of deaths from external conflicts.
+0.247 Philippines
Change in rank: -10
Increase in the perceptions of criminality in society. Increases in the latest data for
the homicide rate and proportion of people in jail. Increase in the number of
deaths from internal conflict.
+0.234 Georgia
Change in rank: -3
Increase in violent demonstrations. Decrease in political stability. Increases in
military expenditure as a % of GDP and imports of weaponry. Increase in conflict
indicator and number of displaced people.
+0.225 Syria
Change in rank: -18
Changes to our measurement methodologies for aggregate number of heavy
weaponry a major contributor to the deterioration in the peace score. Also, fall in
respect for human rights and increases in homicides and displaced people.
www.economicsandpeace.org
The Results
Geography and Key Attributes
Ranking states of peace
Small, politically stable, democratic countries top the ranking
1.

15 of the top 20 are Western or Central European

Most are members of a supranational body

Island nations fare well
Geographical rankings
Western Europe far exceeds other regions
2.

Western Europe

Central and Eastern Europe

Asia Pacific

Latin and South America

Middle East

Africa
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Four-Year Trends
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GPI Indicator Movements 2007 - 2010
Indicator
Score change
Change
Military expenditure as a percentage of GDP
-6.44%

Ease of access to weapons of minor destruction
-1.54%

Potential for terrorist acts
-0.20%

Respect for human rights
-0.16%

Military capability/sophistication
2.56%

Relations with neighbouring countries
2.76%

Number of homicides per 100,000 people
5.13%

Number of deaths from organised conflict (internal)
5.16%

15.57%

Number of external and internal conflicts fought
•Although more countries decreased military expenditure as % of
GDP, military expenditure increased
•Increased conflicts mainly Afghanistan
•Homicide increase mainly 2009 data- improved data
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Four Year Trends – Regional Changes
Region
Change in
peacefulness
% Change on
2007
Country
Average
Sub-Saharan Africa

-0.34%
-0.01
Middle East and North Africa

-0.21%
0.00
Latin America

3.02%
+0.06
Asia-Pacific

3.48%
+0.07
Central and Eastern Europe

3.97%
+0.07
Western Europe

4.13%
+0.06
North America

4.27%
+0.07
•Sub-Saharan Africa - decrease in ease of access to small weapons and number
of conflicts fought and improved relations with neighbouring states.
• Middle East & North Africa – increased political stability and a
reduction in military expenditure as a percentage of GDP.
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Four Year Trends – Top, Bottom Nations
Country
New Zealand
Finland
Ireland
Norway
Denmark
Country
Sudan
Iraq
Israel
Russia
Pakistan
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Change in
peacefulness
•




% Change on Score
2007
change
Change in
peacefulness





% Change on
2007
•
4.17%
7.58%
7.93%
14.89%
-7.31%
-2.95%
3.48%
7.17%
19.32%
0.00
+0.05
+0.10
+0.10
+0.18
Score
change
-0.24
-0.10
+0.11
+0.21
+0.53
Four Year Trends – Regional Changes
Region
Change in
peacefulness
% Change on
2007
Average country
change
G20

3.71%
+0.07
ASEAN

3.84%
+0.08
OECD

4.78%
+0.07
BRIC

5.05%
+0.12
EU high-debt countries

5.15%
+0.08
South Asia

6.27%
+0.11
•All blocs performed worse than the global average of 2% down
•G20, OECD: major falls Canada, Turkey, Italy, Mexico
•EU high debt countries are Spain, Portugal, Italy and Greece
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Four Year Trends – Regional Changes
Publication GPI
Year
average
Score
Countries
whose score
has improved
Countries
whose score
has worsened
Countries with
no score change
2007
1.94
•
•
•
2008
1.92
68
39
13
2009
1.96
36
77
7
2010
1.98
41
75
4
1 being peaceful, 5 being un-peaceful
Overall the world became 2% less peaceful
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Business and Peace
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GPI Correlations with Per Capita Income
For every 10 places a country rises on the GPI:
Per capita income increases by US$3,100
Consumer spending on food and non-alcoholic beverages increases by
US$132
Consumer spending on leisure and recreation increased US$144
Consumer spending on household goods and services increases by
US$87
Consumer spending on housing increases by US$309
Consumer spending on footwear and clothing increases by US$87
Consumer spending on communications increases by US$42
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Economic Impacts of Peace
If it could be demonstrated that peaceful environments had a
better propensity for stability, could long term debt be more
aggressively priced?
If there was a relationship between peacefulness and growth,
would more capital inflows result?
If there was a relationship between peace and growth, would
new investment funds be created that invested in areas of the
world that had the fastest improving prospects of peace?
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Economic Impacts of Peace
Lower risk
Lower interest rates
Lower discount rates on future earnings for investments
Projects pay off over long periods
Larger portfolio of investment containing more stable
investments
Long term planning
increased government spending on infrastructure such
as roads, schools, universities
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Business and Peace
Reductions in violence positively impact most businesses

Market potential increases with rising living standards

Costs reduce

Management is more focused on strategic issues rather than
risk mitigation
There are many measures of violence – different types of violence
have different impacts on different products and markets
UN Global Compact Survey

80% of senior executives believe that the size of their markets
increase with peace

79% of senior executives believe that their costs reduce with
increasing peace
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Monetary Value of Peace
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Valuing Peace – How to value peace to the
global economy
Cost based on known literature and conservatively estimated
Little literature that estimates many forms of violence
Some literature estimates terrorism at 10% of GDP in 2002
IADB estimates 1.6% to 5% of GDP costs from violence in various Latin
American countries
WHO estimates inter-personal violence in US at 3.3% of GDP
UNDP estimates African civil wars at 2.2% to 3.3% of GDP per year per conflict
Static Peace – Value shifting from violent industries to Peaceful Industries
Dynamic Peace – Additional value from suppressed or inefficient economic
activity
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Monetary Value of Peace
US$ Trillion
Year
Actual
GDP
Dynamic
dividend
Static
Dividend
Total
Dividend
2006
$48,802
$4,027
$2,147
$6,174
2007
$54,975
$4,435
$2,418
$6,853
2008
$60,755
$5,112
$2,673
$7,785
2009
$57,522
$4,889
$2,530
$7,419
$18,463
$9,768
$28,231
Total
o Static Peace - Value shifting from violent industries to Peaceful
Industries
o Dynamic Peace – Additional value from suppressed or inefficient
economic activity
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Monetary Value of Peace
Valuing Peace – How to value peace to the global economy
Total four year value of peace – US$28.231 trillion
Assuming the world could be 25% less violent, the total additional or redirected
economic activity would equal US$7.06 trillion over four years
Additional US$1.75 trillion per annum
What could this activity finance?

Millennium Development Goals US$100B p.a.

EU climate change €48B p.a.

US debt interest US$232B p.a.

Repay Greek debt US$550B
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Value of Peace – US Industry Breakdown
Sector
Agriculture
Mining
Utilities
Construction
Manufacturing
Wholesale trade
Retail trade
Transportation and warehousing
Information
Finance and insurance
Real estate, rental, leasing
Professional, scientific, technical services
Management of companies and enterprises
Administrative and waste management services
Educational services
Health care and social assistance
Arts, entertainment, recreation
Accommodation and food services
Other services, except government
Government
Total
[1]
Internal pGDP
7.15
14.76
13.88
26.38
74.28
37.14
40.16
18.82
28.21
48.30
80.89
49.69
12.87
External pGDP
6.22
12.83
12.07
22.94
64.59
32.29
34.92
16.36
24.53
42.00
70.34
43.21
11.19
19.34
6.27
46.25
6.36
17.97
14.82
83.45
US$ 646.96
16.82
5.45
40.22
5.53
15.63
12.89
72.57
US$ 562.60
US sectoral data sourced from the Bureau of Economic Analysis
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US$ Billion
The Violence Crisis
El Salvador was
“lucky”
=> here is the
case of
Nicaragua
The case of Nicaragua
Data: 1950 – 2007; real per capita GDP (I$); base year = 2005
Source: computed from Penn World Tables 6.3
Slide courtesy of Jurgen Brauer
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The Violence Crisis
And here is the case of a
country that had no war
=> but its neighbors did
The case of Costa Rica
Data: 1950 – 2007; real per capita GDP (I$); base year = 2005
Source: computed from Penn World Tables 6.3
Slide courtesy of Jurgen Brauer
www.economicsandpeace.org
The Violence Crisis
Blue line:
ppp-GDP
Red line:
UNODC
projection
assuming that
DOM’s homicide
rate were cut in
half (to the level
of Costa Rica’s
homicide rate).
The case of the Dominican Republic
Data: 1950 – 2007; real per capita GDP (I$); base year = 2005
Source: computed from Penn World Tables 6.3; UNODC (2007)
Slide courtesy of Jurgen Brauer
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The Violence Crisis
Per capita GDP
Cumulative
GDP losses
Trend line of
potential GDP
Actual GDP
Index
= 100
time
violence
post-violence
The pothole diagram
Real per capita GDP (I$); base year = 2005
Source: computed from Penn World Tables 6.3
Slide courtesy of Jurgen Brauer
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Correlations With Other
Indices
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Other Indexes
Well Being Indexes
UNDP Human Development Index r = - 0.58
Legatum Institute Prosperity Index r = 0.72
Yale Environmental Sustainability Index r = 0.63
Yale Environmental Performance Index r = - 0.52
Economic Indexes
World Bank Ease of Doing Business Index r = 0.54
World Economic Forum Global Competitive Index r = 0.58
TI Corruption Perception Index r = 0.71
World Bank Knowledge Economy Index r = 0.60
Frazer Institute Economic Freedom Index r = 0.62
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Correlations with Global Peace Index
Social Attributes of Peaceful Nations
Aspects of Nationalism
Less likely to see their culture as superior
Believe that their nation’s morality is average in foreign policy
Active Civil Society
More likely to perceive their media as having a lot of freedom
Less likely to believe that their government can limit expression of ideas
More likely to support leaders who take a compromising approach
More likely to believe that women and men make equally good leaders
Respect for Human Rights
More likely to reject the use of torture
More likely to respect human rights
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Correlations with Global Peace Index
Social Attributes of Peaceful Nations
Aspects of Globalization
More likely to believe anyone can work in their county
Less likely to believe that globalization is growing too quickly
What Citizens Think of Other Nations
Peaceful nations are perceived most positively by the citizens of other nations –
Highest correlation of all attitudes
Support for the Use of the Military
Reject the use of torture
Support military action when sanctioned by the UN
More likely to disagree with the need to US military force to maintain order
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Correlations with Global Peace Index
Social Attributes of Peaceful Nations
Moral and Religious Aspects
Think that their politicians do not need to believe in God
Believe that good and evil are contingent and not absolute
More likely to believe that it is not necessary to believe in God to be moral
Less likely to believe that globalization is growing too quickly
Economic Attitudes
More likely to believe that anyone can work in their country
Less likely to believe that globalisation is growing too quickly
The strongest correlation was that nations that were perceived positively by other nations
were the most peaceful r = 0.88
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Characteristics of Peace
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Resilience of Peace
Why do Peaceful nations perform well?
Tolerant and open societies are more likely to learn and adapt
Violence needs reactive responses, peace allows for more forethought
The future is more predictable in peace, allowing for better planning
Peaceful societies are less likely to create alienation
More likely to co-operate and support in times of crisis
Freedom of information allows a better flow of information through society
Broad education base creates a larger pool of human capital
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Structural Aspects of Peace
Free flow of
information
Sound
Business
Environment
Low levels of
corruption
Peace and
Resilience
Wellfunctioning
Government
Equitable
Distribution
of Resources
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Acceptance
of the rights
of others
High levels
of
education
Good
relations with
neighbors
Structural Aspects of Peace
Well-Functioning Government – GPI Correlations
Index Name
Source
Worldwide Governance Indicators
Voice and Accountability
Political Stability
Government Effectiveness
Regulatory Quality
Rule of Law
Control of Corruption
World Bank
Political Democracy Index
Freedom in the World Survey
EIU
Freedom House
Correlation coefficient
-0.61
-0.87
-0.70
-0.66
-0.76
-0.72
0.56
0.57
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Structural Aspects of Peace
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Structural Aspects of Peace
Well-Functioning Government – Other Correlations
Index Name
Source
Political instability
Corruption perceptions
Freedom of the press
15-34 year old males as a % of adult
population
The extent of regional integration
GDP per capita
Respect for human rights
Life expectancy
Ease of access to weapons of minor
destruction
Economist Intelligence Unit
Transparency International
Reporters without borders
-0.81
0.76
-0.63
UN World Population Prospects
Economist Intelligence Unit
Economist Intelligence Unit
Political Terror Scale
World Bank
-0.62
-0.62
0.61
-0.60
0.59
Economist Intelligence Unit
-0.56
Relations with neighbouring countries
Mean years of schooling
Global Gender Gap
Level of organised conflict (internal)
Human Rights Index
Perceptions of criminality in society
Economist Intelligence Unit
UNESCO
World Economic Forum
Economist Intelligence Unit
Escola de Cultura de Pau
Economist Intelligence Unit
-0.56
0.55
0.55
-0.55
-0.51
-0.50
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Correlation coefficient
Structural Aspects of Peace
Sound Business Environment – GPI Correlations
Index Name
Source
Correlation
coefficient
Corruption Perception Index
Transparency International
-0.70
Global Competitiveness Report
World Economic Forum
-0.59
Economic Freedom of the World Index
Frazer Institute
-0.58
GDP per capita
EIU
0.57
Ease of Doing Business Index
World Bank
0.52
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Structural Aspects of Peace
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Structural Aspects of Peace
Sound Business Environment – Per Capita Income Correlations
Index Name
Corruption perceptions
Global Competitiveness Report
Political instability
Human Development Index
Functioning of government
Likelihood of violent demonstrations
Life expectancy
UNESCO mean years of schooling
GPI SCORE
Political Democracy Index
Respect for human rights
Ease of access to weapons of minor
destruction
The extent of regional integration
Number of homicides per 100,000 people
Level of violent crime
15-34 year old males as a % of adult
population
Infant mortality per 1,000 live births
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Source
Transparency International
World Bank
Economist Intelligence Unit
UNDP
Economist Intelligence Unit
Economist Intelligence Unit
World Bank
UNESCO
Global Peace Index
Economist Intelligence Unit
Political Terror Scale
Correlation coefficient
0.83
0.77
-0.66
0.63
0.61
-0.61
0.59
0.57
-0.57
0.56
-0.56
Economist Intelligence Unit
Economist Intelligence Unit
UNODC
Economist Intelligence Unit
-0.54
-0.53
-0.52
-0.52
UN World Population Prospects
World Bank
-0.51
-0.50
Strategic Business
Analysis
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Peace in Strategic Business Analysis
Business and Peace

Strong correlation with Global Peace Index
 Per
capita income and peace: r = 0.57
 Ease
of Doing Business Index: r = 0.52
 Business

Competitive Index: r = - 0.59
UN Global Compact Business Survey
 80%
of senior execs believe markets grow with improved peacefulness
 79%
think their costs drop with improved peacefulness
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Competitiveness and Peace
High
Faltering market
Consider
merit of
Current position
Mature market
Exploit current
competitive
advantage
Market
Penetration
Nascent market
Avoid building
market presence
Low
Low
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Market
opportunity
Extend or
establish
competitive
advantage
Peacefulness
High
Several Traditional Business Tools Might
be Considered in Light of a Region’s
Peacefulness to Provide Insight
Industry lifecycle
Profit
Time
 Initial invest takes time to reach break even. This is based on the cost of
the investment, the amount of time to become profitable and the size of the
profits
 The level of violence will affect the cost of investment, the length of time to
deploy and the ROI
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Several Traditional Business Tools Might
be Considered in Light of a Region’s
Peacefulness to Provide Insight
Competitor profitability
Return
Peace
Through analyzing the return that competitors are getting by
the peacefulness of their markets and the momentum of
peacefulness within those markets new competitive
strategies can be developed
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Several Traditional Business Tools Might
be Considered in Light of a Region’s
Peacefulness to Provide Insight
Business segmentation
Price
sales &
service
product
Group A
Group B
What is the relation between price for the same
business segment in different markets when rated
by peacefulness
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User Value Based Advantage Can be
Considered in Light of a Region’s
Peacefulness, Using Several Typical Tools
Customer segmentation
Customer buying process
Need
Search
Young
Socials
Active
Teens
Busy
Parents
The
Gatekeepers
Domestics
Buy
Mature
Uninvolved
Validate
Many consumers view peace as highly desirable – how can they be viewed
as a consumer segment, what are their emotional needs and how can
products be created to fulfill their needs
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Discontinuous Forces of Change –
Including Peace Can Be Examined Using
Several Tools
Deconstruction audit
A business, product or market is affected by many factors outside a company’s
control such as government policies, corruption, rule of law. Peace is a proxy for
order, peaceful markets will be more transparent therefore easier to
deconstruct and easier to understand
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Questions and Answers
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