**Table 1. Variable description**

|**Name**|**Description**|**Source**|
|---|---|---|
|New business<br>density|Number of newly registered corporations per 1,000 working-age people (those ages<br>15–64).|Doing Business<br>entrepreneurship<br>database|
|GDP growth|Annual percentage growth rate of GDP per capita based on constant local currency.<br>Aggregates are based on constant 2005 U.S. dollars.|World Development<br>Indicators|
|Economic risk|The overall aim of the Economic Risk Rating is to provide a means of assessing a<br>country’s current economic strengths and weaknesses. The rating is computed over<br>the following economic variables: GDP per Head, Real GDP Growth, Annual Inflation<br>Rate, Budget Balance as a Percentage of GDP and Current Account as a Percentage<br>ofGDP.|PRS Group<br>International Country<br>Risk Guide database|
|Financial risk|The overall aim of the Financial Risk Rating is to provide a means of assessing a<br>country’s ability to pay its way. In essence, this requires a system of measuring a<br>country’s ability to finance its official, commercial, and trade debt obligations. The<br>dimensions on which the rating is computed are: Foreign Debt as a Percentage of<br>GDP, Foreign Debt Service as a Percentage of Exports of Goods and Services,<br>Current Account as a Percentage of Exports of Goods and Services, Net International<br>Liquidityas Months of Import Cover, Exchange Rate Stability,|PRS Group<br>International Country<br>Risk Guide database|
|Political risk|The aim of the political risk rating is to provide a means of assessing the political<br>stability of the countries covered by ICRG on a comparable basis. This is done by<br>assigning risk points to a pre-set group of factors, termed political risk components.<br>Such factors are: Government Stability, Socioeconomic Conditions, Investment Profile,<br>Internal Conflict, External Conflict, Corruption, Military in Politics, Religious Tensions,<br>Law and Order,Ethnic Tensions,Democratic Accountabilityand BureaucracyQuality.|PRS Group<br>International Country<br>Risk Guide database|
|Corruption<br>perception|Perceived levels of corruption, as determined by expert assessments and opinion<br>surveys.|Transparency<br>International<br>Corruption Perception<br>index.|
|Government<br>consumption|General government final consumption expenditure, includes all government current<br>expenditures for purchases of goods and services (including compensation of<br>employees). Expressed as a percentage of GDP.|World Development<br>Indicators|
|Export|Exports of goods and services represent the value of all goods and other market<br>services provided to the rest of the world. They include the value of merchandise,<br>freight, insurance, transport, travel, royalties, license fees, and other services, such as<br>communication, construction, financial, information, business, personal, and<br>government services. They exclude compensation of employees and investment<br>income (formerly called factor services) and transfer payments. Measured as a<br>percentage ofGDP.|World Development<br>Indicators|
|Import|Imports of goods and services represent the value of all goods and other market<br>services received from the rest of the world. They include the value of merchandise,<br>freight, insurance, transport, travel, royalties, license fees, and other services, such as<br>communication, construction, financial, information, business, personal, and<br>government services. They exclude compensation of employees and investment<br>income (formerly called factor services) and transfer payments. Measured as a<br>percentage ofGDP.|World Development<br>Indicators|
|FDI inflow|Foreign direct investment, net inflows (% of GDP)|World Development<br>Indicators|
|Credit to<br>private sector|Domestic credit to private sector (% of GDP)|World Development<br>Indicators|
|Political<br>freedom|Index of strength of political freedom based on the following areas: electoral process,<br>political pluralism and participation and functioning of government.|Freedom House<br>Freedom in the World<br>database|
|Civil liberties|Index of strength of civil liberties based on the following areas: freedom of expression<br>and belief, associational and organizational rights, rule of law, personal autonomy and<br>individual rights.|Freedom House<br>Freedom in the World<br>database|
|Rents from<br>natural<br>resources|Total natural resources rents: the sum of oil rents, natural gas rents, coal rents (hard<br>and soft), mineral rents, and forest rents. Measured as a percentage of GDP.|World Development<br>Indicators|
|DB Distance to<br>Frontier|Overall distance to the regulatory frontier in Doing Business indicators.<sup>a</sup>|Doing Business<br>database|
|DB Starting a<br>business|Distance to the regulatory frontier in starting a business. It measures all procedures<br>required to start up and formally operate an industrial or commercial business, as well<br>as the time and cost to complete them and the paid-in minimum capital requirement.<sup>a</sup>|Doing Business<br>database|

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