In this piece, we will take a look at the 30 most unstable countries in the world. For more countries, head on over to 5 Most Unstable Countries in the World.
Political stability is the precursor to economic stability. This is due to the fact that investors seek a stable environment for their money, and a country where there is a consistent change of government does not make policies that last for a suitable time period to generate investment returns. Additionally, political upheaval also leads to country shutdowns or protests which prevent businesses from carrying out their daily operations. Therefore, some of the most developed countries in the world have seen decades of stability while those countries that are struggling economically are also facing political crises and uncertainty.
Given the crucial link between the two, there are numerous studies and research papers that further study this topic. On this front, a working paper from the International Monetary Fund (IMF) takes a detailed look at how stability is essential for economic development. It uses a generalized method of moments (GMM) estimator to find out the link between degrees of political instability and gross domestic product (GDP) growth. The IMF’s research defines political stability as the number of cabinet changes in a year. For those out of the loop, a cabinet here is a collection of ministers that is headed by a prime minister in most countries. The IMF’s research finds out that every time there is a cabinet change, GDP growth drops by a painful 2.39 percentage points.
Another research paper covering analyzing political and economic instability comes from Harvard University. It uses a single equation method to evaluate the link between instability, which is measured as a combination of economic and political variables to calculate government change and economic growth measured through a sum of the government change and other variables of growth. The Harvard research also mirrors the conclusions of the IMF, as it points out that political instability not only affects GDP growth but also per capita income.
Narrowing down our focus on how this instability affects the business environment and what the situation is these days, insurance broker Marsh released a new report in March 2023. It outlines that a country’s inward focus on economic stability comes at the expense of free trade and ends up affecting the global trade environment. It adds that the commodity market shock resulting from the Russian invasion of Ukraine has led to soaring inflation in developing countries. However, according to Marsh, there are four key areas that can support growth despite the political instability. These, according to the research firm, are a large potential for infrastructure development that had stopped due to lockdowns ushered in by the coronavirus pandemic, the energy and food insecurity due to the Russian invasion creates an opportunity to invest in supply chain stability, the guidelines in the Paris Agreement to invest in global net zero emissions technologies, and growth in government spending to combat terrorism and other threats.
A key factor that influences the business environment, particularly in developing countries, is Foreign Direct Investment (FDI). FDI is an investment into businesses or other assets such as real estate in a country where the investments are owned by a foreign entity. A report from Investment Monitor studies the effect of political instability on FDI. It uses the example of Venezuela to show that despite the massive underlying potential, an unstable political environment renders the advantage offered by these resources useless. Investment Monitor points out that Venezuela ranks among the lowest countries in the world when its corruption perception, global competitiveness, and rule of law are measured. These factors have led to companies such as General Motors Company (NYSE:GM) exiting the country as it alleged that the Venezuelan government had seized its manufacturing facility. The report also cites the example of the Democratic Republic of Congo (DRC) to show how regulations introduced by the government have led to underinvestment in its mining resources. Finally, the research firm compares these countries with some of the most stable countries in the world such as Germany and Finland to show that the pair attracted $24 billion in investment through 432 deals in 2019. This data comes from the United Nations Conference on Trade and Development, which also shows that during the same period, DRC attracted zero deals. Pretty conclusive, we’d say.
With these details in mind, let’s take a look at some of the most unstable countries in the world.
Copyright: hecke / 123RF Stock Photo
Our Methodology
To compile our list, we used the Fragile States Index 2022 – Annual Report from Fund For Peace. This index analyzes factors such as government strength, government legitimacy, external intervention, and brain drain among several other factors to calculate a fragility score.
Most Unstable Countries in the World
30. Islamic Republic of Pakistan
Fragility Score: 89.7
The Islamic Republic of Pakistan is a Southeast Asian country. It has faced consistent political instability for decades resulting from terrorism, weak governance, and military coups. To build on this, Pakistan’s in a tailspin these days, due to a government change in 2022 and a large current account deficit exacerbated by a trust deficit between the IMF and the current government.
29. Burkina Faso
Fragility Score: 90.5
Burkina Faso is a landlocked African country with a small $50.8 billion economy. The country has gone through several coups and riots over the past decades.
28. Republic of Lebanon
Fragility Score: 91.3
The Republic of Lebanon is an Asian country whose currency is a global example of what to avoid. The Lebanese Pound was devalued by 90% in February 2023, but black market rates are even lower.
27. Guinea-Bissau
Fragility Score: 91.3
Guinea-Bissau is a West African coastal country. It has seen several coups and political assassinations in its history.
26. Bolivarian Republic of Venezuela
Fragility Score: 91.6
The Bolivarian Republic of Venezuela is a South American country that is under American sanctions.
25. Republic of Uganda
Fragility Score: 92.1
The Republic of Uganda is an African country that gained independence from the U.K. in 1962. Uganda’s current President has been ruling since 1986 when he took over in a coup.
24. Democratic Republic of Congo
Fragility Score: 92.2
The Democratic Republic of Congo is a Central African country and has seen several coups since 1960 with some featuring direct U.S. involvement.
23. Republic of Iraq
Fragility Score: 93.8
The Republic of Iraq is a Western Asian country that has been suffering from violence for decades. It was ruled by a brutal military dictator for decades but is yet to see consistent peace despite a new government.
22. State of Libya
Fragility Score: 94.3
The State of Libya is a North African country and another one that was ruled by a dictator for decades. Yet, despite the dictator being killed in 2011, Libya has not seen any political stability due to friction between factions.
21. Republic of Mozambique
Fragility Score: 94.3
The Republic of Mozambique is a Southeastern African country that has been facing an Islamic insurgency since 2017.
20. Republic of the Niger
Fragility Score: 95.2
The Republic of the Niger is a West African landlocked country that has been ruled by four military regimes since 1974.
19. Republic of Burundi
Fragility Score: 95.4
The Republic of Burundi is another African country. It has suffered from devastating genocides and civil wars in its history.
18. State of Eritrea
Fragility Score: 95.9
The State of Eritrea is a coastal country that touches the Red Sea. It has a small $6.8 billion GDP and gained independence from Ethiopia in 1991 after fighting a war of independence for three decades. But Eritrea soon fought another war with Ethiopia between 1998 and 2000.
17. Republic of Cameroon
Fragility Score: 96.0
The Republic of Cameroon is a West African country that gained independence from the U.K. in 1961. It has a $101 billion GDP. Cameroon has seen nationwide protests, failed military coups, and its current ruler has been at the helm of affairs since 1982.
16. Federal Republic of Nigeria
Fragility Score: 97.2
The Federal Republic of Nigeria is a coastal West African country. It has a $1.27 trillion GDP and vast petroleum resources which have enabled it to become one of Africa’s largest economies. However, Nigeria has seen five military coups since 1960 and four failed attempts.
15. Republic of Zimbabwe
Fragility Score: 97.8
The Republic of Zimbabwe is a landlocked African country. It has seen significant economic uncertainty throughout its history, fueled by massive currency devaluation. Civil conflict in Zimbabwe has led to a massive loss of life, with some estimates sitting in hundreds of thousands.
14. Republic of Mali
Fragility Score: 98.6
The Republic of Mali is one of the largest countries in Africa. It has also seen coups and civil wars in its history.
13. Federal Democratic Republic of Ethiopia
Fragility Score: 99.3
The Federal Democratic Republic of Ethiopia is a landlocked Eastern African country with a $348 billion economy. It has seen thousands of people die in political repression.
12. Republic of Guinea
Fragility Score: 99.6
The Republic of Guinea is a West African coastal country that gained independence from the French in 1958.
11. Republic of Haiti
Fragility Score: 99.7
The Republic of Haiti is one of the largest countries in the Caribbean. Its political conflicts have been exacerbated by devastating natural disasters as well.
10. Republic of the Union of Myanmar
Fragility Score: 100
The Republic of the Union of Myanmar is a Southeast Asian country that is currently ruled by a military junta that took over in 2021.
9. Republic of Chad
Fragility Score: 105.7
The Republic of Chad is a landlocked African country that collapsed in 1979 and was united by a resulting dictatorship helped by France.
8. Islamic Emirate of Afghanistan
Fragility Score: 105.9
The Islamic Emirate of Afghanistan is one of the most impoverished regions in the world which has seen consistent turmoil over the past couple of decades.
7. Republic of the Sudan
Fragility Score: 107.1
The Republic of the Sudan is an African country that is currently facing a devastating conflict between two groups.
6. Democratic Republic of the Congo (DRC)
Fragility Score: 107.3
Democratic Republic of the Congo (DRC) is a Central African country that has seen consistent conflicts, wars, and coups for the better half of the past century.
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Disclosure: None. 30 Most Unstable Countries in the World is originally published on Insider Monkey.