The Centennial Resilience Index: Expanding Its Coverage and ...

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWERhave been made to the measurement of private sectordebt and other variables.Second, the addition of the more advancedcountries allows a new base of comparison betweenthe resilience scores for those countries and thescores for EMCs. One fascinating result is the almostcontinuous - and significant - decline in the resiliencescore of the advanced countries since the start ofthe calculation period in 1997. This contrasts sharplywith the steadily increasing resilience of the EMCsuntil the crisis that began in 2007 / 2008 in the UnitedStates. 2 As the charts for the underlying factorsshow, the decline in the resilience of the advancedeconomies before the crisis was driven by the rapidaccumulation of both public and private debt in manycountries, and the decline in external robustness. 3The contrasting improvement in the resilience of theEMCs over that same period derived from a widevariety of factors: most importantly by stronger fiscaland monetary policies; increasing export diversity andinternational reserves; and — beginning around 2001— a strengthening of their banking systems.The resilience of both country groupings hasdeclined sharply in the wake of the global crisis. Inthe advanced countries, this has been driven primarilyby fiscal weaknesses and a severe initial declinein banking soundness. In the EMCs, the decline hasresulted from fiscal weakness - partly the result ofappropriately stimulative policies and the impact ofslower growth on revenue, and an increase in privatedebt. The decline in the resilience of the advancedeconomies has been greater than that in the EMCs.Moreover, there are many EMCs, including Israel,Korea, Singapore, Peru, and others for which the2 The latest WEO from the IMF confirms - with certain caveats - what it callsthe “rising resilience” of the emerging market and developing economies. SeeIMF Survey, September 27, 2012.3 See Box 1 for the definition of the elements included in each of thesefactors.Resilience Indices have actually strengthened in thewake of the crisis.Third, the results for the countries in Europethat have been worst affected by the crisis there aredramatic. For more than a decade before the globalcrisis in 2007 / 2008, with the exception of a brief periodaround 2001 and 2002, each of those countries(Greece, Spain, Portugal, Italy, and Ireland) have seenan almost continuous, and uniquely sharp, decline intheir resilience. The key elements responsible for thisdecline have been fiscal policy and banking sectorsoundness.The global crisis itself helped to further weakenthe resilience of these countries. The initial measurestaken to deal with their own crises since 2010, andthe resulting severe recessions in most of them, havealso contributed to that decline. This is, not least,partly a reflection of the way in which the crisis inEurope has been handled.Fourth, looking forward, the resilience of the largestcountries (the United States, the United Kingdom,the Euro-zone countries other than the crisiscountries, and Japan) has stabilized after the sharpdeclines associated with the global crisis. In Europeand Japan, resilience has begun to increase. Someregions and individual countries of the developingand emerging world, with the exception of emergingEurope and Sub Saharan Africa, have been able toretain or even strengthen somewhat their overall resilience.Latin America is pulled down by Venezuela, Argentina,and – to a lesser extent — Brazil, but overall,the region has retained most of its earlier resilience.Asia, as well as the Middle East and North Africa havemanaged to increase their resilience somewhat sincethe onset of the global crisis. In all regions, as would

e expected, there is a diversity of performanceacross countries.What conclusions can be drawn from this work?The first is that the index appears to have the powerboth to identify economies that are heading fortrouble, 4 and to isolate the specific policy areas ofweakness that lie behind their increasing vulnerability. 5The second conclusion is the more troubling.There was an obvious failure by the various surveillancemechanisms in the global system to fully andaccurately identify the major vulnerabilities that wereemerging in so many countries. It is not that none ofthese emerging problems was seen. Obviously theywere, including the housing bubbles in a number ofcountries - and the associated explosion in privatesector debt; the fiscal problems in the U.S. and insome other countries; and, at least at the BIS, someof the problems developing in the global financialsystem, including those in some of the major financialcenters. But in many instances, those analyses wereeither rejected or “the dots were not connected”, i.e.,the implications of some of the vulnerabilities werenot sufficiently explored. Many things were eithermissed, such as the depth of the perverse incentivesthat had developed in housing finance and inthe securitization process in the U.S. Beyond that,some widely held beliefs about how to deal with assetbubbles and the power of private sector markets toself-correct appears to have blinded many to the risksthat were being run.At the same time, even some of the emergingproblems that were identified were left uncorrected.Partly, this reflected the existing consensus aroundthe “Great Moderation”. In addition, the surveillancesystems that are relied upon to induce corrective policiesby countries at risk - the G7, the G20, WorkingParty 3 at the OECD, and, perhaps most importantly,the IMF - proved incapable of playing an effectiverole. These processes “lacked the teeth” necessaryto encourage - or to force - corrective policy actionswhere needed. As the saying goes, peer protection inthese forums took the place of effective peer pressure.6The Resilience index can add to the tools of thesurveillance process - at least as a device to helpinsure that vulnerabilities are surfaced, and deeperanalysis is conducted to asses those vulnerabilitiesand suggest corrective policies. But that alone wouldstill be insufficient. The recent report of the PalaisRoyal Initiative concludes, bluntly, that “Surveillanceover countries’ economic and financial policies isinadequate”. 7 The report makes a number of suggestionsto improve that process including the adoptionof “norms” and remedial measures on countries thatbreach such norms. 8The Resilience Index shows clearly that emergingweaknesses in many economies were evident wellbefore the global crisis and well before the crisis inEurope. What that implies, more than anything else,4 See the regressions results given in The New Resilience of EmergingMarket Countries: Weathering the Recent Crisis in the Global Economy, byJack Boorman, Jose Fajgenbaum, Manu Bhaskaran, Harpaul Alberto Kohliand Drew Arnold, ADB Regional Forum: Impact of the Global Crisis on Asia:Lessons Learned, Policy Insights, and Outlook, November 2010.5 The index relies on factor analysis to calculate the resilience scores foreach country. There are no a priori constraints put on the analysis other thanthe choice of specific variables to include. Factor analysis permits the datasets to speak for themselves.6 See the Report of the IMF Independent Evaluation Office: “IMF Performancein the Run-Up to the Financial and Economic Crisis: IMF Surveillancein 2004-07”, February 9, 2011.7 Palais Royal Initiative - Reform of the International Monetary System: ACooperative Approach for the 21st Century, in Reform of the InternationalMonetary System, Edited by Jack Boorman and Andre Icard, Sage Publicationsand Emerging Markets Forum, 2011, page 13.8 These could be similar to the measures that may be adopted under theproposed “Fiscal Pact among the euro-area countries.

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWERis the need to pursue more actively many of the ideasthat have been put on the table to improve surveillanceprocesses - and, particularly, those of the IMF.IntroductionIn a paper discussed at the 2010 EmergingMarket Forum, 9 it was argued that there had been nodecoupling of the EMCs from the advanced countriesand that, to the contrary, all countries were becomingmore inter-connected. That reality alone wouldhave suggested a serious negative spillover to theEMCs from the 2007/2008 crisis that originated inthe advanced countries. And we saw this happeningthrough the adverse impact of the crisis on exports,tourism, remittances, capital flows, and the like.However, this negative impact was countered by thepolicy response of the EMCs that was made possibleby the resilience that many of these countrieshad built through important reforms undertaken in theaftermath of their own crises during the mid-1990sand early 2000s (Figures 1 and 2). These reformsprovided many of these countries with a capacity torespond to the crisis with stabilizing and stimulatingpolicy measures that helped them either absorb theshock with limited adverse effects and/or to reboundstrongly after a severe initial impact.While the crisis affected individual EMCs in varyingdegrees, the ability of many of those countries toabsorb the negative spillover effects of the crisis andto recover quickly was impressive. In an attempt tounderstand this newfound policy capacity of EMCs,we developed a Resilience Index. This index is intendedto identify factors that have increased the abilityof many EMCs to absorb external shocks and torespond effectively. The index is composed of a largenumber of key factors that help explain why the moreresilient countries would be able to absorb negativeshocks, respond effectively, and recover faster thanother countries. In addition to the typical economicand financial fundamentals, the Resilience Indexincludes structural and institutional aspects of theeconomies that provide the capacity and space thatpolicy makers need to design a policy response tothe crisis, the confidence to implement that response,and the credibility regarding the effectiveness of theresponse (Box 1).The attractiveness of the Index resides in its comprehensiveview of the factors that help determinethe resilience of the economy, and on its ability togive policy makers clearer insight into the sources oftheir country’s resilience and the specific areas wherefurther strengthening is needed. Such strengtheningis critical in view of the ever-growing and morecomplex interconnectedness between developmentsin the advanced countries and in the EMCs that hasbecome evident in recent years.The purpose of this paper is to assess the relevanceof the Resilience Index — in terms of providingwarning signals — in the lead up to the sovereigndebt and private credit crises in the Euro-zone, aswell as the continued sluggishness of the U.S. andJapanese economies. 10In addition, if Europe and the US were to have adouble dip recession, will the EMCs be able to playthe role they played in the aftermath of the globalfinancial crisis of 2007/08? Put differently, have thestabilizing and supportive efforts of the EMCs in respondingto the global crisis affected those countries’9 See: The New Resilience of Emerging Market Countries: Weathering theRecent Crisis in the Global Economy, by Jack Boorman, Jose Fajgenbaum,Manu Bhaskaran, Harpaul Alberto Kohli and Drew Arnold, Emerging MarketForum, October 2010.10 Please note that this paper expands the sample of EMCs to 72 countries,from about 37 in the 2010 paper referred to above. In addition, it includes25 advanced countries. The countries included in the sample are listed inAppendix 2.

Figure1Annual GDP Growth (In percent)108GDP growth (%)6420-22001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012WorldEmerging and developing economiesSource: IMF World Economic Outlook.Figure2Quarterly GDP Growth (In percent)Source: IMF International Financial Statistics

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWERBox 1The Centennial Resilience Index and the Rationale for Each ElementThe Centennial Resilience Index provides a measure of the capacity of an economy to cope with and bounce back after havingbeen hit by an external shock.The index groups its 56 input component variables into ten element, as specified in Appendix 1. The rationale for each of itselements and components is briefly described below:Fiscal Policy SoundnessThis represents the space policy makers have to adopt fiscal measures. Its components are the stock of public debt in relationto GDP as well as the rate (and direction) of change of this variable as a measure of the overall deficit. A higher debt ratio or overalldeficit decreases the space.Monetary Policy SoundnessThe greater the credibility the central bank has built up – for example, by such actions as controlling inflation — the moreroom the central bank has to ease monetary policy in a slowdown, thereby supporting activity in the economy. Its components arethe difference between domestic inflation and G-7 inflation, whether an inflation targeting framework is in place (as it is typicallyassociated with increased credibility), and a measure of the unpredictability of inflation, estimated by its historical standard deviation.Government EffectivenessThe stronger the capacity of government officials to react and design policies, the better and faster will be the implementationof these policies and thus the response of the economy. The greater the capacity of the government to follow through with its plans,the more likely the private sector will respond positively to stimulus measures, and thus the higher the country’s resilience. Itscomponents are the quality of the bureaucracy and the ability to consistently implement forward-looking policies.Overall GovernanceGood governance is generally seen as a necessary underpinning to an efficient economy, with reliable and independentinstitutions, adherence to the rule of law (confidence in contracts, property rights, etc.), transparency, limits to corruption, pressfreedom, required bank and credit ratings, accounting disclosure, shareholder rights, and availability of both private- and publicsectorstandardized data. Its components are indices of corporate governance, legal system, and policy transparency, and are takenfrom the Index of Financial Development and Strength developed by Centennial Group International (see methodology).Bank SoundnessA sounder financial system with less risk of default, a strong capital base, well-provisioned assets, non-volatile income sources,and high profitability is less likely to amplify an external shock and thus makes the economy more resilient. Although this elementrepresents predominantly banks, it also includes some non-bank financial institutions, and therefore measures the broader financialsector. Its components—all derived from the IMF’s Financial Soundness Indicators Compilation Guide — are indices asset quality,capital base, and income risk, and are also taken from the Index of Financial Development and Strength developed by CentennialGroup International.Export DiversityThe more diversified the export base, the more resilient the economy is likely to be. Its components measure export diversity bydestination and product.Export IndependenceThe greater the dependence on exports, the less resilient to an external shock an economy is likely to be. Its component is theratio of exports to GDP.External RobustnessThe stronger the external sector, the more resilient an economy is likely to be. Its components are the current account balanceas a proportion of GDP, the ratio of international reserves to short term debt, the stock of reserves in terms of months of imports, anda classification of the exchange rate regime.Private DebtThe private debt element includes components measuring both external debt and domestic debt. Much domestic debt consistsof bank credit to the private sector, and its excessive growth leads to destabilizing asset bubbles. Regarding external debt, thefaster the expansion of externally financed credit to the private sector, the less resilient an economy is likely to be to a sudden stopin capital flows. (Externally financed credit should not be seen as financial deepening, which involves credit growth mainly financedby domestic financial savings.) Its components are the ratio of private credit by deposit money banks to GDP, the change over threeyears of this ratio, the change in the ratio of loans from foreign banks to private credit by domestic banks, the ratio of claims on the

Box 1The Centennial Resilience Index and the Rationale for Each Elementcountry’s residents by foreign banks to GDP, and the change in this ratio. It would have been helpful and appropriate to includecurrency composition of private sector debt, but the relevant data was not available.International Reserves and Net International InvestmentAt least up to some limit, the higher the reserve holdings the stronger the self-insurance they offer; in addition, a high stock ofreserves provides policy makers with room for maneuver and confidence to adopt expansionary policies in a downturn. Thus, a highstock of reserves constitutes a buffer against external shocks. While it would appear that the higher the stock of reserves, the betteroff the country is, there are important costs in such an approach. Moreover, a recent IMF study shows that the self-insurance aspecttapers off after a certain level of reserves. A positive international investment position also indicates room for maneuver for both theprivate and public sectors. The components of this element of the resilience index are the ratio of international reserves to GDP andthe ratio of the net international investment position to GDP.resilience and their capacity to counter further negativeforces emanating from the industrial countries?An equally important objective is to explore whatthe Resilience Index may be signaling about thecapacity of certain EMCs and regions to respond tocontinued sluggishness in the U.S. economy andrecession in EuropeThe continued effects of the Global FinancialCrisis and of the Euro-zone crisis on theEMCs 11In contrast to the sudden shock caused by theglobal financial crisis of 2007/08 manifest in the seizingup of global credit markets, recent difficulties inthe advanced countries reflect the protracted and stillongoing effects of that crisis — including, most importantly,the de-leveraging necessitated by the earliercredit excesses and asset price bubbles. Moreover,the protracted nature of this adjustment has been accompaniedby high volatility, arising from large swingsin market perceptions about the adequacy, or lackthereof, of the measures adopted by the advancedcountries to address their difficulties. As was the case11 The rationale for reviewing again developments that followed the onsetof the global financial crisis is three-fold: to update the previous paper, to setthe stage for using the revised index (see below) to test its capacity to see—before their crises—the worsening situation in the peripheral Euro-zonecountries, and to predict which countries/regions now look at risk.with the impact of the global financial crisis of 2008,the effects of these more recent developments onthe EMCs also vary significantly among countries andregions.While the transmission of developments in theadvanced countries to the EMCs is coming througha number of channels — including on expectationsand confidence — we focus on the financial and realactivity channels.1. The financial channelThis section examines the impact of globalshocks on the EMCs as a result of their exposure tofinancial flows. The financial channel impacts EMCsthrough portfolio allocation, foreign direct investment(FDI), and cross-border lending. Additional shockscould materialize from the slowdown in Europe, thecontinued sluggish recovery in the U.S., and, potentially,further decreased growth rates in China, India,and Brazil. A major feature of linkages between advancedeconomies and EMCs over the recent periodhas been the repeated risk-on/risk-off behavior ofcapital flows, alternating between inflow surges duringoptimistic periods and sudden stops or reversals

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWERFigure3Net Capital inflows to Emerging Market Economies (% of GDP)Source: World Bank.as optimism waned, adding an extra challenge toEMCs’ policy makers.Net Capital Inflows to EMCsAfter a steady run-up in the period leading tothe global financial crisis, capital inflows in EMCshave caused serious disruptions as the deleveragingprocess in the advanced economies has led to significantcutbacks, only temporarily reversed in 2010(Figure 3). The steady worsening of the Europeansituation has induced another round of risk aversionand total flows are now lower than at the beginning ofthe observed period (2004).This adds up to a picture of lower and, asimportantly, highly volatile inflows, complicating theadoption of a cohesive policy response by EMCs.Policy adjustments have been able to accommodateinflows by accumulating international reserves, helpingalleviate excessive currency appreciation. Theyhave also helped manage potentially bubble-inducingincreases in liquidity. However, EMCs’ policy makershave found it difficult or cumbersome to manage theunwelcome sources of volatility associated with thesudden stops/inflows linked to the risk-on/risk-off behaviorsof the capital markets and to monetary policyinitiatives in the U.S. Asset prices and exchange rateswere strongly impacted by the volatility of inflows, asillustrated in the following charts.Volatility is the key word. As Figure 4 shows,starting in early 2009, a run-up in portfolio flows toEMCs was triggered by the steep decline in the levelof interest rates in advanced economies and theensuing quest for yield. By early 2011, net portfolioflows (equity and debt instruments) to EMCs hadmore than doubled compared to their level before theadvent of the crisis. In stark contrast, there has beena marked decline more recently, as shown in the followingfigure, as risk appetite and exposure to EMCs,in particular from European investors, plummeted.

Figure4Portfolio flows and their impact on asset pricesSource: EPFR, MSCI, IMF, ECB http://www.ecb.europa.eu/pub/fsr/html/summary201106.en.htmlThe recurring flare up of the Euro-zone crisis sharplycurtailed global investors’ risk appetite.In the aftermath of the global financial crisis,changes in international capital flows, together withthe fall in exports, tourist arrivals, and remittances(see below) led to considerable currency depreciations,in some cases, and to significant losses ininternational reserves in those countries that usedtheir foreign exchange holdings to buffer the externalshocks. The following table illustrates these losses fora selected group of Asian countries.Subsequently, the currency depreciations andreserve losses were reversed in most countries, insome cases by the resumption of strong portfoliocapital inflows as shown in Figure 4.Foreign Direct InvestmentSensitivity to FDI flows can constitute an importantchallenge for EMCs, especially for the lower incomeones. Looking across regions, exposure to FDIvaries significantly. Within regions — and individualcountries — FDI also varies significantly over time, asshown in Figure 5.East Asia and Pacific (EAP), already a strong recipientbefore the crisis, is now the main FDI destinationas Europe and Central Asia as well as South Asiahave experienced significantly reduced inflows whileEAP now benefits from higher inflows than before2008. However, EAP could be especially exposed toreduced Chinese investments. South/South FDI (from

Figure6Average inward FDI flows by geographical regions (US$ million), 2005–10Source: UNCTAD, UNCTADstat database.China, India, South Africa and Malaysia) has provento be a major equilibrating factor as they picked upthe slack created by advanced countries’ deleveraging.China, in particular, has become a major playeras regards FDI, as Chinese FDI to all emerging anddeveloping countries increased more than 10-foldbetween 2005 and 2010, increasing the impact of apotential Chinese slowdown.Such a slowdown is also likely to impact EMCs intwo other ways: first, by reducing Chinese demandfor commodities as the scale of its investment-ledstimulus of 2009 may be difficult to be repeated; andsecond, through lower Chinese growth induced by aslowdown of exports, particularly to Europe.In parallel, reduced outward European FDI mayimpact emerging and developing countries, as Europeaninvestors account for the largest share of FDI tothese countries, at 20-30% of the total, according toUNCTAD. While a decline in FDI could be problematicfor the EMCs, the major source of potential inflowvolatility due to the European crisis is linked to crossborderand local-market banking activity.Cross-border and local-market banking activityEuropean banking activity in EMCs grew steadilyuntil 2008, before experiencing a sharp contractionupon the onset of the crisis (Figure 6).European bank lending to developing countriespicked up fairly rapidly after the initial credit squeezein 2008 and early 2009 (Figure 7). 12 However, sincethe worsening of the Euro-zone crisis (second half of2011), borrowers in EMCs have felt a deteriorationof funding conditions explicitly linked to the Europeansituation, as indicated in global lending surveysby the Institute of International Finance (IIF). This12 Quoted in: The euro zone crisis and developing countries;Isabella Massa, Jodie Keane and Jane Kennan

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWERFigure7Cross-border bank lending from European banks (US$ million), March 2005–September 2011Source: BIS Consolidated Banking Statistics. Quoted in The euro zone crisis and developing countries;Isabella Massa, Jodie Keane and Jane KennanNote: Consolidated foreign claims of reporting banks, by nationality of reporting banks, immediate borrower basis. Developing countries data onsecondary axis.has particularly affected countries where Europeanfinancial institutions command a large share of thedomestic banking systems, such as in Central andEastern Europe, as well as in some African countries.In some of these countries, European financial institutionshold more than 50 percent of banking assets.As the European banking system is highly leveraged(assets represent 16 to 18 times the capital basecompared to about 12 times globally), the process ofbalance sheet shrinking is likely to require both capitalincreases and asset disposals, the latter possibly affectingEMCs access to funding.The impact on EMCs of this deleveraging hasremained contained thus far, at somewhere between€10 and €20 billion, equivalent to only 1 to 2 percentof total EMC credit extended by European banks(€1.35 trillion). Scenarios have tried to assess the ultimateimpact of the planned deleveraging, with numbersvarying greatly, depending on the assumptionson the respective shares of deleveraging achievedthrough capital increases and asset disposals, as wellas the share of disposals affecting the loan book. 13 Inthe most likely scenario, where banks would increasetheir capital base by 20% and allocate only half ofasset disposals to loans, EMCs’ credit would drop byabout 20 percent or as much as $338 billion. Whilethis could be offset in part by other investors, a netfall in European funding to EMCs may constitute asignificant threat to growth in the coming period.This prospect makes a positive resolution to current13 Bank deleveraging: Causes, channels and consequencesfor Emerging Markets and Developing Countries. Erik FeyenKatie Kibuuka İnci Okter-Robe

Figure9CRB commodity index (equally weighted index of 17 commodities)Source: CRBaffected commodity prices. As commodities havebecome an asset class in their own right over the lastdecade, their prices reflect not only final demand fromthe real sector but also investment demand. This lastcomponent is heavily impacted by future price expectations,which add to the volatility linked to the businesscycle. Moreover, the extended seesawing of aTable3Remittances to Emerging and Developing Countries (in US$ billion)Remittances(US$ billion)2006 2007 2008 2009 2010 2011 2012(f)East Asia andPacific 58 71 85 86 95 107 115Europe andCentral Asia 97 51 45 36 37 41 45Latin Americaand Caribbean 59 63 64 57 57 62 66Middle Eastand NorthAfrica 26 31 36 34 40 42 45South Asia 43 54 72 75 82 97 104Sub-SaharanAfrica 13 19 22 20 21 22 24Source: IMF SDDS, BIS Working paper 382: Risk-on/risk-off, capital flows, leverage and safe assets; Robert McCauley, July 2012

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWERmajor source of EMCs’ income is an added challengefor policy makers in resource-dependent economies.Remittances and tourism flows to EMCs wereconsiderably affected by the global financial crisis,although with a lag in the case of the former. Themagnitude of the decline in remittance receipts appearsto have been closely linked to the fall in activityin the countries of origin. For instance, remittancesfrom the U.S. to Mexico experienced an exceptionaldrop. Remittances to East Asia, however, wentrelatively unscathed (Table 3). Following a recovery in2010, remittances to all developing regions continuedto grow and have now surpassed their pre-crisislevels. A similar development seems to have affectedtourism, with tourist arrivals in Asia and the Pacific, aswell as in the Americas, falling considerably in early2009, but subsequently recovering.Inflation in many EMCs rose considerably in2007 and early 2008, owing to increases in commodityprices, particularly for food and fuel, as well asbooming credit and monetary expansion (Figure 9).However, that pattern was reversed in late 2008, asprice pressures receded with the collapse in globaldemand. Following an initial pickup in economicgrowth, mainly associated with relatively expansionarymacroeconomic policies, inflationary pressuresresumed in many EMCs in 2011, along with the rise incommodity prices. While many advanced economiescontinued to implement expansionary monetary policies,a number of EMCs, particularly in Asia, begantightening monetary policy with a view to reduceinflationary pressures. However, global growth hasFigure10Inflation rate (In percent)Source: IMF World Economic Outlook

since weakened, bringing down growth and inflationin EMCs. This, in the context of slow domesticand foreign demand and low external interest rates,allowed policy makers to relax or reverse the tighteningof monetary policies. In contrast to 2011, whenmonetary policy was contractionary in EMCs andexpansionary in advanced economies, monetarypolicy is now once again largely expansionary aroundthe world, as it was in 2009 (Figure 9).In recent years, public finances of many advancedcountries have worsened dramatically, owing primarilyto the decline in revenue caused by sluggisheconomic activity, especially in the U.S. and Europe.Fiscal stimulus packages also contributed somewhatto that worsening. For some countries with largestocks of debt outstanding before the crisis, higherborrowing costs have also affected their fiscal situations.The uncertainty associated with these debtissues has since contributed to lower demand in theadvanced countries, which in turn has hurt the recoveriesof the EMCs through all channels.Moreover, the protracted difficulties faced bythe advanced countries and their associated sluggishrecovery, together with constraints in the EMCsthemselves, limited the ability of EMC policy makersto unwind more rapidly the stimulus measuresthey had implemented in the aftermath of the globalfinancial crisis. In these circumstances, relative to2008, public finances have weakened in most EMCs,monetary policies have remained relatively expansionary—leadingto asset bubbles in some countries(Brazil, China)—and the soundness of financial systemshas deteriorated. This, in turn, has reduced theroom EMC policy makers have to respond to externaldevelopments.III. The Resilience IndexAs noted above, by the time of the global financialcrisis, EMCs had clearly increased, in varyingdegrees, their ability to absorb and recover froman external shock. In an attempt to understandthis increased ability or resilience, we developed aResilience Index. “In contrast to the traditional vulnerabilityelements, which can explain the susceptibilityto shocks, the Resilience Index intends to identifythe factors that have increased the capacity of manyEMCs to absorb external shocks and to respondeffectively. Put differently, while individual EMCs maybe confronted with similar external shocks, the moreresilient ones will be expected to be able to absorbthe shock, respond effectively, and recover fasterthan the others.” 14The Resilience Index includes the macroeconomicpolicy and financial soundness elements of typicalvulnerability exercises as well as important structuraland institutional aspects of the economy, such as thequality of the civil service, governance, export dependencyand diversity, externally financed private debt,and the relative size of reserves (see Box 1). Whilethe first group of elements provides a measure of thecapacity and space for policy makers to adopt correctivepolicies, the second group provides a sense ofthe capacity or flexibility of the economy to respondeffectively to such policies. The combination of thesetwo groups of elements gives a comprehensive viewof the resilience of an economy. For instance, for twocountries with roughly the same fundamentals, the14 See: The New Resilience of Emerging Market Countries:Weathering the Recent Crisis in the Global Economy, by JackBoorman, Jose Fajgenbaum, Manu Bhaskaran, Harpaul AlbertoKohli and Drew Arnold, Emerging Market Forum, October 2010.Page 12.

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWERFigure11115110105100Elements of the resilience index by groups of countries9590Government effectiveness115110Advanced 105economies100EMCs95All90GovernanceAdvancedeconomiesEMCsAll8519971998199920002001200220032004200520062007200820092010201185199719981999200020012002200320042005200620072008200920102011Monetary policyExport diversity1151151101101051009590AdvancedeconomiesEMCsAll1051009590AdvancedeconomiesEMCsAll8519971998199920002001200220032004200520062007200820092010201185199719981999200020012002200320042005200620072008200920102011Export independenceExternal robustness115115110110105100AdvancedeconomiesEMCs105100AdvancedeconomiesEMCs9590All9590All8585199719981999200020012002200320042005200620072008200920102011199719981999200020012002200320042005200620072008200920102011Source: Centennial Group International, Resilience Index.

Figure11Elements of the resilience index by groups of countriesPrivate debtReserves115115110110105100AdvancedeconomiesEMCs105100AdvancedeconomiesEMCs9590All9590All8585199719981999200020012002200320042005200620072008200920102011199719981999200020012002200320042005200620072008200920102011Banking soundness1151101051009590AdvancedeconomiesEMCsAll85199719981999200020012002200320042005200620072008200920102011Source: Centennial Group International, Resilience Index.one with the stronger structural features will likely bemore resilient.As indicated earlier, the number of EMCs forwhich the Index is calculated has increased fromabout 30 to 72. 15 In addition, Euro-zone countriesand other advanced countries (25 countries in total)have been added in an attempt to assess, inter alia,whether the Resilience Index could have predicted15 Appendix 2 includes a list of the countries covered in thispaper.the difficulties affecting some of the countries of thezone. 1616 While the causes of the difficulties of these countries aredomestic, i.e., the asset bubbles (particularly Ireland and Spain)and subsequent bail out of the banking system by the governments,and the large sovereign debts and weak fiscal policies(Greece, Italy, and Portugal), they were triggered or compoundedby the global financial crisis. The inclusion of other advancedcountries in addition to the Euro-zone countries reflects theneed to provide the factor analysis model a balanced andcomprehensive data set for the factor analysis to identify positiveand negative associations between component variables inorder to distinguish between good and bad. If the only observationsused to generate it are from only the poor performers, itwill not be possible to properly distinguish good from bad.

Figure14Fiscal Policy Score for selected groups of countries11511010510095AdvancedeconomiesEMCsAll9085199719981999200020012002200320042005200620072008200920102011Source: Centennial Group International, Resilience Index.the private sector and its rate of change have beenadded to have a more comprehensive measure ofprivate credit expansion and its possible effects onasset bubbles.IV. Results of the updateThe updated—though preliminary—estimates ofthe Resilience Index for EMCs and new calculationsfor the advanced countries are summarized in Figure11. They confirm that many EMCs had significantlystrengthened their resilience to external shocks priorto the global financial crisis. They also show a considerablesteady deterioration in the Resilience Indexof the advanced countries, particularly since 2003(Figure 12 and 13).Not surprisingly, the major decline in the FiscalPolicy element since the global crisis stands out for allgroups of countries (Figure 14). This decline reflectsthe revenue weakness associated with the recessionand continued sluggishness of economic activity aswell as the impact of the fiscal stimulus packagesadopted by a great number of countries. The revenuedeclines, in particular, have led to large increasesin public debt, a key input for this element. In manycases, these increases have resulted in considerablepublic finance difficulties, which are leading to, orthreatening to lead to, major crises in certain countries.It should be noted, however, that policy makersof many EMCs slowed the anticipated unwinding ofthe fiscal stimulus packages in the face of weak economicgrowth resulting from the continued sluggishnessin the demand for their exports.Turning to the EMCs, Figure 15 presents theResilience Indices for a number of selected countriesthat had strengthened their resilience significantly

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWERFigure15Selected EMCs with strong resilience scores before the crisis12512011511010510095908580EMCsChinaBrazilIndonesiaPhilippinesRussiaUganda751997199819992000200120022003200420052006200720082009201020111251201151101051009590858075199719981999200020012002200320042005200620072008200920102011EMCsIsraelTurkeyColombiaMoroccoPeruThailandMalaysiaSource: Centennial Group International, Resilience Index.

Figure16Selected EMCs with strengthening resilience scores after the crisis1251201151101051009590858075199719981999200020012002200320042005200620072008200920102011EMCsChinaIndonesiaIsraelLebanonPhilippinesKoreaSource: Centennial Group International, Resilience Index.Figure17Selected EMCs with weakening resilience scores after the crisis12512011511010510095908580751997 1999 2001 2003 2005 2007 2009 2011EMCsBrazilColombiaEcuadorSlovak RepublicSloveniaTanzaniaUgandaSource: Centennial Group International, Resilience Index.

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWERFigure18Selected EMCs with significant deterioration in resilience scores125115Advanced economiesexcluding peripheralcountriesGreece105Spain95Portugal85Italy75199719981999200020012002200320042005200620072008200920102011Ireland125115105958575199719981999200020012002200320042005200620072008200920102011Advanced economiesUnited StatesUnited KingdomEurozone (excludingperipheral eurozonecountries)JapanEurozone peripheralcountriesSource: Centennial Group International, Resilience Index.

above the average for this group of countries in theperiod prior to the global financial crisis.Importantly, a significant number of these countrieshave further strengthened their resilience inrecent years (Figure 16). This was achieved byreinforcing the elements that underlie their scores forMonetary Policy, Bank Soundness, External Robustness,and, in some cases, Reserves, while reducingvulnerabilities, such as excessive Private Debtincreases.However, the resilience of many EMCs has beeneroded since the onset of the global crisis (Figure17 shows a sample of these countries), reflecting aconsiderable weakening in the Fiscal Policy elementin most cases, as well as a deterioration in the BankSoundness and Export Independence elements.Moreover a significant number of EMCs appear to beat risk from low resilience, in the face of the currentweaknesses in the global environment. This suggeststhat policy makers need to strengthen the frail elementsof their countries’ Resilience Index.But what is most interesting is the abovementionedconsiderable and steady decline in theresilience of the sample of advanced countries since2003. 17 This decline reflects a generalized weakeningin the Fiscal Policy and Bank Soundness elements(Figure 18), offset in part by improvements in theExternal Robustness element that had weakenedconsiderably in earlier years. Similarly, some counties(Iceland, Norway) show an increase in the ExportIndependence element in recent years. A number ofadvanced countries, particularly those that had experiencedasset bubbles and/or are having sovereigndebt difficulties, show a strengthening of the Private17 It should be noted, however, that Denmark and Norway have shownsteady improvements in their Resilience Index during the period under review,while the Netherlands, New Zealand, and Sweden show improvements since2007 and Iceland shows a significant turn around since 2010.Debt element, which had greatly deteriorated prior to2008, reflecting the effects of deleveraging.Of course, the aggregate masks the severedeterioration in the Resilience Index of a relativelysmall group of countries. Not surprisingly, the groupincludes Greece, Ireland, Italy, Portugal, and Spain(see Figure 18). While still at or above the averageresilience indices for advanced economies, the UK,and to a lesser extent the US and Japan, have showna considerable weakening of their resilience. The keyelements responsible for this deterioration have beenFiscal Policy and Bank Soundness while ExternalRobustness has helped strengthen resilience (exceptin the case of Portugal). Similarly, reductions in PrivateCredit expansion since 2007– 08 (associated with deleveragingand loan defaults) appear as having helpedstrengthen resilience.V. ConclusionThe resilience of a country is a function of manyfactors. These include the quality of the government,and governance in general; the strength of its institutions,especially the economic and financial policymakinginstitutions in the country ; the soundnessof its banking sector—and the financial sector morebroadly; the structure of the economy—includingsuch things as its export dependency and diversity,its openness to global financial markets, and othersuch factors; and its policy-making space at anygiven time, particularly in the areas of fiscal, monetaryand reserves policies.In this paper, we report on the first results of effortsto improve the index and to expand its countrycoverage. Five things have been done: (1) some ofthe underlying variables that were included in theoriginal index have been modified; (2) the numberof countries for which the index is calculated hasbeen significantly increased, including coverage of

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWERmany advanced economies; (3) the capacity of theindex to have identified the risks that were emergingin the advanced countries before the crisis in2007/2008 is tested. Similarly, the index is used toexplore whether it would have had predictive powerto identify those countries in Europe worst affected bythe euro-area crisis and to highlight the major areasof vulnerability in those countries; (4) the impact oncountries’ resilience from the global crisis that beganin 2007/2008—and their responses to it, is examined;(5) the index is used to look forward, to identifycountries and regions that appear to be at risk fromlow resilience in the face of current weak- nesses inthe global system.What conclusions can be drawn from this work?The first is that the index appears to have the powerboth to identify economies that are heading fortrouble and to isolate the specific policy areas ofweakness that lie behind their increasing vulnerability.The second conclusion is the more troubling.There was an obvious failure by the various surveillancemechanisms in the global system to fully andaccurately identify the major vulnerabilities that wereemerging in so many countries. It is not that nothingof these emerging problems was seen. Obviouslythey were, including the housing bubbles in a numberof countries—and the associated explosion in privatesector debt; the fiscal problems in the U.S. and insome other countries; and, at least at the BIS, someof the problems developing in the global financialsystem, including those in some of the major financialcenters, but the implications of some of the vulnerabilitieswere not sufficiently explored.The Resilience Index shows clearly that emergingweaknesses in many economies were evidentwell before the global crisis and well before the crisisin Europe. The Resilience index can add to the toolsof the surveillance process—at least as a device tohelp insure that vulnerabilities are surfaced, and thatdeeper analysis is conducted to asses those vulnerabilitiesand suggest corrective policies.

Appendix 1As shown in the diagram, the Resilience indexis calculated by aggregating ten subindices, each ofwhich aggregates underlying variables. The numberin parentheses states how many underlying variablesare used to compute that element (where there is nonumber in parentheses, that element equals the averageof the sub-elements beneath it, which have beennormalized).Unless there is only one variable in an element,factor analysis is used to generate the score. Thedata sample for which scores are calculated and lateranalyzed (97 countries from 1997–2011) is the sameas the sample used to generate the factors. We usethe principal-component factor method to identifythe unobserved latent variables, with the constraintthat the factor analysis should not use more than twosuch factors. Then, except in the case of income risk,we perform a varimax rotation. drop the second factorand take the first factor to be the element score.We also generate standard errors for each measurementso that users may identify which differencesin scores are meaningful and which are not. For all ofthese, we use a maximum-likelihood factor analysis,a varimax rotation, and a bordered informationmatrix with analytic derivatives. These standard errorsincorporate two uncertainties: The first reflects ourimperfect estimates to fill in missing data. The secondreflects how well the factor model fits the indicators:this derives from the intrinsic problem, even withperfect data, of measuring such difficult-to-pin-downconcepts as resilience on a single numerical scalewith necessarily imperfect indicators.For a more detailed explanation of the statisticalmethodology and coding, see the Centennial IndexStructure of the Resilience Index(Numbers in parentheses indicate how many variables(components) of raw data go into each element.)of Financial Development and Strength, from whichthese are taken. 1818 Sundararajan, V. S., H. A. Kohli, C. Loser, H. Kohli, & A. Goldstein. (2008). “CentennialGroup and Emerging Markets present The 2008 FDS Index: Index of FinancialDevelopment and Stability.” Emerging Markets Newspaper, Euromoney, 2008/10/10.Kohli, H. (2009). “Centennial Group & Emerging Markets present The 2009 FDSIndex: Index of financial development & strength.” Emerging Markets Newspaper,Euromoney, 2009/10/06.

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWERResilience Index Variables and Sources (Sorted by Element)Abbreviations for data sourcesBISBIS Quarterly ReviewBKSCBankscopeCBICentral Bank of Iceland: “New Inflation Targeting Countries”CIRICingranelli Richards Human Rights DatabaseDBDoing BusinessDOTIMF’s Direction of Trade StatisticsEIUEconomist Intelligence UnitERF Economic Research Forum: Working Paper 395ESTCentennial EstimateEVEconviewsFHFPFreedom House’s Freedom of the PressFIEFWFraser Institute’s’s Economic Freedom of the WorldFSDWorld Bank’s “A New Database on Financial Development and Structure”GFSRIMF’s Global Financial Stability ReportGIBRGlobal Insight Business Risk and ConditionsHBSBHarvard Business School Case: “Brazil 2003: Inflation Targeting & Debt Dynamics”HFHeritage Foundation’s Index of Economic FreedomIAERTR International Advances in Economic Research: “Taylor Rule in Practice: Evidence from Turkey ” (2008)IFSIMF’s International Financial StatisticsIMFDSBBIMF’s Dissemination Standards Bulletin BoardIMFFXIMF’s Classification of Exchange Rate Arrangements and Monetary FrameworksIMF267 IMF’s Occasional Paper 267IMFSIMF Survey MagazineIRAE International Review of Applied Economics: J. Jim (2008)ITKYangu: Inflation Targeting in Kenya?JMIBJournal of Money, Investment, & Banking 2009: “Is Nigeria Ready for Inflation Targeting?”PACPackard 2007: “Monetary Policy in Viet Nam”PRSPolitical Risk ServicesRJEF Romanian Journal of Economic Forecasting: Daianu & Kallai (2008)ROURoubini Global EconomicsSGSiregar & Goo 2008: “Inflation Targeting Policy”UNCUNCTADstatTITransparency InternationalWBBRWorld Bank’s Banking Regulation SurveyWDIWorld Bank’s World Development IndicatorsWEO IMF’s World Economic Outlook (April 2010)WGIWorldwide Governance Indicators* / ** indicates that a log transformation was applied to the variable: * represents log 10(1+x) and ** represents log 10(x)Fiscal Policy Soundness• WEO, EIU, IFS, WDI, & EST: Public debt to GDP*• WEO, EIU, IFS, WDI, & EST: Change in Ratio of Public debt to GDP (Average over past 3 years)*Government Effectiveness• PRS: Score for Bureaucratic Quality, as calculated by the WGI for their Government Effectiveness subindex• GIBR: Average of 2 scores: Policy Consistency/Forward Planning and Bureaucracy, as calculated by the WGI, as aboveMonetary Policy• WEO & EV: Inflation (Year-End CPI) minus the Average Inflation in G7 Countries*• WEO & EV: Standard Deviation of Inflation (Year-End CPI) over past 3 years*• IMFS, IMF267, ITK, CBI, HBSB, PAC, IRAE, SG, RJEF, ROU, ERF, IAERTR, IMFFX, & EST: Is the country inflation targeting?Corporate Governance• WBBR: Sum of 2 questions: Must Banks Disclose Their Risk Management Procedures or Off-Balance Sheet Items to the Public?

Resilience Index Variables and Sources (Sorted by Element)• WBBR: Do Regulations Require Credit Ratings for Commercial Banks?• DB: Credit Depth of Information Index• FHFP: Sum of two Press Freedom Indicators: Economic Environment and Political Environment• WBBR: Are the Following Bank Activities Rated? Bonds Issuance, Commercial Paper Issuance, Other activity (Certificates ofDeposit, Pension & Mutual Funds, Insurance Companies, Financial Guarantees, etc)Legal• GIBR: Red Tape & Bureaucratic Corruption score, as calculated by WGI for their Corruption sub-index• GIBR: Average of 2 scores: Business Legislation & Tax Effectiveness, as calculated by WGI for their Regulatory Quality subindex• GIBR: Average of 2 scores: Judicial Independence & Business Crime Risk, as calculated by WGI for their Rule of Law sub-index• CIRI: Independence of Judiciary• DB: Legal Rights of Borrowers and Lenders Index• HF: Property Rights• FIEFW: Legal Structure and Security of Property Rights• DB: Sum of two Doing Business Indicators: Shareholder Suits & Director LiabilityPolicy Transparency• TI: Corruption Perceptions Index• FHFP: Laws & Regulations Influence on Media Content• IMFDSBB: Does the country subscribe to the IMF’s Special or General Data Dissemination StandardsAsset Quality• BKSC, GFSR, & WDI: Bank Nonperforming Loans to Total Loans*• BKSC: Impaired Loans to Equity*• BKSC, GFSR, & WDI: Bank Nonperforming Loans Net of Provisions to Total Loans* (floor set at -20%)Capital Base• WBBR: Does accrued, though unpaid, interest/principal enter the income statement while the loan is still non-performing?• BKSC: Equity to Total Assets*• BKSC: Equity to Net Loans*• BKSC: Equity to Liabilities*• BKSC: Equity to Deposits and Short-Term Funding*• BKSC: Tier One Ratio (Aggregate)*Income Risk• FSD, GFSR, & BKSC: Bank Return on Assets• BKSC: Pre-Tax Operating Income to Average Assets*• BKSC: Other Operating Income to Average Assets*• BKSC: Net Interest Revenue to Average Assets*• BKSC: Interest Margin to Gross Income*• FSD & BKSC: Net Interest Margin (Accounting value of bank’s net interest revenue as a share of its interest-bearing assets)*Export Diversity• DOT & EST: Coefficient of Variation of Export Shares by Destination**• UNC: Merchandise Exports: Concentration IndexExport Independence:• IFS & WEO: Exports to GDP*External Robustness• WEO: Current Account Balance to GDP*• BIS, IFS, & EST: Reserves to Short-Term Debt**• IFS & EIU: Import Cover: Total Reserves Minus Gold to Months of Imports**• IMFFX, WEO: Measure of Exchange Rate Regime’s Ability to Weather Crisis (Exchange Rate Regime adjusted for Reserves)

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWERResilience Index Variables and Sources (Sorted by Element)Private Debt• BIS & WEO: Change Over 3 Years in the Ratio of Total Foreign Claims of BIS-Reporting Banks to GDP* (floor set at -20%)• BIS & WEO: Total Foreign Claims of BIS-Reporting Banks to GDP*• BIS, IFS, & EST: Change Over 2 Years in the Ratio of Loans from BIS-Reporting Banks to Private Credit by Domestic DepositMoney Banks* (floor of -20%)• IFS, WEO, & EST: Private Credit by Deposit Money Banks to GDP*• IFS, WEO, & EST: Change over 3 years of the Ratio of Private Credit by Deposit Money Banks to GDP*Reserves• IFS, WEO, & EIU: Total Reserves Minus Gold to GDP*• IFS & WEO: Net International Investment Position to GDP*Note: A two-year moving average was applied to all Asset Quality, Capital Base, and Income Risk variables.A three-year movingaverage was applied to the first and third Private External Debt variables.Note: The types of financial firms included in the Bankscope search criteria used for for all Bankscope data are Commerical Banks,Savings Banks, Cooperative Banks, Real Estate and Mortgage Banks, Islamic Banks, Other Non-Banking Credit Institutions, Micro-Financing Institutions, and Credit Card, Factoring, and Leasing Finance Companies.

Appendix 2List of CountriesAdvanced countries: Australia, Austria, Belgium, Canada, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece,Hong Kong, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Singapore,Slovak Republic, Slovenia, Spain, Sweden, Switzerland, United Kingdom, United StatesCentral & Eastern Europe: Albania, Bosnia & Herzegovina, Croatia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, TurkeyCommonwealth of Independent States: Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Moldova, Russia, UkraineDeveloping Asia: Bangladesh, Cambodia, China, India, Indonesia, Malaysia, Pakistan, Philippines, Sri Lanka, Thailand, VietnamMiddle East and North Africa: Algeria, Bahrain, Egypt, Jordan, Lebanon, Morocco, Saudi Arabia, Tunisia, United Arab EmiratesSub-Saharan Africa: Botswana, Côte d’Ivoire, Ethiopia, Ghana, Kenya, Mauritius, Mozambique, Nigeria, Senegal, South Africa,Tanzania, Uganda, ZambiaWestern Hemisphere: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala,Mexico, Panama, Peru, Trinidad and Tobago, Uruguay, Venezuela

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWERResilience Index and ElementScores by Country over TimeAlbaniaAlgeriaArgentinaArmeniaAustralia

AustriaAzerbaijanBahrainBangladeshBelarusBelgium

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWERBoliviaBosnia & HerzegovinaBotswanaBrazilCambodiaCanada

ChileColombiaCôte d’IvoireChinaCosta RicaCroatia7580859095100105110115120125199719981999200020012002200320042005200620072008200920102011 75808590951001051101151201251997199819992000200120022003200420052006200720082009201020117580859095100105110115120125199719981999200020012002200320042005200620072008200920102011758085909510010511011512012519971998199920002001200220032004200520062007200820092010201175808590951001051101151201251997199819992000200120022003200420052006200720082009201020117580859095100105110115120125199719981999200020012002200320042005200620072008200920102011

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWERCyprusCzech RepublicDenmarkDominican RepublicEgyptEl Salvador

EstoniaFinlandGeorgiaEthiopiaFranceGermany758085909510010511011512012519971998199920002001200220032004200520062007200820092010201175808590951001051101151201251997199819992000200120022003200420052006200720082009201020117580859095100105110115120125199719981999200020012002200320042005200620072008200920102011758085909510010511011512012519971998199920002001200220032004200520062007200820092010201175808590951001051101151201251997199819992000200120022003200420052006200720082009201020117580859095100105110115120125199719981999200020012002200320042005200620072008200920102011

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWER1251201151101051009590858075Ghana1997199819992000200120022003200420052006200720082009201020111251201151101051009590858075Greece199719981999200020012002200320042005200620072008200920102011GuatemalaHong Kong, China12512512012011511511011010510510095908580751997199819992000200120022003200420052006200720082009201020111009590858075199719981999200020012002200320042005200620072008200920102011HungaryIceland12512011511010510095908580751997199819992000200120022003200420052006200720082009201020111251201151101051009590858075199719981999200020012002200320042005200620072008200920102011

IndiaIrelandItalyIndonesiaIsraelJapan758085909510010511011512012519971998199920002001200220032004200520062007200820092010201175808590951001051101151201251997199819992000200120022003200420052006200720082009201020117580859095100105110115120125199719981999200020012002200320042005200620072008200920102011758085909510010511011512012519971998199920002001200220032004200520062007200820092010201175808590951001051101151201251997199819992000200120022003200420052006200720082009201020117580859095100105110115120125199719981999200020012002200320042005200620072008200920102011

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWER1251201151101051009590858075Jordan1997199819992000200120022003200420052006200720082009201020111251201151101051009590858075Kazakhstan199719981999200020012002200320042005200620072008200920102011KenyaKorea12512512012011511511011010510510095908580751997199819992000200120022003200420052006200720082009201020111009590858075199719981999200020012002200320042005200620072008200920102011LatviaLebanon12512011511010510095908580751997199819992000200120022003200420052006200720082009201020111251201151101051009590858075199719981999200020012002200320042005200620072008200920102011

CilY OF SHAWNEEPUBLIC HEARING NOTICECASE #P04-13Notice is hereby given that the City of Shawnee, Oklahoma, will conduct a public hearing on aproposed Rezone of property located within the City of Shawnee.The property requesting rezoning is described as follows :A tract of land ~ltuated wlthln a portion of the NtirthQast Quarter (NE/4) of SBdion Eight (S),Townahlp Te n. (10) Notth 1 "ange rour (4) ~a~t of thf.! Indian M~ridian~ Pottawatomle cout~ty,OLI . - ~a . h01n: -""'a . ~ b. .ij_ · I no-- ·Q!l •O r ~;~p a"'*l _ ,~c ularl .: y d .. e$c rib. . . e -.d· as - f o ll o .. w"' ~: \.;lo"'"'~n"' ,.. ............. -"ind · ll!~h ~ th"'. 1\:iN .O•Leas .... h -t"" '"o· rn· er .of $aid Northeast

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWER1251201151101051009590858075Morocco1997199819992000200120022003200420052006200720082009201020111251201151101051009590858075Mozambique199719981999200020012002200320042005200620072008200920102011NetherlandsNew Zealand12512512012011511511011010510510095908580751997199819992000200120022003200420052006200720082009201020111009590858075199719981999200020012002200320042005200620072008200920102011NigeriaNorway12512011511010510095908580751997199819992000200120022003200420052006200720082009201020111251201151101051009590858075199719981999200020012002200320042005200620072008200920102011

PakistanPeruPolandPanamaPhilippinesPortugal758085909510010511011512012519971998199920002001200220032004200520062007200820092010201175808590951001051101151201251997199819992000200120022003200420052006200720082009201020117580859095100105110115120125199719981999200020012002200320042005200620072008200920102011758085909510010511011512012519971998199920002001200220032004200520062007200820092010201175808590951001051101151201251997199819992000200120022003200420052006200720082009201020117580859095100105110115120125199719981999200020012002200320042005200620072008200920102011

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWER1251201151101051009590858075Romania1997199819992000200120022003200420052006200720082009201020111251201151101051009590858075Russia199719981999200020012002200320042005200620072008200920102011Saudi ArabiaSenegal12512512012011511511011010510510095908580751997199819992000200120022003200420052006200720082009201020111009590858075199719981999200020012002200320042005200620072008200920102011SingaporeSlovak Republic12512011511010510095908580751997199819992000200120022003200420052006200720082009201020111251201151101051009590858075199719981999200020012002200320042005200620072008200920102011

SloveniaSpainSwedenSouth AfricaSri LankaSwitzerland758085909510010511011512012519971998199920002001200220032004200520062007200820092010201175808590951001051101151201251997199819992000200120022003200420052006200720082009201020117580859095100105110115120125199719981999200020012002200320042005200620072008200920102011758085909510010511011512012519971998199920002001200220032004200520062007200820092010201175808590951001051101151201251997199819992000200120022003200420052006200720082009201020117580859095100105110115120125199719981999200020012002200320042005200620072008200920102011

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWER1251201151101051009590858075Tanzania1997199819992000200120022003200420052006200720082009201020111251201151101051009590858075Thailand199719981999200020012002200320042005200620072008200920102011Trinidad and TobagoTunisia12512512012011511511011010510510095908580751997199819992000200120022003200420052006200720082009201020111009590858075199719981999200020012002200320042005200620072008200920102011TurkeyUganda12512011511010510095908580751997199819992000200120022003200420052006200720082009201020111251201151101051009590858075199719981999200020012002200320042005200620072008200920102011

UkraineUnited KingdomUruguayUnited Arab EmiratesUnited StatesVenezuela758085909510010511011512012519971998199920002001200220032004200520062007200820092010201175808590951001051101151201251997199819992000200120022003200420052006200720082009201020117580859095100105110115120125199719981999200020012002200320042005200620072008200920102011758085909510010511011512012519971998199920002001200220032004200520062007200820092010201175808590951001051101151201251997199819992000200120022003200420052006200720082009201020117580859095100105110115120125199719981999200020012002200320042005200620072008200920102011

THE CENTENNIAL RESILIENCE INDEX: EXPANDING ITS COVERAGE AND TESTING ITS PREDICTIVE POWER1251201151101051009590858075Vietnam199719981999200020012002200320042005200620072008200920102011Zambia1251201151101051009590858075199719981999200020012002200320042005200620072008200920102011

The Emerging Markets Forum was created by the Centennial Group as a not-for-profitinitiative to bring together high-level government and corporate leaders from around theworld to engage in dialogue on the key economic, financial and social issues facingemerging market countries (EMCs). The Forum was granted the coveted 501(c) status by theU.S. Internal Revenue Service.The Forum is focused on some 70 emerging market economies in East and South Asia,Eurasia, Latin America and Africa that share prospects of superior economic performance,already have or seek to create a conducive business environment and are of near-terminterest to private investors, both domestic and international. We expect our current list ofEMCs to evolve over time, as countries’ policies and prospects change.Further details on the Forum and its meetings may be seen on our website at http://www.emergingmarketsforum.orgThe Watergate Office Building, 2600 Virginia Avenue, NW, Suite 201Washington, DC 20037, USA. Tel:(1) 202 393 6663 Fax: (1) 202 393 6556Email: info@emergingmarketsforum.org