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

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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.
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