Classification of State Stability

Regardless either in politics or business - crises are undesirable. Therefore, the early prediction of a crisis is always an ultimate goal, so that it would not even occur, or be addressed timely. In order to identify a source of a potential crisis, it is crucial to examine the overall stability of a state. Fragile states are more subjected to various crisis situations than stable ones.

A team at the Universität der Bundeswehr München, in cooperation with the “Zentrum Operative Kommunikation der Bundeswehr”, has addressed this issue by developing a software Global Analysis of Stability Indicators (GASI) that can assess the exposure of a state to a crisis.

Many early warning systems rely on media analysis in order to uncover the signs of short-term shocks in a country. GASI employs a different approach. It examines the social environments in which potential shocks could occur. By doing so, it attempts to answer the question: “At which stability level, the likelihood of a crisis (or the impact of a crisis) would be significantly lower?” In other words, when dealing with the question of a state crisis, it is important to distinguish between short-term shocks occurring in a state and the state’s overall stability.

The greatest challenge in the analysis of stability is that it cannot be measured directly. Rather, it can be assessed indirectly by using a variety of measurable indicators. But how the values of individual indicators could be aggregated into a single value of stability? Using the simple average of all indicator values would imply that these indicators are equally important. Our approach is different. We use the weighted average which requires identifying weighting factors.

There are two distinct features of the GASI model: First, between stability and its indicators, we build an intermediate level, the level of four dimensions upon which the stability of a state is based (see picture 1). These dimensions are: authority, legitimacy, capacity and social cohesion. With the help of indicators, the strengths and weaknesses of a state in these dimensions are assessed and, subsequently, with the help of the values of the dimensions, the overall stability of a state is judged.

The second distinct feature are the indicators used and the process of their aggregation. The key requirement is that these indicators must be comparable across the states included into our analysis. Therefore GASI uses the data from international sources like the World Bank. These data are first scaled and then aggregated. The weighting factors for aggregation are determined not subjectively, but statistically through the correlation with the extent of a crisis.

When using GASI the stability of a state and the values for individual dimensions or indicators can be displayed on a world map. It is also possible to analyze the evolution of a certain dimension of stability (or of a single indicator) over a period of time. Furthermore, the strengths and weaknesses of a state in each dimensions can be represented in a network diagram (see picture 2-4). The quality of the analysis carried out with GASI, similarly to other software-based crisis-detection tools, depends on the quality and selection of the underlying data. The GASI approach, with its focus on criteria of stability, promises an advantage over other models that rely on crisis-focused-indicators.

The forecast of a crisis is often confronted with variety of – sometimes contradictory - signs. In some instances, a combination of causes could lead to crises. In such cases GASI can provide helpful hints for a closer analysis. It identifies states that are unstable and therefore more susceptible to crises. It reveals the weaknesses of a state in the dimension that should be analyzed more precisely. The analysis with GASI on the long term stability can be used as support for the early detection of crises and serve as a basis for a more in-depth consideration and media evaluation.