Post Eurozone crisis, how to increase a country's resilience to risk

When it comes to making the world more peaceful, how do we know what we want or what we don’t want? Do we simply want less violence? Or are we working to build the attitudes, institutions and structures that lead to more peaceful societies?  

At the Institute for Economics and Peace, we’re looking at both. The former – often referred to as negative peace – is what our Global Peace Index, which we just released this month for the sixth year running, measures. The latter – known as positive peace – is what our Positive Peace Index, which we launched for the first time ever, measures.

It turns out - after studying this stuff for six years - countries that perform well on both indices tend to have more resilience and are better able to withstand shocks, be they environmental or economic. Countries that perform well on both indexes also tend to have stronger economies and spend far less on containing violence. 

Let’s first take a look at our 2012 Global Peace Index (GPI) findings. The GPI looks at 23 indicators that measure the absence of violence or the fear of violence, including ongoing domestic and international conflict, safety and security in society, and militarization. We do this because we think it’s important to quantify peace. Otherwise how can you measure and manage progress towards that goal?

The good news from this year’s GPI is that the world is more peaceful, reversing a two-year trend of less peacefulness as indicated by our previous two indexes. What changed? We’re seeing less political terror, fewer terrorist incidences, and less spending on militarization. This is good news. Nations are spending less on military, as a percentage of their GDP, less on heavy weapons and less on weapons sophistication.

Other good news, at the country level, is that Iceland is number one for the second year in a row. Iceland is worth studying because it also ranks high on our Positive Peace Index, showing that peak performance on both indexes enables a quicker rebound when faced with economic shock, as Iceland’s quick recovery from its financial crisis of 2008 exemplifies. At the regional level, Sub-Saharan Africa is no longer at the bottom of the index, showing the greatest regional improvement over the last three years in its relations with neighbors.  

And now for the news that needs improvement: What has worsened around the world is that we’re seeing an increase in perceptions of criminality in society, an increase in the likelihood of violent demonstration and increases in violent crime, homicide, and organized conflict. In short, the conflicts are increasingly internal, between citizens and their governments, and less so between nations, and people are becoming more fearful because of it.

Other disconcerting trends: The economic impact of all this violence on the world’s gross domestic product is a whopping $9 trillion, no small change considering the austerity budgets and the drive to reduce debts and deficits. A mere 25 percent reduction in violence worldwide would generate an extra $2.25 trillion, a critical sum that would, without question, substantially boost flailing economies at this critical juncture. In fact, for every ten slots a country improves its ranking on the GPI, the GPD per capita increases on average $3,100.  

So how does a country improve its peace and realize these savings?  

This is where the 2012 Positive Peace Index comes in. After studying six years of GPI trends, eight factors have emerged that correlate very strongly with more peaceful societies. These eight facts comprise our Positive Peace Index (PPI). What are they?  Essentially, countries that have well-functioning governments, sound business environments, equitable distribution of resources, free flow of information, respect for the rights of others, good relations with neighbors (near and far), low levels of corruption, and high levels of education ultimately perform well on our PPI and are generally more resilience to risk and shock.  

These eight factors, then – or pillars of peace – provide countries with a roadmap for improving their peacefulness through policies that attend to those factors.

In sum, with the Global Peace Index and the Positive Peace Index, we now have a way to measure what we don’t want and what we do want and a roadmap for getting there. It’s up to the world’s leaders to begin, or continue, to value the aforementioned savings that are possible with even the slightest reduction in violence and to set their sights on the eight factors to further these goals.