What this dimension measures: Statecraft Intensity captures whether a country is subject to (Exposure) or actively deploying (Posture) economic coercion instruments — sanctions, export controls, secondary pressure, and multilateral designations.
Why it matters: Economic statecraft is the primary mechanism through which geopolitical competition manifests in supply chains and financial markets. Rising statecraft intensity precedes trade disruption and financing constraints by 3–12 months.
Exposure score weights: OFAC SDN (Specially Designated Nationals — individuals and entities blocked from the U.S. financial system) designation coverage 35%; BIS (Bureau of Industry and Security) Entity List presence 25%; sectoral sanctions breadth 22%; secondary sanctions exposure 10% (risk of extraterritorial measures affecting third-country firms doing business with the target); multi-regime overlap 8% (overlap across U.S., EU, and UN designation lists signals coordinated multilateral pressure).
Posture score measures outbound coercion: designation volume issued, export control enforcement rate, CSIS (Center for Strategic and International Studies) coercion tracker incidents, and WTO (World Trade Organization) dispute initiation rate.
Data sources: OFAC SDN XML (live daily) · BIS Entity, Denied Persons, Unverified, and Military End-User lists (daily) · EU Consolidated Sanctions List · UN Security Council Sanctions List.
What this dimension measures: Policy Signal Velocity captures the rate of change in economic policy-instrument deployment — how fast a government is issuing executive orders, regulations, sanctions programs, and legislative changes. Velocity is a leading indicator: regulatory acceleration precedes market disruption and operating-environment change by weeks to months.
Why it matters: A country with moderate exposure but rapidly accelerating velocity represents a fundamentally different risk profile than one with the same score but stable policy output. Velocity is the earliest observable signal that a government is actively escalating or de-escalating economic pressure.
Velocity Index: Action count in rolling 90-day window divided by the 12-month baseline count. A ratio above 1.0 signals acceleration relative to the country's own historical baseline.
Instrument weighting: Enacted law and EO (Executive Order) or NSM (National Security Memorandum) carry 3x weight (immediate legal effect). Final rule or regulatory amendment carries 2x. Introduced bill carries 1x (lowest — legislation frequently fails to pass).
Noise filtering: Legislative introduction rate is discounted in election years. Policy reversals — measures rescinded within 180 days — increase the unpredictability sub-score feeding the Hedge/Reduce decision layer.
Data sources: U.S. Federal Register (daily) · EU Official Journal (daily) · Congressional bills via Congress.gov · G7/G20 joint statements (event-driven).
What this dimension measures: Trade & Supply Chain Fragility captures exposure to physical disruption of the goods a country depends on — through geographic chokepoints, concentrated supplier relationships, and critical input dependencies.
Why it matters: Chokepoint disruption creates immediate delivery failures. Critical input dependency creates medium-term production constraints that cannot be quickly substituted. HHI and AIS data together give a real-time picture of where fragility is highest.
HHI (Herfindahl-Hirschman Index): Standard concentration measure — sum of squared market shares of all suppliers. Near 0 = highly diversified; 10,000 = single-supplier monopoly. Scores above 2,500 indicate high concentration and fragility. Applied to bilateral trade flows from UN Comtrade.
Critical import dependency: Reliance on externally sourced materials with no near-term domestic substitute — semiconductor materials, pharmaceutical active ingredients, rare earth elements, lithium, cobalt. Sourced from IEA (International Energy Agency) and USGS (U.S. Geological Survey).
Chokepoint exposure: IMF PortWatch AIS (Automatic Identification System) satellite transponder data — daily transit volume for 28 strategic maritime chokepoints including Strait of Hormuz, Suez Canal, Strait of Malacca, and Bab-el-Mandeb, weighted by country trade dependency on each route.
Data sources: UN Comtrade (quarterly) · IMF PortWatch AIS (weekly) · IEA Critical Minerals Outlook · USGS Mineral Resources.
What this dimension measures: Macroeconomic Stress captures underlying structural economic vulnerability — the degree to which a country's economy lacks the fiscal, monetary, and financial buffers needed to absorb external shocks without crisis. A high score means the country has limited capacity to respond to sanctions, trade disruption, or capital flow reversal without significant economic damage.
Why it matters: Macro stress is the amplifier for all other dimensions. A country with high statecraft pressure but strong macro buffers (large reserves, low debt, fiscal surplus) can absorb and respond. The same statecraft pressure applied to a country with depleted buffers triggers a feedback loop: currency depreciation raises import costs, raising inflation, constraining monetary policy, widening the deficit, raising CDS (Credit Default Swap) spreads, and tightening financial conditions further. This is the Bernanke-Gertler financial accelerator dynamic that underpins the Financial Amplifier interaction rule (IX-8).
CDS (Credit Default Swap) spread: The annual cost, expressed in basis points, of insuring against a sovereign default on 5-year government bonds. A CDS spread of 100bp means a buyer pays 1% per year to insure against default. Rising CDS spreads signal that credit markets expect increasing default risk. This is the highest-frequency macro indicator available — it updates daily and reacts to news faster than any fundamental data.
PMI (Purchasing Managers Index): A monthly survey of purchasing managers at manufacturing and services companies, measuring whether business conditions are expanding (above 50) or contracting (below 50). Used here inverted — a falling PMI signals deteriorating real economy conditions. The composite PMI blends manufacturing and services readings.
REER (Real Effective Exchange Rate): A country's currency value measured against a trade-weighted basket of partner currencies, adjusted for relative inflation rates. A declining REER means the currency is depreciating in real terms, which raises the domestic cost of imported goods and increases the burden of foreign-currency debt. REER deviation from its 5-year trend is used here as a stress indicator.
Debt/GDP: Total government debt as a percentage of gross domestic product (GDP, the total economic output of the country). A higher ratio means a larger share of national income is required to service debt, leaving less fiscal headroom for response to crises. IMF threshold for emerging markets: 60% is elevated; above 80% is high stress.
Stress score is a weighted composite: sovereign CDS spread (30%), government debt as % of GDP (25%), PMI composite inverted (25%), REER deviation from trend (20%). Each sub-indicator is independently sourced and normalized 0–100 against the 15-country universe.
Data sources: FRED (Federal Reserve Economic Data) · IMF World Economic Outlook (WEO) · World Bank Quarterly External Debt Statistics (QEDS) · BIS Real Effective Exchange Rate data · S&P/Markit PMI surveys · Sovereign CDS market proxies.