Do the country risk indexes reflect the more important variables that trigger the external crises? An analysis over the 1994-2001

The aim of this paper is to establish on what extent the most used country risk indexes, specifically, the Euromoney index and the ICRG, contain decisive variables in the triggering of external crises, as a basic aspect in evaluating its ability to assess appropriately the risk of particular country. To this end, a sample of external crises for the period between 1994 and 2001 has been analysed, obtaining a set of variables that seem to be decisive and common to all episodes, and therefore, they should be included in an adequate country risk index. Comparing these variables with those included in indexes mentioned above, it has been verified that not all of them have direct reflect in the development of both indexes and, consequently, they might show, a priori, significant limitations as ability to predict and assess the country risk.