Country’s International Reputation Index

Abstract

Nowadays it is very common to make decisions about our actions and behaviors based on a series of perceptions, which have
been created according to a series of variables, and in many cases their deep knowledge is unnecessary. The purpose of this
paper is to create an index to measure the reputation of a country based on a fnancial markets perspective to see how attractive a country is for foreign investors by neutral, constant, and ofcials measurement criteria. Data for 28 countries have been
taken from several ofcials databases and the method used is principal component analysis. The index is a combination of
four diferent dimensions: (1) markets and trade, (2) national accounts, (3) labor market, (4) living conditions and security,
along with 23 distinct factors. The top scores in this index are the United Kingdom, Germany, and Sweden, compared to
Bulgaria, Croatia, and Greece, which are at the bottom of the table. In general, the best ranked countries receive high scores
in all four dimensions, while the worst ranked countries tend to receive low scores in all four dimensions analyzed. Country’s
international reputation index could be used to assist public policies designed to improve reputation in countries where it
is needed. The study and analysis of this index will make it possible to measure the evolution of the factors that afect the
country, both positively and negatively, in order to identify both strengths and weaknesses in order to improve the latter.
This paper is the frst to explore the dimensions comprising the international reputation construct at a multinational scope in
Europe from an empirical analysis using ofcials datasets. Although other indexes have been widely used for many countrybranding projects, they only show what is being measured by interviews or panel of experts but not by neutral, constant and
ofcials measurement criteria, and therefore this paper flls the gap that exists in the current state-of-the-art.