Data reveals an "inverted U-shape" for political and economic stability. Both strong democracies and full autocracies are relatively stable. The most dangerous and volatile environment for business and society is the “anocracy” in the middle, which suffers from lower growth, lower investment, and higher rates of violence.
Once a country falls into the unstable “anocracy” zone, its chances of recovery are slim, with only 20% returning to a full democracy. Data shows this reversal, or "U-turn," must happen quickly, typically within a single electoral cycle of five to eight years. The longer a nation lingers, the harder it is to escape.
Business leaders may see short-term benefits in aligning with an aspiring autocrat. However, this alliance is temporary. In Hungary, 15 years after Viktor Orbán took power, only 23% of the country's 50 wealthiest people remained on the list, as the regime moved to consolidate power by bankrupting or eliminating rivals.
A CIA task force analyzed 38 variables to predict political instability, including common assumptions like poverty and inequality. They found only two were highly predictive: 1) a country being a partial democracy, or “anocracy,” and 2) its political parties organizing around identity (race, religion) rather than ideology.