The Financial and Economic Dangers of Democratic Backsliding

This report presents robust global data showing that democratic erosion—especially in advanced economies—is increasingly tied to higher costs of capital and greater economic volatility. It finds that more polarized environments tend to experience elevated equity risk premiums and reduced investment, posing long-term financial risks. The author urges businesses and investors to proactively incorporate these risks into their strategic planning, treating political instability as a material driver of market performance not just a political issue.