Assessing Policy-related Risk and Export Dynamics: Evidence from 16 Economies

This research examines the impact of policy-related risk (geopolitical risk, economic uncertainty, and political risk) on export performance. The data we used came from 16 leading economies between 1998 and 2022. We used fixed effect, two-stage least squares (2SLS), and generalized method of moments (GMM) regression analyses to see how different types of policy-related risk affect exports. The results show that geopolitical risk and economic policy uncertainty have a negative impact on export performance, while political stability has a positive effect. We divided the countries into East and West, developing and developed countries, and the results show different efficiency but the same impact on East and West. However, the result of developed and developing countries has a variation in the effect of geopolitical risk on exports; in developed countries, the geopolitical risk has a negative insignificant effect, while in developing countries, it has a significantly negative impact. The study contributes to the literature by providing a regional perspective on the influence of policy-related risks on export performance, offering valuable insights for policymakers and firms seeking to navigate the complexities of global trade amidst uncertainty.