Dissertation Abstracts

Risky Business: The Social Construction of Country Risk Ratings

Author: Pinheiro, Diogo L, diogolpin@gmail.com
Department: Sociology
University: Emory University, USA
Supervisor: Timothy Dowd
Year of completion: 2010
Language of dissertation: English

Areas of Research: Economy and Society , Comparative Sociology , Political Sociology


The objective of this project is to understand the origins and impact of Sovereign and Country risk ratings. These ratings were created by key financial agencies and serve as a way of guiding a significant part of investment in developing nations. This project focuses on three key issues related to these risk ratings: their adoption, their implementation, and their current impact on policy. The first issue addresses how an abstract idea (i.e., how financial risks should be measured) gained support and spread throughout the world. The second issue concerns how this idea was implemented by numerous financial service agencies. Finally, the third issue is about the impact that these ratings have on a nation’s ability to borrow money, therefore influencing policy. Theoretically, this project deals with one of the key debates in the social sciences: are markets rational and efficient, or does uncertainty lead to the adoption of certain measures and policies because they are culturally and politically legitimate? To answer this question, this dissertation employs quantitative analyses, looking at both the statistical trends and the substantive discussions that involve the creation of these ratings. More specifically, I use different statistical techniques to show that the spread of risk ratings are not solely driven by market factors, and that these ratings persist despite known inaccuracies in their methodology. They are measures of compliance with the existing policy paradigm, and fail to adequately capture investment risk. As such, they play a key role in the adoption of certain policies even in the face of financial crises worldwide.