Final answer:
Quantification of risk is designed to predict political instability and its impact on business with economic development being a key element related to increasing democratization. The connection is not guaranteed but is probabilistic in nature, suggesting that higher economic growth often supports democratic longevity and stability.
Step-by-step explanation:
Quantification of risk is an attempt to forecast political instability and help management identify and evaluate political events and their potential influence on current and future international business decisions. In a world of varying conditions, where relations between nations could be tempered by the state of a country's development or political stability, it is crucial for international businesses to assess these risks. Economic development has been empirically supported to correlate with democratization, suggesting that as economies grow, the likelihood of democratic governance increases, thereby reducing political instability.
However, the relationship is not deterministic but probabilistic, meaning that while economic growth can spur democracy, it is not a guaranteed outcome. Political scientists like Daron Acemoglu consider critical historical moments as pivotal to economic and political trajectories. Meanwhile, accessibility to social safety nets, promotion of good governance, and involvement in decision-making can play significant roles in stabilizing a nation's political landscape.
Despite attempts to enhance democracy and reduce authoritarianism through international organizations' policies, the non-binding nature of these recommendations limits their impact. Nonetheless, the consensus among modernization scholars, such as New York University's Adam Przeworski, is that once a certain threshold of economic development is reached, a democratic regime will more likely survive.