Methodology · Palanor Sovereignty Index · 2026-10-30.1
How much of the future is in its own hands.
The Palanor Sovereignty Index reads self-reliance. A high reading means diversified inflows and outflows, little reliance on any single outside party, the means to fund itself and a steady record. A low reading means concentration on one buyer, supplier, lender, funder or commodity, and exposure to shocks the entity cannot control. Two families share one grammar: Country Sovereignty (annual, every economy the World Bank reports on) and Company Sovereignty (quarterly, the S&P 500).
It is not a credit rating, a democracy score, a governance grade or a buy or sell signal. It describes reliance; it does not say what to do about it. On Country Dossiers it sits beside Country Strength, which reads size and capacity: a large economy can be dependent and a small one self-reliant.
What is shown today
A family’s scores appear on dossiers and as signals only after its validation passes: back-tests against known episodes, a weight-sensitivity test, a check that no pillar repeats another, and checks for pegged or constant readings. The results below are recomputed with every run.
- Country Sovereignty: staged: validation has not passed (see below), so no scores are shown yet.
- Company Sovereignty: published.
How it is scored
- Each component is ranked against peers as a mid-rank percentile, 0 to 100, with 100 the most self-reliant. Countries are ranked against every economy that reports the component that year; companies against the S&P 500 outside Financials, and within their GICS sector for self-funding and steadiness, where sector norms dominate (utilities borrow, software does not). A component is not ranked in a period too few peers report (40 economies; 150 companies).
- A pillar’s score is the weighted mean of its components that are present; a missing component’s weight is spread over the rest of its pillar.
- The index is the weighted mean of the five pillars, with the fixed weights below.
- Coverage gate. A reading is published only when components carrying at least 60% of the full weight are live and fresh. Otherwise it reads Withheld; it is never filled with a default.
- Freshness. Country series may carry their last value up to two years (one for the current account, three for FAO’s three-year averages); each carried value is marked on the reading. Company financial statements count for 200 days, 10-K facts for 500 days and prices for two weeks. Nothing older counts.
Percentile ranks keep one outlier (a hyperinflation, a single giant customer) from compressing everyone else, and make the score relative: an entity can improve and still fall if its peers improve faster.
Country Sovereignty
| Pillar | Weight | Component | More self-reliant when | Source |
|---|---|---|---|---|
| Trade balance of reliance | 25 (12.5) | Fuel, ores and metals, share of merchandise exports | lower | World Bank WDI (CC BY 4.0) |
| (12.5) | Current account, % of GDP (surpluses above 3% count as 3%) | higher | World Bank WDI, from IMF BOP (CC BY 4.0) | |
| Energy and food self-sufficiency | 20 (10.0) | Primary energy production ÷ consumption (capped at 100%) | higher | U.S. EIA International Energy Statistics (public domain) |
| (10.0) | Cereal import dependency ratio (3-year average) | lower | FAO, FAOSTAT Suite of Food Security Indicators (CC BY 4.0) | |
| Financial self-reliance | 20 (5.0) | External debt, % of GNI | lower | World Bank International Debt Statistics via WDI (CC BY 4.0) |
| (5.0) | Reserves, months of imports | higher | World Bank WDI (CC BY 4.0) | |
| (5.0) | Net aid received, % of GNI | lower | World Bank WDI, from OECD DAC (CC BY 4.0) | |
| (5.0) | Personal remittances received, % of GDP | lower | World Bank WDI (CC BY 4.0) | |
| Steadiness | 20 (6.7) | Real GDP growth, 10-year standard deviation | lower | World Bank WDI (CC BY 4.0) |
| (6.7) | Inflation, 10-year standard deviation | lower | World Bank WDI (CC BY 4.0) | |
| (6.7) | Unemployment rate, 10-year standard deviation | lower | World Bank WDI, ILO modelled estimates (CC BY 4.0) | |
| Self-government | 15 (5.0) | Government effectiveness (WGI) | higher | World Bank WGI (CC BY 4.0) |
| (5.0) | Political stability (WGI) | higher | World Bank WGI (CC BY 4.0) | |
| (5.0) | Rule of law (WGI) | higher | World Bank WGI (CC BY 4.0) |
High-income economies are not on the OECD DAC list of aid recipients, so their aid received is recorded as zero, a fact rather than a default. External debt is published by the World Bank for low- and middle-income economies only; high-income economies are scored on the other three financial components. EU members pool trade and monetary sovereignty by design; that is noted here, not penalized.
What was left out, and why
- Export partner concentration. It needs bilateral trade from UN Comtrade or the IMF’s Direction of Trade Statistics; no commercial licence for either is confirmed. Product concentration and the current account carry the trade pillar.
- Energy imports as a share of use (World Bank EG.IMP.CONS.ZS). The World Bank labels it CC BY 4.0, but it comes from the IEA, whose data is licensed commercially. Energy self-sufficiency is read instead from the U.S. EIA’s production and consumption totals (public domain).
- Economic complexity rankings. Licence not confirmed; the steadiness pillar uses macro volatility only.
- Democracy and freedom measures. Deliberately left out: the self-government pillar reads governance capacity (World Bank WGI), not political system.
- Defence self-sufficiency. Arms-import data comes from SIPRI, which requires its own commercial licence; military spending measures effort, not independence.
Company Sovereignty
| Pillar | Weight | Component | More self-reliant when | Source |
|---|---|---|---|---|
| Customer and market reliance | 25 (8.3) | Largest customer, share of revenue (0 when none at 10% or more is disclosed) | lower | SEC EDGAR (public domain), 10-K XBRL |
| (8.3) | Largest geographic market, share of revenue | lower | SEC EDGAR (public domain), 10-K XBRL | |
| (8.3) | Federal prime contracts, share of revenue (12 months) | lower | USAspending.gov (public domain) ÷ SEC revenue | |
| Supply and input reliance | 20 (10.0) | Risk factors naming a sole, single or limited source of supply | lower | SEC EDGAR (public domain), 10-K Item 1A |
| (10.0) | Largest weekly co-movement with oil, natural gas or farm prices (2 years) | lower | Palanor calculation from licensed closes and FRED | |
| Financial self-funding | 25 (8.3) | Free cash flow ÷ revenue (12 months) · ranked within sector | higher | SEC EDGAR (public domain) |
| (8.3) | Net debt ÷ operating cash flow (12 months) · ranked within sector | lower | SEC EDGAR (public domain) | |
| (8.3) | Debt due within 24 months ÷ cash and short-term investments · ranked within sector | lower | SEC EDGAR (public domain) | |
| Control (held 25–75) | 15 (6.0) | Largest individual holder, % of a class (capped at 30%) | higher | SEC EDGAR (public domain), Schedules 13D and 13G |
| (4.0) | More than one class of common stock | higher | SEC EDGAR (public domain), 10-K cover page | |
| (5.0) | Schedule 13D filed by a fund in the last 24 months | lower | SEC EDGAR (public domain), Schedule 13D | |
| Steadiness | 15 (5.0) | Revenue growth (year on year), standard deviation over 12 quarters · ranked within sector | lower | SEC EDGAR (public domain) |
| (5.0) | Free cash flow margin (12 months), standard deviation over 12 quarters · ranked within sector | lower | SEC EDGAR (public domain) | |
| (5.0) | Share price volatility, 1 year (annualized) · ranked within sector | lower | Palanor calculation from licensed closes |
- GICS Financials are not scored. Banks, insurers and other financial companies fund themselves through deposits, premiums and markets, so free cash flow, net debt and maturities do not read self-funding, and ranking within the sector cannot repair that. They read Withheld and stay out of the peer field. This is a departure from the first draft, made after the top of the ranking filled with regional banks and insurers.
- Largest customer. From each 10-K’s own XBRL instance: the largest named customer in a revenue concentration disclosure. ASC 280-10-50-42 requires the disclosure for any customer at 10% of revenue or more, so a 10-K that discloses none records zero. Groups of customers (“ten largest”) are not counted as one customer; a 10-K that tags only a group, or a customer’s share of one segment, reads as missing, not zero.
- Federal contracts. Prime contract obligations over the last twelve months USAspending has reported, divided by revenue. A window that is not fully reported is missing.
- Largest geographic market. The largest single country or region in the 10-K’s geographic revenue disclosure; remainders (“other countries”, “outside the U.S.”) are not counted as a market. Companies that tag no geographic split are missing for this component, not assumed domestic.
- Net debt ÷ operating cash flow is used in place of net debt ÷ EBITDA because operating cash flow is filed consistently and EBITDA is not a reported figure.
- Classes of stock are counted from the 10-K cover page: more than one class of common stock with shares outstanding.
- Control is capped and two-sided. Founder control raises self-direction but cuts outside accountability. The pillar is held between 25 and 75, so it moves the index by at most 3.75 points either way. Ownership schedules are read from June 2025, when Palanor’s record of them becomes complete; earlier quarters are scored without the two ownership components, and the 13D look-back reaches only as far as that record.
- Share price inputs are derived reads. Volatility and commodity co-movement are computed from licensed closes; the closes themselves are never shown here.
- Visa reliance (labour-condition filings per employee) was considered and left out: employee counts are not tagged consistently enough to divide by.
- Readings use today’s S&P 500 members for every quarter (survivorship, stated), dated at the calendar quarter end, reading the latest figures for periods ending on or before it.
Validation
Published with every release, following the OECD–JRC handbook’s guidance on uncertainty and sensitivity analysis. Weight sensitivity draws each pillar weight from 50% to 150% of its published value 500 times and counts how often an entity’s five-band tier (0–20, 20–40, 40–60, 60–80, 80–100) changes. Pillars correlated at 0.8 or more would be treated as redundant and the weights revisited, with the change dated.
Country Sovereignty · run 2026-11-09 · latest period 2025-12-31
- Published 178, withheld 39; 144 distinct scores; 0 constant series (passed).
- Weight sensitivity: 10.4% of entity-draws changed tier; the largest rank move was 68 places (passed; the bar is 25%).
- Pillar redundancy: highest absolute correlation 0.38 (passed; the bar is 0.8).
- Correlation with Country Strength (2025, 67 panel countries): 0.429. Related, not the same read.
- Back-tests: not passed.
| Episode | Year −3 | Year −2 | Year −1 | Low (bottom 40%) | Falling (2+ pts) |
|---|---|---|---|---|---|
| Sri Lanka: default and IMF program (2022) | 49.3 (49th) | 49.4 (54th) | 48 (48th) | no | no |
| Argentina: currency crisis and IMF program (2018) | 59.2 (77th) | 60.7 (80th) | 61.8 (85th) | no | no |
| Egypt: devaluation and IMF program (2016) | 45.5 (37th) | 43.1 (31th) | 41.2 (25th) | yes | yes |
| Russia: sanctions (2022) | 60.3 (81th) | 61.4 (82th) | 64.1 (89th) | no | no |
The bar: at least three of the four episodes read low or falling in the years before. Score (percentile among economies that year).
- Sri Lanka: default and IMF program (2022): read 48 (above 48% of economies) the year before, and not falling.
- Argentina: currency crisis and IMF program (2018): read 61.8 (above 85% of economies) the year before, and not falling.
- Russia: sanctions (2022): read 64.1 (above 89% of economies) the year before, and not falling.
Company Sovereignty · run 2026-11-09 · latest period 2026-09-30
- Published 413, withheld 90; 246 distinct scores; 0 constant series (passed).
- Weight sensitivity: 7.7% of entity-draws changed tier; the largest rank move was 204 places (passed; the bar is 25%).
- Pillar redundancy: highest absolute correlation 0.20 (passed; the bar is 0.8).
- Back-tests: passed.
Companies whose largest customer is 25% of revenue or more: 23; 19 of them (83%) read below the universe median (50.7); their median is 41.1. The bar is 70%.
Highest and lowest readings
Company Sovereignty, quarter ending 2026-09-30
Most self-reliant
- ABNB 72.5
- ODFL 68.6
- ADP 68.4
- WDAY 67.9
- ROST 67.7
Least self-reliant
- INCY 25.7
- P 29.0
- OKE 29.3
- CLX 29.3
- MCHP 30.5
The research it rests on
Every pillar, the scoring and the weighting rest on published work. Each citation below was checked against publisher, Crossref or repository records.
Building the composite
- Nardo, M., Saisana, M., Saltelli, A., Tarantola, S., Hoffmann, A. & Giovannini, E. (2008). Handbook on Constructing Composite Indicators: Methodology and User Guide. OECD Publishing and European Commission Joint Research Centre. Selection, normalization, weighting, aggregation and sensitivity analysis; our choices follow it. Link
- UN Committee for Development Policy, Economic and Environmental Vulnerability Index, one of the criteria for the least developed country category. Link
- Briguglio, L. (1995). "Small island developing states and their economic vulnerabilities." World Development 23(9): 1615–1632. Link
- Briguglio, L., Cordina, G., Farrugia, N. & Vella, S. (2009). "Economic vulnerability and resilience: concepts and measurements." Oxford Development Studies 37(3): 229–247. Link
Trade reliance
- UNCTAD (2025). The State of Commodity Dependence 2025. Commodity export dependence and concentration. Link
- Hausmann, R., Hidalgo, C.A., Bustos, S., Coscia, M., Simoes, A. & Yıldırım, M.A. (2014). The Atlas of Economic Complexity: Mapping Paths to Prosperity. MIT Press (first edition Harvard CID / MIT Media Lab, 2011). Link
- Imbs, J. & Wacziarg, R. (2003). "Stages of Diversification." American Economic Review 93(1): 63–86. Link
Energy and food self-sufficiency
- Ang, B.W., Choong, W.L. & Ng, T.S. (2015). "Energy security: Definitions, dimensions and indexes." Renewable and Sustainable Energy Reviews 42: 1077–1093. Link
- FAO. FAOSTAT Suite of Food Security Indicators: cereal import dependency ratio (net imports ÷ (production + net imports), three-year averages). Link
Financial self-reliance
- IMF (2011). "Assessing Reserve Adequacy." IMF Policy Paper, 14 February 2011 (with later updates). Link
- Greenspan, A. (1999). "Currency reserves and debt." Remarks to the World Bank Conference on Recent Trends in Reserves Management, 29 April 1999 (the Greenspan–Guidotti rule; months-of-imports is the older rule of thumb). Link
- IMF and World Bank. Debt Sustainability Framework for Low-Income Countries: external debt thresholds. Link
- Chami, R., Barajas, A., Cosimano, T., Fullenkamp, C., Gapen, M. & Montiel, P. (2008). Macroeconomic Consequences of Remittances. IMF Occasional Paper 259. Link
- Bräutigam, D.A. & Knack, S. (2004). "Foreign Aid, Institutions, and Governance in Sub-Saharan Africa." Economic Development and Cultural Change 52(2): 255–285. Link
Steadiness
- Ramey, G. & Ramey, V.A. (1995). "Cross-Country Evidence on the Link Between Volatility and Growth." American Economic Review 85(5): 1138–1151. Link
- Acemoglu, D., Johnson, S., Robinson, J. & Thaicharoen, Y. (2003). "Institutional causes, macroeconomic symptoms: volatility, crises and growth." Journal of Monetary Economics 50(1): 49–123. Link
Self-government
- Kaufmann, D., Kraay, A. & Mastruzzi, M. (2010). "The Worldwide Governance Indicators: Methodology and Analytical Issues." World Bank Policy Research Working Paper 5430. Link
Customer reliance
- Patatoukas, P.N. (2012). "Customer-Base Concentration: Implications for Firm Performance and Capital Markets." The Accounting Review 87(2): 363–392. Link
- Dhaliwal, D., Judd, J.S., Serfling, M. & Shaikh, S. (2016). "Customer concentration risk and the cost of equity capital." Journal of Accounting and Economics 61(1): 23–48. Link
- FASB ASC 280-10-50-42, information about major customers (the 10%-of-revenue disclosure the data comes from). Link
Supply reliance
- Hendricks, K.B. & Singhal, V.R. (2005). "Association Between Supply Chain Glitches and Operating Performance." Management Science 51(5): 695–711. Link
- Barrot, J.-N. & Sauvagnat, J. (2016). "Input Specificity and the Propagation of Idiosyncratic Shocks in Production Networks." Quarterly Journal of Economics 131(3): 1543–1592. Link
Self-funding
- Graham, J.R. & Harvey, C.R. (2001). "The theory and practice of corporate finance: evidence from the field." Journal of Financial Economics 60(2–3): 187–243. Link
- Almeida, H., Campello, M. & Weisbach, M.S. (2004). "The Cash Flow Sensitivity of Cash." Journal of Finance 59(4): 1777–1804. Link
- Almeida, H., Campello, M., Laranjeira, B. & Weisbenner, S. (2012). "Corporate Debt Maturity and the Real Effects of the 2007 Credit Crisis." Critical Finance Review 1(1): 3–58. Link
Control
- Bebchuk, L.A. & Kastiel, K. (2017). "The Untenable Case for Perpetual Dual-Class Stock." Virginia Law Review 103: 585–631. Link
- Adams, R. & Ferreira, D. (2008). "One Share-One Vote: The Empirical Evidence." Review of Finance 12(1): 51–91. Link
- Brav, A., Jiang, W., Partnoy, F. & Thomas, R. (2008). "Hedge Fund Activism, Corporate Governance, and Firm Performance." Journal of Finance 63(4): 1729–1775. Link
Company steadiness
- Minton, B.A. & Schrand, C.M. (1999). "The impact of cash flow volatility on discretionary investment and the costs of debt and equity financing." Journal of Financial Economics 54(3): 423–460. Link
Sources and licences
World Bank World Development Indicators and Worldwide Governance Indicators (CC BY 4.0). FAO, FAOSTAT Suite of Food Security Indicators (CC BY 4.0; the use of the data does not imply FAO’s endorsement). U.S. Energy Information Administration, International Energy Statistics (public domain). U.S. Securities and Exchange Commission, EDGAR filings and XBRL frames (public domain). USAspending.gov (public domain). Licensed closes, derived reads only. Methodology is code: src/lib/sovereignty/.