This is an MIT Sloan Management Review article. Although large-scale risks such as war, terrorism, and natural disaster garner media attention, it is the everyday, small-scale risks associated with opacity--a lack of transparency in countries' legal, economic, regulatory, and governance structures--that can confound global investment and commerce. The authors offer new research that identifies the causes and measures the effects of this phenomenon across 48 countries. The research draws upon 65 objective variables from 41 sources, including the World Bank, the International Monetary Fund, the International Securities Services Association, the "International Country Risk Guide," and country regulators. The authors' methodology projects which aspects of a country's economy carry the greatest risk and then, by assessing and comparing the costs of those risks on a country-by-country basis, they create an overall Opacity Index. Next, they correlate the Opacity Index to a variety of other indicators, including a country's income level, economic development and foreign investment, entrepreneurship, and access to capital and lending and equity markets. The authors conclude that opacity strongly correlates overall with slower growth and less foreign direct investment in nearly all markets, and they suggest how information about opacity and its contributing factors can enhance both managerial and national policy decisions alike.

HBR's editors searched for the best new ideas related to the practice of management and came up with a collection that is as diverse as it is provocative. The 2004 HBR List includes emergent concepts from biology, network science, management theory, and more. A few highlights: Richard Florida wonders why U.S. society doesn't seem to be thinking about the flow of people as the key to America's advantage in the "creative age." Diane L. Coutu describes how the revolution in neurosciences will have a major impact on business. Clayton M. Christensen explains the law of conservation of attractive profits: When attractive profits disappear at one stage in the value chain because a product becomes commoditized, the opportunity to earn attractive profits with proprietary products usually emerges at an adjacent stage. Daniel H. Pink explains why the master of fine arts is the new MBA. Herminia Ibarra describes how companies can get the most out of managers returning from leadership-development programs. Iqbal Quadir suggests a radical fix for the third world's trade problems: Get the World Bank to lend to rich countries so that there are resources for retraining workers in dying industries.