The Global Competitiveness Report: The Global Competitiveness Report: A Tool for Fostering Better PoliciesA Tool for Fostering Better Policies
8th November, 2005
Augusto Lopez-ClarosChief Economist & Director
Global Competitiveness ProgrammeWorld Economic Forum
Geneva, Switzerland
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Contents
Part I. Global Competitiveness Programme
• What do we mean by
“competitiveness” ?
Part II. The Growth Competitiveness Index
• Results and Analysis
Part III. Global Competitiveness Index
• Macroeconomy and Public Institutions
• Results and Analysis
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Competitiveness is defined as the set of factors, policies and
institutions that determine the level of productivity of a
country
A more competitive economy is one that is likely to grow
faster over the medium to long run
We try to shed light on “the factors, policies and institutions”
that determine the sharply different growth experiences of
117 economies worldwide
Part I. Global Competitiveness Programme:What do we mean by “competitiveness” ?
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Global Competitiveness Programme: What are we trying to achieve?
GDP per capita, PPP in international dollars
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
1955 1960 1965 1970 1975 1980 1985 1990 1995 2000
Sources: Penn World Tables, WEO Database, April 2005
Argentina
Ghana
Taiw an
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The Global Competitiveness Programme
Key insights gained from competitiveness programme
1. The factors that determine the level of productivity of
a country are many and spread over a large number
of areas
2. These factors matter differently for different
countries depending on their stage of development
3. Their relative importance changes over time
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Growth Competitiveness Index
Technology Transfer Sub-Index
Information & Communications
Technology Subindex
Technology IndexMacroeconomic
Environment IndexPublic Institutions
Index
Contracts and law Sub-Index
Corruption Sub-Index
Macroeconomic stability Sub-Index
Innovation Sub-Index
Country CreditRating
GovernmentWaste
Part II. The Growth Competitiveness Index
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Growth Competitiveness Index Components(out of 117)
CountryGCI
overallTechnology
index
Public Institutions
indexMacroeconomy
indexFinland 1 2 5 4United States 2 1 18 23Sweden 3 4 17 12Denmark 4 5 2 3Iceland 7 9 3 11Japan 12 8 14 42United Kingdom 13 17 12 18
Germany 15 16 8 28
Chile 23 35 22 15
Spain 29 27 36 24
China 49 64 56 33
India 50 55 52 50
Mexico 55 57 71 43
Brazil 65 50 70 79
Turkey 66 53 61 87Argentina 72 59 74 86Russia 75 73 91 58
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Public Institutions Rankings(out of 117)
Country
Public Institutions
Index
Contracts and Laws
subindexCorruption subindex
Singapore 4 5 3Finland 5 3 5Germany 8 6 20United Kingdom 12 12 12Japan 14 21 8Sweden 17 19 11United States 18 20 14Chile 22 34 13Taiwan 26 33 24Spain 36 47 28India 52 37 78China 56 62 50Turkey 61 59 64Brazil 70 77 62Mexico 71 79 60Argentina 74 100 57Russia 91 109 76
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Public Institutions Ranking: Key Variables(out of 117)
CountriesProperty Rights
Judicial Independence
Government Favoritism
Burden of govt
regulationSingapore 6 19 3 1Finland 13 12 5 5Germany 1 1 13 80United Kingdom 7 9 16 51Japan 17 22 19 31Sweden 21 36 9 24United States 2 17 33 20Chile 31 47 20 18Taiwan 29 44 17 4Spain 33 55 52 25India 32 23 53 76China 71 65 59 30Turkey 58 57 64 65Brazil 60 72 69 115Mexico 66 60 71 96Argentina 110 105 97 101Russia 108 102 106 110
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Macroeconomic Environment Rankings(out of 117)
Country
Macro. Environment
Index
Macro. Stability
subindexGovernment
WasteCountry Credit
RatingSingapore 1 10 1 15Finland 4 13 10 4Sweden 12 16 31 11Chile 15 3 19 32Taiwan 17 17 12 24United Kingdom 18 32 27 4United States 23 47 20 6Spain 24 31 24 17Germany 28 65 37 10China 33 27 44 37Japan 42 78 68 19Mexico 43 36 55 45India 50 41 63 53Russia 58 42 93 54Brazil 79 81 111 62Argentina 86 50 91 107Turkey 87 111 76 69
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Macroeconomic Environment Rankings: Key Variables(out of 117)
CountriesGovt surplus/
deficit Govt debt /GDP REER InflationSingapore 7 107 40 22Finland 15 38 76 7Sweden 23 58 69 13Chile 13 7 26 13Taiwan 76 31 25 21United Kingdom 73 41 87 17United States 92 76 49 40Spain 31 53 97 47Germany 86 78 82 23China 57 28 54 59Japan 113 114 48 6Mexico 49 15 50 68India 116 69 63 57Russia 9 19 111 103Brazil 68 59 8 83Argentina 78 111 2 63Turkey 117 89 109 102
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Technology Index Rankings(out of 117)
CountryTechnology
IndexInnovation subindex
ICT subindex
Tech transfer subindex
United States 1 1 3 --Finland 2 2 5 --Sweden 4 4 4 --Denmark 5 10 1 --Japan 8 5 17 --Singapore 10 13 8 --Norway 13 12 14 --Germany 16 9 20 --United Kingdom 17 16 15 --Portugal 20 35 30 3Spain 27 28 32 13Chile 35 38 37 17Brazil 50 68 52 18Turkey 53 56 54 29India 55 76 67 6Mexico 57 73 57 27Argentina 59 34 59 39
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Part III. The Global Competitiveness Index
The Growth Competitiveness Index is a simple structure which
captures some of the key drivers of growth.
It does not incorporate concepts which the theory or empirical
observation suggests are important determinants of competitiveness.
For instance, the functioning of labour markets, the quality of a country’s
infrastructure, the state of public health and the size of the market.
The Global Competitive Index tries to assess both the macroeconomic
and microeconomic determinants of competitiveness in one index
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The Global Competitiveness Index
Three stages of development:
1. “Factor-driven stage”
Firms compete in prices, taking advantage of cheap factorse.g., India, China, Ukraine
2. “Efficiency-driven stage”
Efficient production practices to increase productivity
e.g., Poland, Brazil, Mexico
3. “Innovation-driven stage”
Economies need to produce innovative products using
sophisticated production methodse.g., Finland, Germany, Japan
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The Global Competitiveness Index
The Nine Pillars of Competitiveness
1. Institutions
2. Infrastructure
3. Macroeconomy
4. Health and Primary Education
5. Higher Education and Training
6. Market Efficiency (goods, labour,
financial)
7. Technological Readiness
8. Business Sophistication
9. Innovation
Basic requirements
Key for factor-
driven economies
Efficiency enhancers
Key for efficiency-
driven economiesInnovation and
sophistication
factors
Key for innovation-
driven economies
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Weights given to the groups of pillars (subindexes)
The Global Competitiveness Index
Weights Basic Requirements Efficiency Enhancers Innovation and
Sophistication Factors
Factor-Driven Stage 50% 40% 10%
Efficiency-Driven Stage 40% 50% 10%
Innovation-Driven Stage 30% 40% 30%
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The Global Competitiveness IndexList of countries in each stage
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Top performers in the nine pillars
The Global Competitiveness Index
Country Institutions InfrastructureMacro-
economy
Health and Primary
Education
Higher education and
trainingMarket
EfficiencyTechnological
ReadinessBusiness
Sophistication Innovation
Singapore 1 5 9 69 8 4 20 9
Denmark 2 16 23 3 5 2 4 10
Chile 27 34 25 42 24 36 31 41
Japan 26 9 93 16 16 17 2
Finland 3 10 10 10 12 12 12 4
United States 16 8 62 47 2 5 3
Turkey 56 64 116 93 55 57 50 41 51
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The Global Competitiveness Index
Public Institutions
Property rights
Diversion of public funds
Public trust of politicians
Judicial independence
Favoritism in decision of government officials
Wastefulness of government spending
Burden of government regulation
Business costs of terrorism
Reliability of police services
Business costs of crime and violence
Organized crime
Macroeconomy
Government surplus/deficit
National savings rate
Inflation
Interest rate spread
Government debt / GDP ratio
Real effective exchange rate
Technology & Innovation
Country technological readiness
Capacity for innovation
Technology absorption by firms
FDI and technology transfer
Spending on R&D
Technology penetration (cell
phones, Internet users, PCs)
Quality of scientific research
institutions
Academic/Private sector research
collaboration
Availability of scientists and
engineers
Appropriate legal framework and
intellectual property protection