global competitiveness index
DESCRIPTION
ECON2180. Global Competitiveness Index. Wong Check Ying 04003446 Cheung Siu Wun 04004485 Lee Po Hung 04005856 Leung Yee Ka 04014057. Introduciton. Introduction. Global Competitiveness Report is published by the World Economic Forum Assessed 117 economies - PowerPoint PPT PresentationTRANSCRIPT
Wong Check Ying 04003446Cheung Siu Wun 04004485Lee Po Hung 04005856Leung Yee Ka 04014057
Introduction
• Global Competitiveness Report is published by the World Economic Forum
• Assessed 117 economies
• understanding the key ingredients of economic growth and prosperity
Introduction
• Based on two indexes - Growth Competitiveness Index - Business Competitiveness Index
• Amendment in 2004 - Global Competitiveness Index - 9 pillars---institutions, infrastructure, market efficiency, business sophistication, higher education and training, etc
Growth Competitiveness Index (GCI)• measure the capacity of the national economy to achieve
sustained economic growth
• a number of complementary concepts
• providing a quantified framework for measuring competitiveness
• Limitations - from small and homogenous economies to big and diverse societies
• hard data - university enrollment rates, inflation performance, the state of the public finances, the level of penetration of new technologies, etc
• survey data drawn from the World Economic Forum’s Executive Opinion Survey - captures the expert opinions of business leaders and entrepreneurs on macroeconomic environment, corruption, technology, innovation and diffusion, domestic competition, etc
Growth Competitiveness Index (GCI)
• Core innovators are countries with more than 15 US utility patents registered per million population
• non-core innovators are all other countries
Growth Competitiveness Index (GCI)
Growth Competitiveness Index (GCI)
• explaining the evolution of growth in a country---“three pillars”
- the quality of the macroeconomic environment - the state of the country’s public institutions - the level of its technological readiness
• 3 indexes - the technology index - the public institution index - the macroeconomic environment index
Growth Competitiveness Index (GCI)
• measures the capacity for innovation and diffusion of technology
• 3 sub-indexes - innovation sub-index measures the levels of technological sophistication - technology transfer sub-index - information and communication technology sub- index measures of telephone lines, personal computers, Internet usage, etc
Technology Index
• Technology index for core economies / innovators =
1/2 innovation sub-index + 1/2 ICT sub-index
• Technology index for non-core economies / innovators =
1/8 innovation sub-index + 3/8 technology transfer
sub-index + 1/2 ICT sub-index
Growth Competitiveness Index (GCI)
Technology Index
• Innovation sub-index = 1/4 Survey data + 3/4 hard data
• Technology Transfer sub-index = un-weighted average of two technology transfer survey
questions
• Information and Communication technology sub-index = 1/3 survey data + 2/3 hard data
Growth Competitiveness Index (GCI)
Technology Index
Technology Index
Growth Competitiveness Index (GCI)
Growth Competitiveness Index (GCI)
• measures the role of politics and the bureaucracy in supporting market-based economic activity and the division of labor
• 2 sub-indexes - the contracts and law sub-index concerns neutrality in government procurement, clear delineation and respect for property rights, etc - the corruption sub-index measures the pervasiveness of bribery in three key public service areas
Public Institutions Index
• Public institutions index =
1/2 contracts and law sub-index
+ 1/2 corruption sub-index
Growth Competitiveness Index (GCI)
Public Institutions Index
Growth Competitiveness Index (GCI)Public Institutions Index
Growth Competitiveness Index (GCI)
• Measures variables related to capital accumulation and the efficiency of the division of labor
• 1 sub-index - the macroeconomic stability sub-index include the real exchange rate relative to the US, the general government budget balance, consumer price inflation, etc
Macroeconomic Environment Index
• Macroeconomic environment index =
1/2 macroeconomic stability sub-index
+ 1/4 country credit rating
+ 1/4 government waste
• Macroeconomic stability sub-index =
5/7 hard data + 2/7 survey data
Growth Competitiveness Index (GCI)
Macroeconomic Environment Index
Growth Competitiveness Index (GCI)Macroeconomic Environment Index
• GCI for core economies / innovators =
1/2 technology index
+ 1/4 public institution index
+ 1/4 macroeconomic environment index
• GCI for non-core economies / innovators =
1/3 technology index
+ 1/3 public institutions index
+ 1/3 macroeconomic environment index
Growth Competitiveness Index (GCI)
Growth Competitiveness Index (GCI)
• underlying microeconomic factors
• determine economies’ current sustainable levels of productivity and competitiveness
• complementary approach to the forward-looking macroeconomic approach of the GCI
• highly skilled people, efficiency of government processes, quality of infrastructure, the competitive pressures faced by companies, etc
The Business Competitiveness Index (BCI)
• measures two areas that are critical to the microeconomic business environment in an economy
- the sophistication of company operations and
strategy
- the quality of the overarching national business
environment in which they are operating
The Business Competitiveness Index (BCI)
• 2 sub-indexes
- companies’ operations and strategies
- quality of the national business
environment
The Business Competitiveness Index (BCI)
The Business Competitiveness Index (BCI)
Relationship between GCI and BCI
Partial regression results of GCIvs.
GDP per capita growth
GDP 2005 Data source: 2005 CIA World Factbook
1 World $55,500,000,000,000
2 United States $11,750,000,000,000
3 European Union $11,650,000,000,000
4 China $7,262,000,000,000
5 Japan $3,745,000,000,000
6 India $3,319,000,000,000
7 Germany $2,362,000,000,000
8 United Kingdom $1,782,000,000,000
9 France $1,737,000,000,000
10
Italy $1,609,000,000,000
36 Sweden $255,400,000,000
37 Switzerland $251,900,000,000
38 Hong Kong $234,500,000,000
39 Malaysia $229,300,000,000
40 Vietnam $227,200,000,000
41 Greece $226,400,000,000
42 Algeria $212,300,000,000
43 Portugal $188,700,000,000
44 Norway $183,000,000,000
45 Denmark $174,400,000,000
46 Czech Republic $172,200,000,000
139 Iceland $9,373,000,000
Competitiveness VS. GDP
About GCI
Countries with high GDP - United States (rank2)-----GCI ranking 2 - Japan (rank 5)-----GCI ranking 12
Countries with relative high GDP - Denmark (rank 45)---- GCI ranking 4
Countries with low GDP - Iceland (rank 139)---- GCI ranking 7
Competitiveness VS. GDP
About BCI
Countries with high GDP - United States (rank2)-----BCI ranking 1 - Japan (rank 5)-----BCI ranking 8
Countries with relative high GDP - Denmark (rank 45)---- BCI ranking 4
Countries with low GDP - Iceland (rank 139)---- BCI ranking 17
GDP - per capita 2005 Data source: 2005 CIA World Factbook
1 Luxembourg $58,900
2 United States $40,100
3 Guernsey $40,000
3 Jersey $40,000
3 Norway $40,000
4 British Virgin Islands $38,500
5 Bermuda $36,000
6 San Marino $34,600
7 Hong Kong $34,200
8 Switzerland $33,800
9 Cayman Islands $32,300
10 Denmark $32,200
11 Iceland $31,900
11 Ireland $31,900
12 Canada $31,500
13 Austria $31,300
14 Australia $30,700
15 Belgium $30,600
16 United Kingdom $29,600
17 Netherlands $29,500
18 Japan $29,400
19 Finland $29,000
20 France $28,700
20 Germany $28,700
21 Man, Isle of $28,500
22 Sweden $28,400
23 Aruba $28,000
24 Gibraltar $27,900
25 Singapore $27,800
98 Peru $5,600
Competitiveness VS. GDP per capita
About GCI
Countries with high per capita GDP - United States (rank 2)-----GCI ranking 2 - Hong Kong (rank 7)-----GCI ranking 12
Countries with relative high per capita GDP - Japan (rank 18)---- GCI ranking 4
Countries with low per capita GDP - Peru (rank 98)---- GCI ranking 68
About BCI
Countries with high per capita GDP - United States (rank 2)-----BCI ranking 1 - Hong Kong (rank 7)-----BCI ranking 20
Countries with relative high per capita GDP - Japan (rank 18)---- BCI ranking 8
Countries with low per capita GDP - Peru (rank 98)---- BCI ranking 81
Competitiveness VS. GDP per capita
GDP - real growth rate(%) 2005 Data source: 2005 CIA World Factbook
1 Iraq 52.30
2 Chad 38.00
3 Liberia 21.80
4 Equatorial Guinea 20.00
5 Venezuela 16.80
6 Macau 15.60
7 Ukraine 12.00
8 Angola 11.70
9 Ethiopia 11.60
10 Liechtenstein 11.00
11 Mongolia 10.60
12 Tajikistan 10.50
13 Uruguay 10.20
14 Faroe Islands 10.00
15 Azerbaijan 9.80
16 Georgia 9.50
17 Kazakhstan 9.10
17 China 9.10
18 Armenia 9.00
19 Qatar 8.70
20 Argentina 8.30
21 Turkey 8.20
21 Mozambique 8.20
22 Romania 8.10
22 Singapore 8.10
23 Hong Kong 7.90
24 Vietnam 7.70
25 Latvia 7.60
26 Afghanistan 7.50
26 Congo, Democratic Republic of the
7.50
26 San Marino 7.50
27 Malaysia 7.10
27 Cook Islands 7.10
28 Moldova 6.80
28 Kuwait 6.80
29 Russia 6.70
30 Lithuania 6.60
69 Luxembourg 2.30
69 Barbados 2.30
69 Syria 2.30
70 Kenya 2.20
71 France 2.10
71 Denmark 2.10
72 Virgin Islands 2.00
72 Andorra 2.00
72 Bermuda 2.00
72 Comoros 2.00
73 Yemen 1.90
73 Gabon 1.90
73 Guyana 1.90
73 Jamaica 1.90
73 Austria 1.90
74 Greenland 1.80
74 El Salvador 1.80
74 Iceland 1.80
74 Switzerland 1.80
75 Germany 1.70
Competitiveness VS. GDP real growth rate (%)
About GCI
Countries with high GDP real growth rate - Chad (rank 2)-----GCI ranking 117 - Mongolia (rank 11)-----GCI ranking 96 Countries with relative high GDP real growth rate - Hong Kong (rank 23)---- GCI ranking 12
Countries with low GDP real growth rate - Iceland (rank 74)---- GCI ranking 7 - Germany (rank 75)---- GCI ranking 15
Competitiveness VS. GDP real growth rate (%)
About BCI
Countries with high GDP real growth rate - Chad (rank 2)-----BCI ranking 116 - Mongolia (rank 11)-----BCI ranking 104 Countries with relative high GDP real growth rate - Hong Kong (rank 23)---- BCI ranking 20
Countries with low GDP real growth rate - Iceland (rank 74)---- BCI ranking 17 - Germany (rank 75)---- BCI ranking 3
What is WCI?
• WCI stands for World Competitiveness Index
• indicated in the World Competitiveness Yearbook
• most renowned and comprehensive annual report
on the competitiveness of nations, ranking and
analyzing how a nation environment creates and
sustains the competitiveness of enterprises
GCR WCI
Aim assess the capacity of the world’s economies to achieve sustained economic growth
evaluate the overall competitiveness of countries
Cover more than 100 economies
60 national and regional economies
Global network
122 Partner Institutes 55 Partner Institutes
GCR WCI
Aggregation of data
Aggregates data over the year
Aggregates data over a 5-year period
Collection of data
Combines publicly available data with survey data that captures the perceptions and observations of business leaders in a given country
Survey data are drawn from the Executive Opinion Survey (4,166 respondents)
Hard data are taken from international and regional organizations and private institutes
Conclusion• GDP and competitiveness are normally positively related , but there still some exception like Iceland which has low GDP but high competitiveness
• GDP per capita are normally in positive relation
• Real GDP growth rate are in negative relation to competitiveness
• They are only one of the sub-indexes
• should not focus on one pillar only