The Global Competitiveness Report:
A Tool for Fostering Better Policies
8th November, 2005
Augusto Lopez-Claros
Chief Economist & Director
Global Competitiveness Programme
World Economic Forum
Geneva, Switzerland
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
2
Part I. Global Competitiveness Programme:
What do we mean by “competitiveness” ?
 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
3
Global Competitiveness Programme:
What are we trying to achieve?
GDP per capita, PPP in international dollars
20,000
18,000
Argentina
Ghana
16,000
Taiw an
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
Sources: Penn World Tables, WEO Database, April 2005
4
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
5
Part II. The Growth Competitiveness Index
Growth Competitiveness Index
Technology Index
Macroeconomic
Environment Index
Public Institutions
Index
Innovation Sub-Index
Macroeconomic
stability Sub-Index
Contracts and
law Sub-Index
Technology
Transfer Sub-Index
Country Credit
Rating
Corruption SubIndex
Information &
Communications
Technology Subindex
Government
Waste
6
Growth Competitiveness Index
Components
(out of 117)
GCI
overall
1
2
3
4
7
12
13
Technology
index
2
1
4
5
9
8
17
Public
Institutions
index
5
18
17
2
3
14
12
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
Argentina
Russia
66
72
75
53
59
73
61
74
91
87
86
58
Country
Finland
United States
Sweden
Denmark
Iceland
Japan
United Kingdom
Macroeconomy
index
4
23
12
3
11
42
18
7
Public Institutions Rankings
(out of 117)
Country
Singapore
Finland
Germany
United Kingdom
Japan
Sweden
United States
Chile
Taiwan
Spain
India
China
Turkey
Brazil
Mexico
Argentina
Russia
Public
Contracts and
Institutions
Laws
Index
subindex
4
5
5
3
8
6
12
12
14
21
17
19
18
20
22
34
26
33
36
47
52
37
56
62
61
59
70
77
71
79
74
100
91
109
Corruption
subindex
3
5
20
12
8
11
14
13
24
28
78
50
64
62
60
57
76
8
Public Institutions Ranking: Key Variables
(out of 117)
Countries
Singapore
Finland
Germany
United Kingdom
Japan
Sweden
United States
Chile
Taiwan
Spain
India
China
Turkey
Brazil
Mexico
Argentina
Russia
Property
Rights
6
13
1
7
17
21
2
31
29
33
32
71
58
60
66
110
108
Judicial
Independence
19
12
1
9
22
36
17
47
44
55
23
65
57
72
60
105
102
Government
Favoritism
3
5
13
16
19
9
33
20
17
52
53
59
64
69
71
97
106
Burden of
govt
regulation
1
5
80
51
31
24
20
18
4
25
76
30
65
115
96
101
110
9
Macroeconomic Environment Rankings
(out of 117)
Country
Singapore
Finland
Sweden
Chile
Taiwan
United Kingdom
United States
Spain
Germany
China
Japan
Mexico
India
Russia
Brazil
Argentina
Turkey
Macro.
Environment
Index
1
4
12
15
17
18
23
24
28
33
42
43
50
58
79
86
87
Macro.
Stability
subindex
10
13
16
3
17
32
47
31
65
27
78
36
41
42
81
50
111
Government
Waste
1
10
31
19
12
27
20
24
37
44
68
55
63
93
111
91
76
Country Credit
Rating
15
4
11
32
24
4
6
17
10
37
19
45
53
54
62
107
69
10
Macroeconomic Environment Rankings:
Key Variables
(out of 117)
Countries
Singapore
Finland
Sweden
Chile
Taiwan
United Kingdom
United States
Spain
Germany
China
Japan
Mexico
India
Russia
Brazil
Argentina
Turkey
Govt surplus/
deficit
Govt debt /GDP
7
107
15
38
23
58
13
7
76
31
73
41
92
76
31
53
86
78
57
28
113
114
49
15
116
69
9
19
68
59
78
111
117
89
REER
40
76
69
26
25
87
49
97
82
54
48
50
63
111
8
2
109
Inflation
22
7
13
13
21
17
40
47
23
59
6
68
57
103
83
63
102
11
Technology Index Rankings
(out of 117)
Country
United States
Finland
Sweden
Denmark
Japan
Singapore
Norway
Germany
United Kingdom
Portugal
Spain
Chile
Brazil
Turkey
India
Mexico
Argentina
Technology
Index
1
2
4
5
8
10
13
16
17
20
27
35
50
53
55
57
59
Innovation
subindex
1
2
4
10
5
13
12
9
16
35
28
38
68
56
76
73
34
ICT
subindex
3
5
4
1
17
8
14
20
15
30
32
37
52
54
67
57
59
Tech transfer
subindex
---------3
13
17
18
29
6
27
39
12
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
13
The Global Competitiveness Index
Three stages of development:
1. “Factor-driven stage”
Firms compete in prices, taking advantage of cheap factors
e.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 methods
e.g., Finland, Germany, Japan
14
The Global Competitiveness Index
The Nine Pillars of Competitiveness
Efficiency enhancers
Key for efficiencydriven economies
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 factordriven economies
Innovation and
sophistication
factors
Key for innovationdriven economies
15
The Global Competitiveness Index
Weights given to the groups of pillars (subindexes)
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%
Weights
16
The Global Competitiveness Index
List of countries in each stage
17
The Global Competitiveness Index
Top performers in the nine pillars
Country
Singapore
Denmark
Infrastructure
Macroeconomy
Health and
Primary
Education
Higher
education and
training
Market
Efficiency
1
5
9
69
8
4
1
20
9
2
1
16
23
3
5
2
4
10
Institutions
Technological
Business
Readiness Sophistication
Innovation
Chile
27
34
1
25
42
24
36
31
41
Japan
26
9
93
1
16
16
17
1
2
Finland
3
10
10
10
1
12
12
12
4
United States
16
8
62
47
2
1
5
3
1
Turkey
56
64
116
93
55
57
50
41
51
18
The Global Competitiveness Index
Public Institutions
Macroeconomy
Technology & Innovation
 Property rights
 Government surplus/deficit
 Country technological readiness
 Diversion of public funds
 National savings rate
 Capacity for innovation
 Public trust of politicians
 Inflation
 Technology absorption by firms
 Judicial independence
 Interest rate spread
 Favoritism in decision of
government officials
 Government debt / GDP ratio
 Real effective exchange rate
 FDI and technology transfer
 Spending on R&D
 Wastefulness of government
spending
 Technology penetration (cell
phones, Internet users, PCs)
 Burden of government
regulation
 Quality of scientific research
institutions
 Business costs of terrorism
 Reliability of police services
 Business costs of crime and
violence
 Organized crime
 Academic/Private sector research
collaboration
 Availability of scientists and
engineers
 Appropriate legal framework and
intellectual property protection
19