An alternative index to the global competitiveness index

Abstract

This paper reviews the methodology used by the World Economic Forum (WEF) to create the Global Competitiveness Index (WEF-GCI). We propose an alternative competitiveness index that only includes the objective data (hard data) from the WEF-GCI and is created by applying a multivariate statistical procedure (Exploratory Factor Analysis) that allows us to determine the weights from the implicit data structure. The rankings obtained from this index have a high degree of association with those provided by the WEF. The main benefit of this index over the WEF index is that it does not include valuations from opinion surveys given to business executives and/or entrepreneurs of the countries included in the index (soft data). Consequently, the rankings from this alternative index are not affected by political biases or individual interests as it is elaborated only including officially published objective data.

Are Human Development and Innovativeness Levels Good Predictors of the Competitiveness of Nations? A Panel Data Approach

“…Diverse stakeholders have utilized ranking indices for different purposes such as determining investment plans by the business community, benchmarking policies to attract enterprises by governments, and employing cross-country analyses by academicians [29]. Two widely accepted and more influential indices have been prepared by the World Economic Forum (WEF) and the International Institute for Management Development (IMD) for years [28,30,31]. Also, there are very few similar indices that are found in the literature; however, they are not able to sustain their continuity such as the Centre for International Competitiveness [32] or not finding an application area by other researchers [31,33].…”

“…Two widely accepted and more influential indices have been prepared by the World Economic Forum (WEF) and the International Institute for Management Development (IMD) for years [28,30,31]. Also, there are very few similar indices that are found in the literature; however, they are not able to sustain their continuity such as the Centre for International Competitiveness [32] or not finding an application area by other researchers [31,33]. Besides these indices, there are many developed by governments, research institutions, and consultants to serve as a guideline for strategy development [29].…”

“…Annual publishments transformed into the Growth Competitiveness Index, Business Competitiveness Index, and finally evolved to the Global Competition Index including microeconomic and macroeconomic factors that are supported by twelve basic pillars that are categorized into three sub-indices called Basic Requirements, Efficiency Enhancers, and Innovation & Sophistication. These pillars include not only quantified data (hard data) supported by internationally recognized agencies such as the International Monetary Fund (IMF), United Nations Education, Scientific and Cultural Organization (UNESCO), and the World Health Organizations, but also qualified data (soft data) composed by the executives of the analyzed nations [31]. Moreover, WCYB has been published annually since 1989 to serve as a reference point for benchmarking nations by using statistics and survey data, and IMD World Competitiveness Ranking (WCR) is structured on four main sub-factors of Economic Performance, Government Efficiency, Business Efficiency, and Infrastructure to measure competitiveness with more than 330 criteria using hard data, surveys, and background information [34].…”

Sustaining the Path for Innovation Capability from a Developing Country Perspective: A Conceptual Framework

“…These three mechanisms are among the prominent ones used to assess the innovation capability of a nation due to the global approach they adopt by analyzing several countries and the numerous studies conducted using these innovation mechanisms as their framework. Although it might be argued that these carefully crafted assessing mechanisms are mainly suitable for developed countries, where data collection tends to be better carried out than in developing countries (particularly considering rural settings with small agricultural holdings), it is precisely the transparency of the information (freely and publicly available), the continuity of the publications of the indexes and the contrast with various sources that provide a common ground to evaluate and compare the innovation capability between countries with different settings [57,59,65,67,68].…”

The Conceptual Link between Country Competitiveness and Corporate ESG Performance

“…In addition, for efficiency-driven countries, factors such as GDP, inflation rate, trade, labor productivity and costs represent significant determinants of competitiveness, while for innovation-driven countries the determinants of competitiveness are represented by GDP, inflation rate, tax rate, trade and costs. -Márquez et al (2022) proposed an alternative competitiveness index to the one computed by the World Economic Forum, which does not include any valuation from opinion surveys given to entrepreneurs and executives, encompassing only quantitative indicators. The results obtained on 79 countries for which data was available for 2007-2008, respectively for 2010-2011 periods, reflected that the composition of the lower quintile for the two time periods is very similar and over 50% of the countries included in this quintile are from Africa.…”