Global Competitive Report
Insight Report
The Global
Competitiveness Report
2012–2013
Klaus Schwab, World Economic Forum
Insight Report
The Global
Competitiveness Report
2012–2013
Full Data Edition
Professor Klaus Schwab
World Economic Forum
Editor
Professor Xavier Sala-i-Martín
Columbia University
Chief Advisor of The Global Benchmarking Network
The Global Competitiveness Report 2012–20013:
Full Data Edition is published by the World Economic
Forum within the framework of The Global
Benchmarking Network.
World Economic Forum
Geneva
Professor Klaus Schwab
Executive Chairman
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, or otherwise without the prior permission of the World Economic Forum.
Professor Xavier Sala-i-Martín
Chief Advisor of The Global Benchmarking Network
Børge Brende
Managing Director, Government Relations and
Constituents Engagement
THE GLOBAL BENCHMARKING NETWORK
Jennifer Blanke, Senior Director,
Lead Economist, Head of The Global
Benchmarking Network
Beñat Bilbao-Osorio, Associate Director,
Senior Economist
Ciara Browne, Associate Director
Roberto Crotti, Quantitative Economist
Margareta Drzeniek Hanouz, Director, Senior
Economist, Head of Competitiveness Research
Brindusa Fidanza, Associate Director,
Environmental Initiatives
Thierry Geiger, Associate Director, Economist
Tania Gutknecht, Community Manager
Caroline Ko, Junior Economist
Cecilia Serin, Team Coordinator
We thank Hope Steele for her excellent editing work and
Neil Weinberg for his superb graphic design and layout.
We are grateful to Annabel Guinault for her invaluable research assistance.
The terms country and nation as used in this report do not in all cases refer to a territorial entity that is a state as understood by international law and practice. The terms cover well-defined, geographically self-contained economic areas that may not be states but for which statistical data are maintained on a separate and independent basis.
Copyright © 2012 by the World Economic Forum
ISBN-13: 978-92-95044-35-7
ISBN-10: 92-95044-35-5
This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources.
Printed and bound in Switzerland by SRO-Kundig.
The Report and an interactive data platform are available at www.weforum.org/gcr.
Contents
Partner Institutes
Preface
v xiii by Klaus Schwab
Part 2: Data Presentation
79
2.1 Country/Economy Profiles
81
How to Read the Country/Economy Profiles ..................................83
Index of Countries/Economies ........................................................85
Country/Economy Profiles ..............................................................86
Part 1: Measuring Competitiveness
1.1 The Global Competitiveness Index
2012–2013: Strengthening Recovery by
Raising Productivity
1
3
2.2 Data Tables
375
How to Read the Data Tables .......................................................377
Index of Data Tables .....................................................................379
Data Tables ..................................................................................381
by Xavier Sala-i-Martín, Beñat Bilbao-Osorio, Jennifer
Technical Notes and Sources
519
About the Authors
523
Acknowledgments
Blanke, Roberto Crotti, Margareta Drzeniek Hanouz,
527
Thierry Geiger, and Caroline Ko
1.2 Assessing the Sustainable Competitiveness of Nations
49
by Beñat Bilbao-Osorio, Jennifer Blanke, Roberto Crotti,
Margareta Drzeniek Hanouz, Brindusa Fidanza, Thierry
Geiger, Caroline Ko, and Cecilia Serin
1.3 The Executive Opinion Survey: The Voice of the Business Community
69
by Ciara Browne, Thierry Geiger, and Tania Gutknecht
The Global Competitiveness Report 2012–2013 | iii
Partner Institutes
The World Economic Forum’s Global Benchmarking
Network is pleased to acknowledge and thank the following organizations as its valued Partner
Institutes, without which the realization of The Global
Competitiveness Report 2012–2013 would not have been feasible:
Albania
Institute for Contemporary Studies (ISB)
Artan Hoxha, President
Elira Jorgoni, Senior Expert
Endrit Kapaj, Expert
Algeria
Centre de Recherche en Economie Appliquée pour le Développement (CREAD)
Youcef Benabdallah, Assistant Professor
Yassine Ferfera, Director
Argentina
IAE—Universidad Austral
Eduardo Luis Fracchia, Professor
Santiago Novoa, Project Manager
Armenia
Economy and Values Research Center
Manuk Hergnyan, Chairman
Sevak Hovhannisyan, Board Member and Senior Associate
Gohar Malumyan, Research Associate
Australia
Australian Industry Group
Colleen Dowling, Senior Research Coordinator
Innes Willox, Chief Executive
Austria
Austrian Institute of Economic Research (WIFO)
Karl Aiginger, Director
Gerhard Schwarz, Coordinator, Survey Department
Azerbaijan
Azerbaijan Marketing Society
Fuad Aliyev, Deputy Chairman
Ashraf Hajiyev, Consultant
Bahrain
Bahrain Economic Development Board
Kamal Bin Ahmed, Minister of Transportation and Acting Chief
Executive of the Economic Development Board
Nada Azmi, Manager, Economic Planning and Development
Maryam Matter, Coordinator, Economic Planning and
Development
Bangladesh
Centre for Policy Dialogue (CPD)
Khondaker Golam Moazzem, Senior Research Fellow
Kishore Kumer Basak, Research Associate
Mustafizur Rahman, Executive Director
Barbados
Sir Arthur Lewis Institute of Social and Economic Studies,
University of West Indies (UWI)
Judy Whitehead, Director
Belgium
Vlerick Business School
Priscilla Boiardi, Associate, Competence Centre
Entrepreneurship, Governance and Strategy
Wim Moesen, Professor
Leo Sleuwaegen, Professor, Competence Centre
Entrepreneurship, Governance and Strategy
Benin
CAPOD—Conception et Analyse de Politiques de
Développement
Epiphane Adjovi, Director
Maria-Odile Attanasso, Deputy Coordinator
Fructueux Deguenonvo, Researcher
Bosnia and Herzegovina
MIT Center, School of Economics and Business in Sarajevo,
University of Sarajevo
Zlatko Lagumdzija, Professor
Zeljko Sain, Executive Director
Jasmina Selimovic, Assistant Director
Botswana
Botswana National Productivity Centre
Letsogile Batsetswe, Research Consultant and Statistician
Baeti Molake, Executive Director
Phumzile Thobokwe, Manager, Information and Research
Services Department
Brazil
Fundação Dom Cabral, Bradesco Innovation Center
Carlos Arruda, International Relations Director, Innovation and Competitiveness Professor
Daniel Berger, Bachelor Student in Economics
Fabiana Madsen, Economist and Associate Researcher
Movimento Brasil Competitivo (MBC)
Carolina Aichinger, Project Coordinator
Erik Camarano, Chief Executive Officer
Brunei Darussalam
Ministry of Industry and Primary Resources
Pehin Dato Yahya Bakar, Minister
Normah Suria Hayati Jamil Al-Sufri, Permanent Secretary
Bulgaria
Center for Economic Development
Adriana Daganova, Expert, International Programmes and
Projects
Anelia Damianova, Senior Expert
Burkina Faso lnstitut Supérieure des Sciences de la Population (ISSP),
University of Ouagadougou
Baya Banza, Director
The Global Competitiveness Report 2012–2013 | v
Partner Institutes
Burundi
University Research Centre for Economic and Social
Development (CURDES), National University of Burundi
Banderembako Deo, Director
Gilbert Niyongabo, Dean, Faculty of Economics &
Management
Cambodia
Economic Institute of Cambodia
Sok Hach, President
Sokheng Sam, Researcher
Cameroon
Comité de Compétitivité (Competitiveness Committee)
Lucien Sanzouango, Permanent Secretary
Canada
The Conference Board of Canada
Michael R. Bloom, Vice-President, Organizational
Effectiveness & Learning
Douglas Watt, Associate Director
Cape Verde
INOVE RESEARCH—Investigação e Desenvolvimento, Lda
Júlio Delgado, Partner and Senior Researcher
José Mendes, Chief Executive Officer
Sara França Silva, Project Manager
Chad
Groupe de Recherches Alternatives et de Monitoring du Projet
Pétrole-Tchad-Cameroun (GRAMP-TC)
Antoine Doudjidingao, Researcher
Gilbert Maoundonodji, Director
Celine Nénodji Mbaipeur, Programme Officer
Chile
Universidad Adolfo Ibáñez
Fernando Larrain Aninat, Director MBA
Leonidas Montes, Dean, School of Government
China
Institute of Economic System and Management, National
Development and Reform Commission
Chen Wei, Research Fellow
Dong Ying, Professor
Zhou Haichun, Deputy Director and Professor
China Center for Economic Statistics Research, Tianjin
University of Finance and Economics
Bojuan Zhao, Professor
Fan Yang, Professor Jian Wang, Associate Professor
Hongye Xiao, Professor
Lu Dong, Professor
Colombia
National Planning Department
Sara Patricia Rivera, Advisor
John Rodríguez, Coordinator, Competitiveness Observatory
Javier Villarreal, Enterprise Development Director
Colombian Private Council on Competitiveness
Rosario Córdoba, President
Marco Llinás, Vicepresident
Côte d’Ivoire
Chambre de Commerce et d’Industrie de Côte d’Ivoire
Jean-Louis Billon, President
Mamadou Sarr, Director General
Croatia
National Competitiveness Council
Jadranka Gable, Advisor
Kresimir Jurlin, Research Fellow
vi | The Global Competitiveness Report 2012–2013
Cyprus
The European University
Bambos Papageorgiou, Head of Socioeconomic and
Academic Research cdbbank—The Cyprus Development Bank
Maria Markidou-Georgiadou, Manager, Business Development and Special Projects
Czech Republic
CMC Graduate School of Business
Tomas Janca, Executive Director
Denmark
Danish Technological Institute, Center for Policy and Business
Development
Hanne Shapiro, Center Manager
Ecuador
ESPAE Graduate School of Management, Escuela Superior
Politécnica del Litoral (ESPOL)
Elizabeth Arteaga, Project Assistant
Virginia Lasio, Director
Sara Wong, Professor
Egypt
The Egyptian Center for Economic Studies (ECES)
Iman Al-Ayouty, Senior Economist
Omneia Helmy, Acting Executive Director and Director of Research
Estonia
Estonian Institute of Economic Research
Evelin Ahermaa, Head of Economic Research Sector
Marje Josing, Director
Estonian Development Fund
Kitty Kubo, Head of Foresight
Ott Pärna, Chief Executive Officer
Ethiopia
African Institute of Management, Development and
Governance
Zebenay Kifle, General Manager
Tegenge Teka, Senior Expert
Finland
ETLA—The Research Institute of the Finnish Economy
Markku Kotilainen, Research Director
Petri Rouvinen, Research Director
Pekka Ylä-Anttila, Managing Director
France
HEC School of Management, Paris
Bertrand Moingeon, Professor and Deputy Dean
Bernard Ramanantsoa, Professor and Dean
Gabon
Confédération Patronale Gabonaise
Regis Loussou Kiki, General Secretary
Gina Eyama Ondo, Assistant General Secretary
Henri Claude Oyima, President
Gambia, The
Gambia Economic and Social Development Research Institute
(GESDRI)
Makaireh A. Njie, Director
Georgia
Business Initiative for Reforms in Georgia
Tamara Janashia, Executive Director
Giga Makharadze, Founding Member of the Board of Directors
Mamuka Tsereteli, Founding Member of the Board of Directors
Partner Institutes
Germany
WHU—Otto Beisheim School of Management
Ralf Fendel, Professor of Monetary Economics
Michael Frenkel, Professor, Chair of Macroeconomics and
International Economics
Ghana
Association of Ghana Industries (AGI)
Patricia Addy, Projects Officer
Nana Owusu-Afari, President
Seth Twum-Akwaboah, Executive Director
Greece
SEV Hellenic Federation of Enterprises
Michael Mitsopoulos, Senior Advisor, Entrepreneurship
Thanasis Printsipas, Economist, Entrepreneurship
Guatemala
FUNDESA
Felipe Bosch G., President of the Board of Directors
Pablo Schneider, Economic Director
Juan Carlos Zapata, General Manager
Guinea
Confédération Patronale des Entreprises de Guinée
Mohamed Bénogo Conde, Secretary-General
Guyana
Institute of Development Studies, University of Guyana
Karen Pratt, Research Associate
Clive Thomas, Director
Haiti
Group Croissance SA
Pierre Lenz Dominique, Coordinator, Survey Department
Kesner Pharel, Chief Executive Officer and Chairman
Hong Kong SAR
Hong Kong General Chamber of Commerce
David O’Rear, Chief Economist
Federation of Hong Kong Industries
Alexandra Poon, Director
The Chinese General Chamber of Commerce
Hungary
KOPINT-TÁRKI Economic Research Ltd.
Éva Palócz, Chief Executive Officer
Peter Vakhal, Project Manager
Iceland
Innovation Center Iceland
Ardis Armannsdottir, Marketing Manager
Karl Fridriksson, Managing Director of Human Resources and Marketing
Thorsteinn I. Sigfusson, Director
India
Confederation of Indian Industry (CII)
Chandrajit Banerjee, Director General
Marut Sengupta, Deputy Director General
Gantakolla Srivastava, Head, Financial Services
Indonesia
Center for Industry, SME & Business Competition Studies,
University of Trisakti
Tulus Tambunan, Professor and Director
Iran, Islamic Republic of
The Center for Economic Studies and Surveys (CESS), Iran
Chamber of Commerce, Industries, Mines and Agriculture
Mohammad Janati Fard, Research Associate
Hamed Nikraftar, Project Manager
Farnaz Safdari, Research Associate
Ireland
Institute for Business Development and Competitiveness
School of Economics, University College Cork
Justin Doran, Principal Associate
Eleanor Doyle, Director
Catherine Kavanagh, Principal Associate
Forfás, Economic Analysis and Competitiveness Department
Adrian Devitt, Manager
Conor Hand, Economist
Israel
Manufacturers’ Association of Israel (MAI)
Dan Catarivas, Director
Amir Hayek, Managing Director
Zvi Oren, President
Italy
SDA Bocconi School of Management
Secchi Carlo, Full Professor of Economic Policy, Bocconi
University
Paola Dubini, Associate Professor, Bocconi University
Francesco A. Saviozzi, SDA Professor, Strategic and
Entrepreneurial Management Department
Jamaica
Mona School of Business (MSB), The University of the West
Indies
Patricia Douce, Project Administrator
Evan Duggan, Executive Director and Professor
William Lawrence, Director, Professional Services Unit
Japan
Keio University
Yoko Ishikura, Professor, Graduate School of Media Design
Heizo Takenaka, Director, Global Security Research Institute
Jiro Tamura, Professor of Law, Keio University
Keizai Doyukai (Japan Association of Corporate Executives)
Kiyohiko Ito, Managing Director, Keizai Doyukai
Jordan
Ministry of Planning & International Cooperation
Jordan National Competitiveness Team
Kawther Al-Zou’bi, Head of Competitiveness Division
Basma Arabiyat, Researcher
Mukhallad Omari, Director of Policies and Studies Department
Kazakhstan
National Analytical Centre
Diana Tamabayeva, Project Manager
Vladislav Yezhov, Chairman
Kenya
Institute for Development Studies, University of Nairobi
Mohamud Jama, Director and Associate Research Professor
Paul Kamau, Senior Research Fellow
Dorothy McCormick, Research Professor
Korea, Republic of
College of Business School, Korea Advanced Institute of
Science and Technology KAIST
Byungtae Lee, Acting Dean
Soung-Hie Kim, Associate Dean and Professor
Jinyung Cha, Assistant Director, Exchange Programme
Korea Development Institute
Joohee Cho, Senior Research Associate
Yongsoo Lee, Head, Policy Survey Unit
Kuwait
Kuwait National Competitiveness Committee
Adel Al-Husainan, Committee Member
Fahed Al-Rashed, Committee Chairman
Sayer Al-Sayer, Committee Member
The Global Competitiveness Report 2012–2013 | vii
Partner Institutes
Kyrgyz Republic
Economic Policy Institute “Bishkek Consensus”
Lola Abduhametova, Program Coordinator
Marat Tazabekov, Chairman
Latvia
Stockholm School of Economics in Riga
Karlis Kreslins, EMBA Programme Director
Anders Paalzow, Rector
Lebanon
Bader Young Entrepreneurs Program
Antoine Abou-Samra, Managing Director
Farah Shamas, Program Coordinator
Lesotho
Private Sector Foundation of Lesotho
O.S.M. Moosa, President
Thabo Qhesi, Chief Executive Officer
Nteboheleng Thaele, Researcher
Libya
Libya Development Policy Center
Yusser Al-Gayed, Project Director
Ahmed Jehani, Chairman
Mohamed Wefati, Director
Lithuania
Statistics Lithuania
Ona Grigiene, Deputy Head, Knowledge Economy and Special Surveys Statistics Division
Vilija Lapeniene, Director General
Gediminas Samuolis, Head, Knowledge Economy and Special Surveys Statistics Division
Luxembourg
Luxembourg Chamber of Commerce
Christel Chatelain, Research Analyst
Stephanie Musialski, Research Analyst
Carlo Thelen, Chief Economist, Member of the
Managing Board
Macedonia, FYR
National Entrepreneurship and Competitiveness
Council (NECC)
Mirjana Apostolova, President of the Assembly
Dejan Janevski, Project Coordinator
Madagascar
Centre of Economic Studies, University of Antananarivo
Ravelomanana Mamy Raoul, Director
Razato Rarijaona Simon, Executive Secretary
Malawi
Malawi Confederation of Chambers of Commerce and
Industry
Hope Chavula, Public Private Dialogue Manager
Chancellor L. Kaferapanjira, Chief Executive Officer
Malaysia
Institute of Strategic and International Studies (ISIS)
Jorah Ramlan, Senior Analyst, Economics
Steven C.M. Wong, Senior Director, Economics
Mahani Zainal Abidin, Chief Executive
Malaysia Productivity Corporation (MPC)
Mohd Razali Hussain, Director General
Lee Saw Hoon, Senior Director
Mali
Groupe de Recherche en Economie Appliquée et
Théorique (GREAT)
Massa Coulibaly, Executive Director
viii | The Global Competitiveness Report 2012–2013
Malta
Competitive Malta—Foundation for National Competitiveness
Margrith Lutschg-Emmenegger, Vice President
Adrian Said, Chief Coordinator
Caroline Sciortino, Research Coordinator
Mauritania
Centre d’Information Mauritanien pour le Développement
Economique et Technique (CIMDET/CCIAM)
Lô Abdoul, Consultant and Analyst
Mehla Mint Ahmed, Director
Habib Sy, Administrative Agent and Analyst
Mauritius
Board of Investment of Mauritius
Nirmala Jeetah, Director, Planning and Policy
Ken Poonoosamy, Managing Director
Joint Economic Council
Raj Makoond, Director
Mexico
Center for Intellectual Capital and Competitiveness
Erika Ruiz Manzur, Executive Director
René Villarreal Arrambide, President and Chief Executive
Officer
Rodrigo David Villarreal Ramos, Director
Instituto Mexicano para la Competitividad (IMCO)
Priscila Garcia, Researcher
Manuel Molano, Deputy General Director
Juan E. Pardinas, General Director
Ministry of the Economy
Jose Antonio Torre, Undersecretary for Competitiveness and Standardization
Enrique Perret Erhard, Technical Secretary for
Competitiveness
Narciso Suarez, Research Director, Technical Secretary for Competitiveness
Moldova
Academy of Economic Studies of Moldova (AESM)
Grigore Belostecinic, Rector
Centre for Economic Research (CER)
Corneliu Gutu, Director
Mongolia
Open Society Forum (OSF)
Munkhsoyol Baatarjav, Manager of Economic Policy
Erdenejargal Perenlei, Executive Director
Montenegro
Institute for Strategic Studies and Prognoses (ISSP)
Maja Drakic, Project Manager
Petar Ivanovic, Chief Executive Officer
Veselin Vukotic, President
Morocco
Comité National de l’Environnement des Affaires
Seloua Benmbarek, Head of Mission
Mozambique
EconPolicy Research Group, Lda.
Peter Coughlin, Director
Donaldo Miguel Soares, Researcher
Ema Marta Soares, Assistant
Namibia
Institute for Public Policy Research (IPPR)
Graham Hopwood, Executive Director
Partner Institutes
Nepal
Centre for Economic Development and Administration (CEDA)
Ramesh Chandra Chitrakar, Professor, Country Coordinator and Project Director
Mahendra Raj Joshi, Member
Hari Dhoj Pant, Officiating Executive Director, Advisor, Survey project Netherlands
INSCOPE: Research for Innovation, Erasmus University
Rotterdam
Frans A. J. Van den Bosch, Professor
Henk W. Volberda, Director and Professor
New Zealand
The New Zealand Initiative
Catherine Harland, Research Fellow
Oliver Hartwich, Executive Director
Nigeria
Nigerian Economic Summit Group (NESG)
Frank Nweke Jr., Director General
Chris Okpoko, Associate Director, Research
Foluso Phillips, Chairman
Norway
BI Norwegian Business School
Eskil Goldeng, Researcher
Torger Reve, Professor
Oman
The International Research Foundation
Salem Ben Nasser Al-Ismaily, Chairman
Public Authority for Investment Promotion and Export
Development (PAIPED)
Mehdi Ali Juma, Expert for Economic Research
Pakistan
Mishal Pakistan
Puruesh Chaudhary, Director Content
Amir Jahangir, Chief Executive Officer
Paraguay
Centro de Análisis y Difusión de Economia Paraguaya
(CADEP)
Dionisio Borda, Research Member
Fernando Masi, Director
María Belén Servín, Research Member
Peru
Centro de Desarrollo Industrial (CDI), Sociedad Nacional de Industrias
Néstor Asto, Project Director
Luis Tenorio, Executive Director
Philippines
Makati Business Club (MBC)
Michael B. Mundo, Chief Economist
Marc P. Opulencia, Deputy Director
Peter Angelo V. Perfecto, Executive Director
Management Association of the Philippines (MAP)
Arnold P. Salvador, Executive Director
Poland
Economic Institute, National Bank of Poland
Piotr Boguszewski, Advisor
Jarosław T. Jakubik, Deputy Director
Portugal
PROFORUM, Associação para o Desenvolvimento da
Engenharia
Ilídio António de Ayala Serôdio, Vice President of the Board of Directors
Fórum de Administradores de Empresas (FAE)
Paulo Bandeira, General Director
Pedro do Carmo Costa, Member of the Board of Directors
Esmeralda Dourado, President of the Board of Directors
Puerto Rico
Puerto Rico 2000, Inc.
Ivan Puig, President
Instituto de Competitividad Internacional, Universidad
Interamericana de Puerto Rico
Francisco Montalvo, Project Coordinator
Qatar
Qatari Businessmen Association (QBA)
Sarah Abdallah, Deputy General Manager
Issa Abdul Salam Abu Issa, Secretary-General
Social and Economic Survey Research Institute (SESRI)
Hanan Abdul Ibrahim, Associate Director
Darwish Al Emadi, Director
Romania
SC VBD Alliance Consulting Srl
Irina Ion, Program Coordinator
Rolan Orzan, General Director
Russian Federation
Bauman Innovation & Eurasia Competitiveness Institute
Katerina Marandi, Programme Manager
Alexey Prazdnichnykh, Principal and Managing Director
Stockholm School of Economics, Russia
Igor Dukeov, Area Principal
Carl F. Fey, Associate Dean of Research
Rwanda
Private Sector Federation (PSF)
Hannington Namara, Chief Executive Officer
Andrew O. Rwigyema, Head of Research and Policy
Saudi Arabia
National Competitiveness Center (NCC)
Awwad Al-Awwad, President
Khaldon Mahasen, Vice President
Senegal
Centre de Recherches Economiques Appliquées (CREA),
University of Dakar
Diop Ibrahima Thione, Director
Serbia
Foundation for the Advancement of Economics (FREN)
Mihail Arandarenko, Director
Aleksandar Radivojevic, Project Coordinator
Bojan Ristic, Researcher
Seychelles
Plutus Auditing & Accounting Services
Nicolas Boulle, Partner
Marco L. Francis, Partner
Singapore
Economic Development Board
Anna Chan, Assistant Managing Director, Planning & Policy
Cheng Wai San, Head, Research & Statistics Unit
Teo Xinyu, Executive, Research & Statistics Unit
Slovak Republic
Business Alliance of Slovakia (PAS)
Robert Kicina, Executive Director
The Global Competitiveness Report 2012–2013 | ix
Partner Institutes
Slovenia
Institute for Economic Research
Peter Stanovnik, Professor
Sonja Uršic, Senior Research Assistant
University of Ljubljana, Faculty of Economics
Mateja Drnovšek, Professor
Aleš Vahcic, Professor
South Africa
Business Leadership South Africa
Friede Dowie, Director
Thero Setiloane, Chief Executive Officer
Business Unity South Africa
Nomaxabiso Majokweni, Chief Executive Officer
Joan Stott, Executive Director, Economic Policy
Spain
IESE Business School, International Center for
Competitiveness
María Luisa Blázquez, Research Associate
Antoni Subirà, Professor
Sri Lanka
Institute of Policy Studies of Sri Lanka (IPS)
Ayodya Galappattige, Research Officer
Dilani Hirimuthugodage, Research Officer
Saman Kelegama, Executive Director
Suriname
Suriname Trade & Industry Association (VSB)
Helen Doelwijt, Executive Secretary
Rene van Essen, Director
Dayenne Wielingen Verwey, Economic Policy Officer
Swaziland
Federation of Swaziland Employers and Chamber of
Commerce
Mduduzi Lokotfwako, Research Analyst
Zodwa Mabuza, Chief Executive Officer
Nyakwesi Motsa, Administration & Finance Manager
Sweden
International University of Entrepreneurship and Technology
Niclas Adler, President
Switzerland
University of St. Gallen, Executive School of Management,
Technology and Law (ES-HSG)
Rubén Rodriguez Startz, Head of Project
Tobias Trütsch, Communications Manager
Taiwan, China
Council for Economic Planning and Development, Executive
Yuan
Hung, J. B., Director, Economic Research Department
Shieh, Chung Chung, Researcher, Economic Research
Department
Wu, Ming-Ji, Deputy Minister
Tajikistan
The Center for Sociological Research “Zerkalo”
Rahima Ashrapova, Assistant Researcher
Qahramon Baqoev, Director
Gulnora Beknazarova, Researcher
Tanzania
Research on Poverty Alleviation (REPOA)
Cornel Jahari, Assistant Researcher
Johansein Rutaihwa, Commissioned Researcher
Samuel Wangwe, Professor and Executive Director
x | The Global Competitiveness Report 2012–2013
Thailand
Sasin Graduate Institute of Business Administration,
Chulalongkorn University
Pongsak Hoontrakul, Senior Research Fellow
Narudee Kiengsiri, President of Sasin Alumni Association
Toemsakdi Krishnamra, Director of Sasin
Thailand Development Research Institute (TDRI)
Somchai Jitsuchon, Research Director
Chalongphob Sussangkarn, Distinguished Fellow
Yos Vajragupta, Senior Researcher
Timor-Leste
East Timor Development Agency (ETDA)
Jose Barreto, Survey Manager
Palmira Pires, Director
Chambers of Commerce and Industry of Timor-Leste
Kathleen Fon Ha Tchong Goncalves, Vice-President
Trinidad and Tobago
Arthur Lok Jack Graduate School of Business
Miguel Carillo, Executive Director and Professor of Strategy
Nirmala Harrylal, Director, Internationalisation and Institutional
Relations Centre
The Competitiveness Company
Rolph Balgobin, Chairman
Tunisia
Institut Arabe des Chefs d’Entreprises
Ahmed Bouzguenda, President
Majdi Hassen, Executive Counsellor
Turkey
TUSIAD Sabanci University Competitiveness Forum
Izak Atiyas, Director
Selcuk Karaata, Vice Director
Sezen Ugurlu, Project Specialist
Uganda
Kabano Research and Development Centre
Robert Apunyo, Program Manager
Delius Asiimwe, Executive Director
Francis Mukuya, Research Associate
Ukraine
CASE Ukraine, Center for Social and Economic Research
Dmytro Boyarchuk, Executive Director
Vladimir Dubrovskiy, Leading Economist
United Arab Emirates
Abu Dhabi Department of Economic Development
H.E. Mohammed Omar Abdulla, Undersecretary
Dubai Economic Council
H.E. Hani Al Hamly, Secretary General
Institute for Social and Economic Research (ISER), Zayed
University
Mouawiya Alawad, Director
Emirates Competitiveness Council
H.E. Abdulla Nasser Lootah, Secretary General
United Kingdom
LSE Enterprise Ltd, London School of Economics and
Political Science
Adam Austerfield, Director of Projects
Niccolo Durazzi, Project Manager
Robyn Klingler Vidra, Researcher
Uruguay
Universidad ORT Uruguay
Isidoro Hodara, Professor
Partner Institutes
Venezuela
CONAPRI—The Venezuelan Council for Investment Promotion
Litsay Guerrero, Economic Affairs and Investor Services
Manager
Eduardo Porcarelli, Executive Director
Vietnam
Ho Chi Minh City Institute for Development Studies (HIDS)
Nguyen Trong Hoa, Professor and President
Du Phuoc Tan, Head of Department
Trieu Thanh Son, Researcher
Yemen
Yemeni Businessmen Club (YBC)
Mohammed Esmail Hamanah, Executive Manager
Fathi Abdulwasa Hayel Saeed, Chairman
Moneera Abdo Othman, Project Coordinator
MARcon Marketing Consulting
Margret Arning, Managing Director
Zambia
Institute of Economic and Social Research (INESOR),
University of Zambia
Patricia Funjika, Research Fellow
Jolly Kamwanga, Senior Research Fellow and Project
Coordinator
Mubiana Macwan’gi, Director and Professor
Zimbabwe
Graduate School of Management, University of Zimbabwe
A. M. Hawkins, Professor
Bolivia, Costa Rica, Dominican Republic, Ecuador,
El Salvador, Honduras, Nicaragua, Panama
INCAE Business School, Latin American Center for
Competitiveness and Sustainable Development (CLACDS)
Ronald Arce, Researcher
Arturo Condo, Rector
Marlene de Estrella, Director of External Relations
Lawrence Pratt, Director
Liberia and Sierra Leone
FJP Development and Management Consultants
Omodele R. N. Jones, Chief Executive Officer
The Global Competitiveness Report 2012–2013 | xi
Preface
KLAUS SCHWAB
Executive Chairman, World Economic Forum
The Global Competitiveness Report 2012–2013 is being released amid a long period of economic uncertainty.
The tentative recovery that seemed to be gaining ground during 2010 and the first half of 2011 has given way to renewed concerns. The global economy faces a number of significant and interrelated challenges that could hamper a genuine upturn after an economic crisis half a decade long in much of the world, especially in the most advanced economies. The persisting financial difficulties in the periphery of the euro zone have led to a long-lasting and unresolved sovereign debt crisis that has now reached the boiling point. The possibility of Greece and perhaps other countries leaving the euro is now a distinct prospect, with potentially devastating consequences for the region and beyond.
This development is coupled with the risk of a weak recovery in several other advanced economies outside of Europe—notably in the United States, where political gridlock on fiscal tightening could dampen the growth outlook. Furthermore, given the expected slowdown in economic growth in China, India, and other emerging markets, reinforced by a potential decline in global trade and volatile capital flows, it is not clear which regions can drive growth and employment creation in the short to medium term.
Policymakers are struggling to find ways to cooperate and manage the current economic challenges while preparing their economies to perform well in an increasingly difficult and unpredictable global landscape.
Amid the short-term crisis management, it remains critical for countries to establish the fundamentals that underpin economic growth and development for the longer term. The World Economic Forum has, for more than three decades, played a facilitating role in this process by providing detailed assessments of the productive potential of nations worldwide. The Report contributes to an understanding of the key factors that determine economic growth, helps to explain why some countries are more successful than others in raising income levels and opportunities for their respective populations, and offers policymakers and business leaders an important tool in the formulation of improved economic policies and institutional reforms.
The complexity of today’s global economic environment has made it more important than ever
to recognize and encourage the qualitative as well as the quantitative aspects of growth, integrating such concepts as social and environmental sustainability to provide a fuller picture of what is needed and what works. In this context, the Forum’s Global Benchmarking
Network has continued to push forward with its research on how sustainability relates to competitiveness and economic performance. To this end, Chapter 1.2 of this
Report presents our evolving analysis of how country competitiveness can be assessed once issues of social and environmental sustainability are taken into account. This represents an important area for the World
Economic Forum’s research going forward.
This year’s Report features a record number of
144 economies, and thus continues to be the most comprehensive assessment of its kind. It contains a detailed profile for each of the economies included in the study as well as an extensive section of data tables with global rankings covering over 100 indicators.
This Report remains the flagship publication within the
Forum’s Global Benchmarking Network, which produces a number of research studies that mirror the increased integration and complexity of the world economy.
The Global Competitiveness Report 2012–2013 could not have been put together without the thought leadership of Professor Xavier Sala-i-Martín at Columbia
University, who has provided ongoing intellectual support for our competitiveness research. Further, this Report would have not been possible without the commitment and enthusiasm of our network of over 150
Partner Institutes worldwide. The Partner Institutes are instrumental in carrying out the Executive Opinion Survey that provides the foundation data of this Report as well as imparting the results of the Report at the national level. We would also like to convey our sincere gratitude to all the business executives around the world who took the time to participate in our Executive Opinion Survey.
We are also grateful to the members of our Advisory
Board on Competitiveness and Sustainability, who have provided their valuable time and knowledge to help us develop the framework on sustainability and competitiveness presented in this Report: James
Cameron, Chairman, Climate Change Capital; Dan Esty,
Commissioner, Connecticut Department of Energy and
Environmental Protection; Edwin J. Feulner Jr, President,
The Global Competitiveness Report 2012–2013 | xiii
Preface
The Heritage Foundation; Clément Gignac, Minister of Natural Resources and Wildlife of Quebec; Jeni
Klugman, Director for Gender, The World Bank; Marc A.
Levy, Deputy Director, CIESIN, Columbia University; John
McArthur, Senior Fellow, United Nations Foundation;
Kevin X. Murphy, President and Chief Executive Officer,
J.E. Austin Associates Inc.; Mari Elka Pangestu, Minister of Tourism and Creative Economy of Indonesia; Mark
Spelman, Global Head of Strategy, Accenture; and
Simon Zadek, Senior Visiting Fellow, Global Green
Growth Institute.
Appreciation also goes to Børge Brende, Managing
Director at the Forum, and Jennifer Blanke, Head of
The Global Benchmarking Network, as well as team members Beñat Bilbao-Osorio, Ciara Browne, Roberto
Crotti, Margareta Drzeniek Hanouz, Thierry Geiger, Tania
Gutknecht, Caroline Ko, and Cecilia Serin. Finally, we would like to thank the Africa Commission and FedEx, our partners in this Report, for their support in this important publication.
xiv |The Global Competitiveness Report 2012–2013
Part 1
Measuring Competitiveness
CHAPTER 1.1
The Global
Competitiveness Index
2012–2013: Strengthening
Recovery by Raising
Productivity
XAVIER SALA-I-MARTÍN
BEÑAT BILBAO-OSORIO
JENNIFER BLANKE
ROBERTO CROTTI
MARGARETA DRZENIEK HANOUZ
THIERRY GEIGER
CAROLINE KO
World Economic Forum
At the time of releasing The Global Competitiveness
Report 2012–2013, the outlook for the world economy is once again fragile. Global growth remains historically low for the second year running with major centers of economic activity—particularly large emerging economies and key advanced economies—expected to slow in
2012–13, confirming the belief that the global economy is troubled by a slow and weak recovery. As in previous years, growth remains unequally distributed. Emerging and developing countries are growing faster than advanced economies, steadily closing the income gap.
The International Monetary Fund (IMF) estimates that, in 2012, the euro zone will have contracted by
0.3 percent, while the United States is experiencing a weak recovery with an uncertain future. Large emerging economies such as Brazil, the Russian Federation, India,
China, and South Africa are growing somewhat less than they did in 2011. At the same time, other emerging markets—such as developing Asia—will continue to show robust growth rates, while the Middle East and
North Africa as well as sub-Saharan African countries are gaining momentum.
Recent developments—such as the danger of a property bubble in China, a decline in world trade, and volatile capital flows in emerging markets—could derail the recovery and have a lasting impact on the global economy. Arguably, this year’s deceleration to a large extent reflects the inability of leaders to address the many challenges that were already present last year.
Policymakers around the world remain concerned about high unemployment and the social conditions in their countries. The political brinkmanship in the United
States continues to affect the outlook for the world’s largest economy, while the sovereign debt crises and the danger of a banking system meltdown in peripheral euro zone countries remain unresolved. The high levels of public debt coupled with low growth, insufficient competitiveness, and political gridlock in some European countries stirred financial markets’ concerns about sovereign default and the very viability of the euro.
Given the complexity and the urgency of the situation,
European countries are facing particularly difficult economic management decisions with challenging political and social ramifications. Although European leaders do not agree on how to address the immediate challenges, there is recognition that, in the longer term, stabilizing the euro and putting Europe on a higher and more sustainable growth path will necessitate improvements to the competitiveness of the weaker member states.
All these developments are highly interrelated and demand timely, decisive, and coordinated action by policymakers. In light of these uncertain global ramifications, sustained structural reforms aimed at enhancing competitiveness will be necessary for
The Global Competitiveness Report 2012–2013 | 3
1.1: The Global Competitiveness Index 2012–2013
countries to stabilize economic growth and ensure the rising prosperity of their populations going into the future.
Competitive economies drive productivity enhancements that support high incomes by ensuring that the mechanisms enabling solid economic performance are in place.
For more than three decades, the World Economic
Forum’s annual Global Competitiveness Reports have studied and benchmarked the many factors underpinning national competitiveness. From the onset, the goal has been to provide insight and stimulate the discussion among all stakeholders on the best strategies and policies to help countries to overcome the obstacles to improving competitiveness. In the current challenging economic environment, our work is a critical reminder of the importance of structural economic fundamentals for sustained growth.
Since 2005, the World Economic Forum has based its competitiveness analysis on the Global
Competitiveness Index (GCI), a comprehensive tool that measures the microeconomic and macroeconomic foundations of national competitiveness.1
We define competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country. The level of productivity, in turn, sets the level of prosperity that can be earned by an economy. The productivity level also determines the rates of return obtained by investments in an economy, which in turn are the fundamental drivers of its growth rates. In other words, a more competitive economy is one that is likely to sustain growth.
The concept of competitiveness thus involves static and dynamic components. Although the productivity of a country determines its ability to sustain a high level of income, it is also one of the central determinants of its returns to investment, which is one of the key factors explaining an economy’s growth potential.
THE 12 PILLARS OF COMPETITIVENESS
Many determinants drive productivity and competitiveness. Understanding the factors behind this process has occupied the minds of economists for hundreds of years, engendering theories ranging from Adam Smith’s focus on specialization and the division of labor to neoclassical economists’ emphasis on investment in physical capital and infrastructure,2 and, more recently, to interest in other mechanisms such as education and training, technological progress, macroeconomic stability, good governance, firm sophistication, and market efficiency, among others.
While all of these factors are likely to be important for competitiveness and growth, they are not mutually exclusive—two or more of them can be significant at the same time, and in fact that is what has been shown in the economic literature.3
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This open-endedness is captured within the GCI by including a weighted average of many different components, each measuring a different aspect of competitiveness. These components are grouped into 12 pillars of competitiveness (see Figure 1):
First pillar: Institutions
The institutional environment is determined by the legal and administrative framework within which individuals, firms, and governments interact to generate wealth. The importance of a sound and fair institutional environment became even more apparent during the recent economic and financial crisis and is especially crucial for further solidifying the fragile recovery given the increasing role played by the state at the international level and for the economies of many countries.
The quality of institutions has a strong bearing on competitiveness and growth.4 It influences investment decisions and the organization of production and plays a key role in the ways in which societies distribute the benefits and bear the costs of development strategies and policies. For example, owners of land, corporate shares, or intellectual property are unwilling to invest in the improvement and upkeep of their property if their rights as owners are not protected.5
The role of institutions goes beyond the legal framework. Government attitudes toward markets and freedoms and the efficiency of its operations are also very important: excessive bureaucracy and red tape,6 overregulation, corruption, dishonesty in dealing with public contracts, lack of transparency and trustworthiness, inability to provide appropriate services for the business sector, and political dependence of the judicial system impose significant economic costs to businesses and slow the process of economic development. In addition, the proper management of public finances is also critical to ensuring trust in the national business environment. Indicators capturing the quality of government management of public finances are therefore included here to complement the measures of macroeconomic stability captured in pillar 3 below.
Although the economic literature has focused mainly on public institutions, private institutions are also an important element in the process of creating wealth.
The recent global financial crisis, along with numerous corporate scandals, have highlighted the relevance of accounting and reporting standards and transparency for preventing fraud and mismanagement, ensuring good governance, and maintaining investor and consumer confidence. An economy is well served by businesses that are run honestly, where managers abide by strong ethical practices in their dealings with the government, other firms, and the public at large.7 Private-sector transparency is indispensable to business, and can be brought about through the use of standards as well as
1.1: The Global Competitiveness Index 2012–2013
auditing and accounting practices that ensure access to information in a timely manner.8
Second pillar: Infrastructure
Extensive and efficient infrastructure is critical for ensuring the effective functioning of the economy, as it is an important factor in determining the location of economic activity and the kinds of activities or sectors that can develop in a particular instance. Well-developed infrastructure reduces the effect of distance between regions, integrating the national market and connecting it at low cost to markets in other countries and regions. In addition, the quality and extensiveness of infrastructure networks significantly impact economic growth and reduce income inequalities and poverty in a variety of ways.9 A well-developed transport and communications infrastructure network is a prerequisite for the access of less-developed communities to core economic activities and services.
Effective modes of transport—including quality roads, railroads, ports, and air transport—enable entrepreneurs to get their goods and services to market in a secure and timely manner and facilitate the movement of workers to the most suitable jobs.
Economies also depend on electricity supplies that are free of interruptions and shortages so that businesses and factories can work unimpeded. Finally, a solid and extensive telecommunications network allows for a rapid and free flow of information, which increases overall economic efficiency by helping to ensure that businesses can communicate and decisions are made by economic actors taking into account all available relevant information.
Third pillar: Macroeconomic environment
The stability of the macroeconomic environment is important for business and, therefore, is important for the overall competitiveness of a country.10 Although it is certainly true that macroeconomic stability alone cannot increase the productivity of a nation, it is also recognized that macroeconomic instability harms the economy, as we have seen over the past years, notably in the European context. The government cannot provide services efficiently if it has to make high-interest payments on its past debts. Running fiscal deficits limits the government’s future ability to react to business cycles and to invest in competitiveness-enhancing measures. Firms cannot operate efficiently when inflation rates are out of hand. In sum, the economy cannot grow in a sustainable manner unless the macro environment is stable. Macroeconomic stability has captured the attention of the public most recently when some
European countries needed the support of the IMF and other euro zone economies to prevent sovereign default, as their public debt reached unsustainable levels.
It is important to note that this pillar evaluates the stability of the macroeconomic environment, so it does not directly take into account the way in which public accounts are managed by the government. This qualitative dimension is captured in the institutions pillar described above.
Fourth pillar: Health and primary education
A healthy workforce is vital to a country’s competitiveness and productivity. Workers who are ill cannot function to their potential and will be less productive. Poor health leads to significant costs to business, as sick workers are often absent or operate at lower levels of efficiency. Investment in the provision of health services is thus critical for clear economic, as well as moral, considerations.11
In addition to health, this pillar takes into account the quantity and quality of the basic education received by the population. Basic education increases the efficiency of each individual worker. Moreover, workers who have received little formal education can carry out only simple manual tasks and find it much more difficult to adapt to more advanced production processes and techniques, and therefore contribute less to come up with or execute innovations. In other words, lack of basic education can become a constraint on business development, with firms finding it difficult to move up the value chain by producing more sophisticated or value-intensive products with existing human resources.
For the longer term, it will be essential to avoid significant reductions in resource allocation to these critical areas, in spite of the fact that government budgets will need to be cut to reduce the deficits and debt burden.
Fifth pillar: Higher education and training
Quality higher education and training is particularly crucial for economies that want to move up the value chain beyond simple production processes and products.12 In particular, today’s globalizing economy requires countries to nurture pools of well-educated workers who are able to perform complex tasks and adapt rapidly to their changing environment and the evolving needs of the economy. This pillar measures secondary and tertiary enrollment rates as well as the quality of education as evaluated by the business community. The extent of staff training is also taken into consideration because of the importance of vocational and continuous on-the-job training—which is neglected in many economies—for ensuring a constant upgrading of workers’ skills.
Sixth pillar: Goods market efficiency
Countries with efficient goods markets are well positioned to produce the right mix of products and services given their particular supply-and-demand
The Global Competitiveness Report 2012–2013 | 5
1.1: The Global Competitiveness Index 2012–2013
conditions, as well as to ensure that these goods can be most effectively traded in the economy. Healthy market competition, both domestic and foreign, is important in driving market efficiency and thus business productivity by ensuring that the most efficient firms, producing goods demanded by the market, are those that thrive. The best possible environment for the exchange of goods requires a minimum of impediments to business activity through government intervention. For example, competitiveness is hindered by distortionary or burdensome taxes and by restrictive and discriminatory rules on foreign direct investment (FDI)—limiting foreign ownership—as well as on international trade. The recent economic crisis has highlighted the degree of interdependence of economies worldwide and the degree to which growth depends on open markets.
Protectionist measures are counterproductive as they reduce aggregate economic activity.
Market efficiency also depends on demand conditions such as customer orientation and buyer sophistication. For cultural or historical reasons, customers may be more demanding in some countries than in others. This can create an important competitive advantage, as it forces companies to be more innovative and customer-oriented and thus imposes the discipline necessary for efficiency to be achieved in the market.
Seventh pillar: Labor market efficiency
The efficiency and flexibility of the labor market are critical for ensuring that workers are allocated to their most effective use in the economy and provided with incentives to give their best effort in their jobs. Labor markets must therefore have the flexibility to shift workers from one economic activity to another rapidly and at low cost, and to allow for wage fluctuations without much social disruption.13 The importance of well-functioning labor markets has been dramatically highlighted by last year’s events in Arab countries, where rigid labor markets were an important cause of high youth unemployment, sparking social unrest in Tunisia that then spread across the region. Youth unemployment is also high in a number of European countries, where important barriers to entry into the labor market remain in place.
Efficient labor markets must also ensure a clear relationship between worker incentives and their efforts to promote meritocracy at the workplace, and they must provide equity in the business environment between women and men. Taken together these factors have a positive effect on worker performance and the attractiveness of the country for talent, two aspects that are growing more important as talent shortages loom on the horizon.
6 | The Global Competitiveness Report 2012–2013
Eighth pillar: Financial market development
The recent economic crisis has highlighted the central role of a sound and well-functioning financial sector for economic activities. An efficient financial sector allocates the resources saved by a nation’s citizens, as well as those entering the economy from abroad, to their most productive uses. It channels resources to those entrepreneurial or investment projects with the highest expected rates of return rather than to the politically connected. A thorough and proper assessment of risk is therefore a key ingredient of a sound financial market.
Business investment is also critical to productivity.
Therefore economies require sophisticated financial markets that can make capital available for private-sector investment from such sources as loans from a sound banking sector, well-regulated securities exchanges, venture capital, and other financial products. In order to fulfill all those functions, the banking sector needs to be trustworthy and transparent, and—as has been made so clear recently—financial markets need appropriate regulation to protect investors and other actors in the economy at large.
Ninth pillar: Technological readiness
In today’s globalized world, technology is increasingly essential for firms to compete and prosper. The technological readiness pillar measures the agility with which an economy adopts existing technologies to enhance the productivity of its industries, with specific emphasis on its capacity to fully leverage information and communication technologies (ICT) in daily activities and production processes for increased efficiency and enabling innovation for competitiveness.14 ICT has evolved into the “general purpose technology” of our time,15 given the critical spillovers to the other economic sectors and their role as industry-wide enabling infrastructure. Therefore ICT access and usage are key enablers of countries’ overall technological readiness.
Whether the technology used has or has not been developed within national borders is irrelevant for its ability to enhance productivity. The central point is that the firms operating in the country need to have access to advanced products and blueprints and the ability to absorb and use them. Among the main sources of foreign technology, FDI often plays a key role, especially for countries at a lower stage of technological development. It is important to note that, in this context, the level of technology available to firms in a country needs to be distinguished from the country’s ability to conduct blue-sky research and develop new technologies for innovation that expand the frontiers of knowledge. That is why we separate technological readiness from innovation, captured in the 12th pillar, described below.
1.1: The Global Competitiveness Index 2012–2013
Tenth pillar: Market size
The size of the market affects productivity since large markets allow firms to exploit economies of scale.
Traditionally, the markets available to firms have been constrained by national borders. In the era of globalization, international markets can to a certain extent substitute for domestic markets, especially for small countries. Vast empirical evidence shows that trade openness is positively associated with growth.
Even if some recent research casts doubts on the robustness of this relationship, there is a general sense that trade has a positive effect on growth, especially for countries with small domestic markets.16 The case of the European Union illustrates the importance of the market size for competitiveness, as important efficiency gains were realized through closer integration. Although the reduction of trade barriers and the harmonization of standards within the European Union have contributed to raising exports within the region, many barriers to a true single market, in particular in services, remain in place and lead to important border effects. Therefore we continue to use the size of the national domestic and foreign market in the Index.
Thus exports can be thought of as a substitute for domestic demand in determining the size of the market for the firms of a country.17 By including both domestic and foreign markets in our measure of market size, we give credit to export-driven economies and geographic areas (such as the European Union) that are divided into many countries but have a single common market.
Eleventh pillar: Business sophistication
There is no doubt that sophisticated business practices are conducive to higher efficiency in the production of goods and services. Business sophistication concerns two elements that are intricately linked: the quality of a country’s overall business networks and the quality of individual firms’ operations and strategies. These factors are particularly important for countries at an advanced stage of development when, to a large extent, the more basic sources of productivity improvements have been exhausted. The quality of a country’s business networks and supporting industries, as measured by the quantity and quality of local suppliers and the extent of their interaction, is important for a variety of reasons.
When companies and suppliers from a particular sector are interconnected in geographically proximate groups, called clusters, efficiency is heightened, greater opportunities for innovation in processes and products are created, and barriers to entry for new firms are reduced. Individual firms’ advanced operations and strategies (branding, marketing, distribution, advanced production processes, and the production of unique and sophisticated products) spill over into the economy and lead to sophisticated and modern business processes across the country’s business sectors.
Twelfth pillar: Innovation
Innovation can emerge from new technological and nontechnological knowledge. Non-technological innovations are closely related to the know-how, skills, and working conditions that are embedded in organizations and are therefore largely covered by the eleventh pillar of the GCI. The final pillar of competitiveness focuses on technological innovation. Although substantial gains can be obtained by improving institutions, building infrastructure, reducing macroeconomic instability, or improving human capital, all these factors eventually seem to run into diminishing returns. The same is true for the efficiency of the labor, financial, and goods markets.
In the long run, standards of living can be largely enhanced by technological innovation. Technological breakthroughs have been at the basis of many of the productivity gains that our economies have historically experienced. These range from the industrial revolution in the 18th century and the invention of the steam engine and the generation of electricity to the more recent digital revolution. The latter is transforming not only the way things are being done, but also opening a wider range of new possibilities in terms of products and services.
Innovation is particularly important for economies as they approach the frontiers of knowledge and the possibility of generating more value by only integrating and adapting exogenous technologies tends to disappear.18
Although less-advanced countries can still improve their productivity by adopting existing technologies or making incremental improvements in other areas, for those that have reached the innovation stage of development this is no longer sufficient for increasing productivity. Firms in these countries must design and develop cutting-edge products and processes to maintain a competitive edge and move toward highervalue-added activities. This progression requires an environment that is conducive to innovative activity and supported by both the public and the private sectors. In particular, it means sufficient investment in research and development (R&D), especially by the private sector; the presence of high-quality scientific research institutions that can generate the basic knowledge needed to build the new technologies; extensive collaboration in research and technological developments between universities and industry; and the protection of intellectual property, in addition to high levels of competition and access to venture capital and financing that are analyzed in other pillars of the Index. In light of the recent sluggish recovery and rising fiscal pressures faced by advanced economies, it is important that public and private sectors resist pressures to cut back on the R&D spending that will be so critical for sustainable growth going into the future. The Global Competitiveness Report 2012–2013 | 7
1.1: The Global Competitiveness Index 2012–2013
Figure 1: The Global Competitiveness Index framework
GLOBAL COMPETITIVENESS INDEX
Basic requirements subindex Pillar 1. Institutions
Pillar 2. Infrastructure
Pillar 3. Macroeconomic environment
Pillar 4. Health and primary education
Efficiency enhancers subindex Pillar 5. Higher education and training Innovation and sophistication factors subindex
Pillar 11. Business sophistication
Pillar 12. Innovation
Pillar 6. Goods market efficiency
Pillar 7. Labor market efficiency
Pillar 8. Financial market development Pillar 9. Technological readiness
Pillar 10. Market size
Key for
Key for
Key for
factor-driven
efficiency-driven
innovation-driven
economies
economies
economies
Note: See the appendix for the detailed structure of the GCI.
The interrelation of the 12 pillars
While we report the results of the 12 pillars of competitiveness separately, it is important to keep in mind that they are not independent: they tend to reinforce each other, and a weakness in one area often has a negative impact in others. For example, a strong innovation capacity (pillar 12) will be very difficult to achieve without a healthy, well-educated and trained workforce (pillars 4 and 5) that is adept at absorbing new technologies (pillar 9), and without sufficient financing
(pillar 8) for R&D or an efficient goods market that makes it possible to take new innovations to market (pillar 6).
Although the pillars are aggregated into a single index, measures are reported for the 12 pillars separately because such details provide a sense of the specific areas in which a particular country needs to improve.
The appendix describes the exact composition of the GCI and technical details of its construction.
STAGES OF DEVELOPMENT AND THE WEIGHTED
INDEX
While all of the pillars described above will matter to a certain extent for all economies, it is clear that they will affect them in different ways: the best way for Cambodia to improve its competitiveness is not the same as the
8 | The Global Competitiveness Report 2012–2013
best way for France to do so. This is because Cambodia and France are in different stages of development: as countries move along the development path, wages tend to increase and, in order to sustain this higher income, labor productivity must improve.
In line with the economic theory of stages of development, the GCI assumes that economies in the first stage are mainly factor-driven and compete based on their factor endowments—primarily low-skilled labor and natural resources.19 Companies compete on the basis of price and sell basic products or commodities, with their low productivity reflected in low wages.
Maintaining competitiveness at this stage of development hinges primarily on well-functioning public and private institutions (pillar 1), a well-developed infrastructure
(pillar 2), a stable macroeconomic environment (pillar 3), and a healthy workforce that has received at least a basic education (pillar 4).
As a country becomes more competitive, productivity will increase and wages will rise with advancing development. Countries will then move into the efficiency-driven stage of development, when they must begin to develop more efficient production processes and increase product quality because wages have risen and they cannot increase prices. At
1.1: The Global Competitiveness Index 2012–2013
Table 1: Subindex weights and income thresholds for stages of development
S TAGES OF DEVELOPMENT
Stage 1:
Factor-driven
Transition from stage 1 to stage 2
Stage 2:
Efficiency-driven
Transition from stage 2 to stage 3
17,000
Weight for basic requirements subindex
60%
40–60%
40%
20–40%
20%
Weight for efficiency enhancers subindex
35%
35–50%
50%
50%
50%
5%
5–10%
10%
10–30%
30%
GDP per capita (US$) thresholds*
Weight for innovation and sophistication factors
Stage 3:
Innovation-driven
Note: See individual country/economy profiles for the exact applied weights.
* For economies with a high dependency on mineral resources, GDP per capita is not the sole criterion for the determination of the stage of development. See text for details.
this point, competitiveness is increasingly driven by higher education and training (pillar 5), efficient goods markets (pillar 6), well-functioning labor markets (pillar 7), developed financial markets (pillar 8), the ability to harness the benefits of existing technologies (pillar 9), and a large domestic or foreign market (pillar 10).
Finally, as countries move into the innovation-driven stage, wages will have risen by so much that they are able to sustain those higher wages and the associated standard of living only if their businesses are able to compete with new and/or unique products, services, models, and processes. At this stage, companies must compete by producing new and different goods through new technologies (pillar 12) and/or the most sophisticated production processes or business models
(pillar 11).
The GCI takes the stages of development into account by attributing higher relative weights to those pillars that are more relevant for an economy given its particular stage of development. That is, although all
12 pillars matter to a certain extent for all countries, the relative importance of each one depends on a country’s particular stage of development. To implement this concept, the pillars are organized into three subindexes, each critical to a particular stage of development.
The basic requirements subindex groups those pillars most critical for countries in the factor-driven stage. The efficiency enhancers subindex includes those pillars critical for countries in the efficiency-driven stage. And the innovation and sophistication factors subindex includes the pillars critical to countries in the innovation-driven stage. The three subindexes are shown in Figure 1.
The weights attributed to each subindex in every stage of development are shown in Table 1. To obtain the weights shown in the table, a maximum likelihood regression of GDP per capita was run against each subindex for past years, allowing for different coefficients for each stage of development.20 The rounding of these econometric estimates led to the choice of weights displayed in Table 1.
Implementation of stages of development
Two criteria are used to allocate countries into stages of development. The first is the level of GDP per capita at market exchange rates. This widely available measure is used as a proxy for wages, because internationally comparable data on wages are not available for all countries covered. The thresholds used are also shown in Table 1. A second criterion is used to adjust for countries that are wealthy, but where prosperity is based on the extraction of resources. This is measured by the share of exports of mineral goods in total exports (goods and services), and assumes that countries that export more than 70 percent of mineral products (measured using a five-year average) are to a large extent factor driven.21 Any countries falling in between two of the three stages are considered to be “in transition.” For these countries, the weights change smoothly as a country develops, reflecting the smooth transition from one stage of development to another. This allows us to place increasingly more weight on those areas that are becoming more important for the country’s competitiveness as the country develops, ensuring that the GCI can gradually “penalize” those countries that are not preparing for the next stage. The classification of countries into stages of development is shown in
Table 2.
DATA SOURCES
To measure these concepts, the GCI uses statistical data such as enrollment rates, government debt, budget deficit, and life expectancy, which are obtained from internationally recognized agencies, notably the United
Nations Educational, Scientific and Cultural Organization
(UNESCO), the IMF, and the World Health Organization
(WHO). The descriptions and data sources of all these statistical variables are presented in the Technical Notes and Sources at the end of this Report. Furthermore, the GCI uses data from the World Economic Forum’s annual Executive Opinion Survey (Survey) to capture concepts that require a more qualitative assessment or for which internationally comparable statistical data
The Global Competitiveness Report 2012–2013 | 9
1.1: The Global Competitiveness Index 2012–2013
Table 2: Countries/economies at each stage of development
Stage 1:
Factor-driven
(38 economies)
Transition from stage 1 to stage 2
(17 economies)
Stage 2:
Efficiency-driven
(33 economies)
Transition from stage 2 to stage 3
(21 economies)
Stage 3:
Innovation-driven
(35 economies)
Bangladesh
Benin
Burkina Faso
Burundi
Cambodia
Cameroon
Chad
Côte d’Ivoire
Ethiopia
Gambia, The
Ghana
Guinea
Haiti
India
Kenya
Kyrgyz Republic
Lesotho
Liberia
Madagascar
Malawi
Mali
Mauritania
Moldova
Mozambique
Nepal
Nicaragua
Nigeria
Pakistan
Rwanda
Senegal
Sierra Leone
Tajikistan
Tanzania
Uganda
Vietnam
Yemen
Zambia
Zimbabwe
Algeria
Azerbaijan
Bolivia
Botswana
Brunei Darussalam
Egypt
Gabon
Honduras
Iran, Islamic rep.
Kuwait
Libya
Mongolia
Philippines
Qatar
Saudi Arabia
Sri Lanka
Venezuela
Albania
Armenia
Bosnia and Herzegovina
Bulgaria
Cape Verde
China
Colombia
Costa Rica
Dominican Republic
Ecuador
El Salvador
Georgia
Guatemala
Guyana
Indonesia
Jamaica
Jordan
Macedonia, FYR
Mauritius
Montenegro
Morocco
Namibia
Panama
Paraguay
Peru
Romania
Serbia
South Africa
Suriname
Swaziland
Thailand
Timor-Leste
Ukraine
Argentina
Bahrain
Barbados
Brazil
Chile
Croatia
Estonia
Hungary
Kazakhstan
Latvia
Lebanon
Lithuania
Malaysia
Mexico
Oman
Poland
Russian Federation
Seychelles
Trinidad and Tobago
Turkey
Uruguay
Australia
Austria
Belgium
Canada
Cyprus
Czech Republic
Denmark
Finland
France
Germany
Greece
Hong Kong SAR
Iceland
Ireland
Israel
Italy
Japan
Korea, Rep.
Luxembourg
Malta
Netherlands
New Zealand
Norway
Portugal
Puerto Rico
Singapore
Slovak Republic
Slovenia
Spain
Sweden
Switzerland
Taiwan, China
United Arab Emirates
United Kingdom
United States
are not available for the entire set of economies. The
Survey process and the statistical treatment of data are described in detail in Chapter 1.3 of this Report.
ADJUSTMENTS TO THE GCI
A few minor adjustments have been made to the
GCI structure this year. Within the macroeconomic environment pillar (3rd), the interest rate spread has been removed from the Index because of limitations in the international comparability of these data.
Furthermore, mobile broadband was added to the technological readiness (9th) pillar in order to take into account the rapidly expanding access to the Internet via mobile devices. And a variable capturing the extent to which governments provide services to the business community, which has been collected through the
Executive Opinion Survey, was added to the institutions pillar (1st). For the patent indicator in the innovation pillar
10 | The Global Competitiveness Report 2012–2013
(12th), the source has been changed to include data based on the Patents Co-operations Treaty instead of the US Patent and Trademark Office (USPTO), which had been used until now. These data are collected and published jointly by the World Intellectual Property
Organization and the Organisation for Economic Cooperation and Development (OECD). They record patent applications globally, not just in the United States, therefore eliminating a possible geographical bias.22
Finally, the Rigidity of Employment Index was dropped from the labor market efficiency pillar (7th), as the World
Bank ceased to provide this indicator.23
COUNTRY COVERAGE
The coverage of this year has increased from 142 to 144 economies. The newly covered countries are Gabon,
Guinea, Liberia, Seychelles, and Sierra Leone. Libya was re-included after a year of absence as we were
1.1: The Global Competitiveness Index 2012–2013
not able to conduct the Survey because of civil unrest in 2011. Three previously covered countries had to be excluded from this year’s Report. Survey data could not be collected in Belize and Angola; in Syria, the security situation did not allow the Survey to be carried out. In the case of Tunisia we decided not to report the results this year because an important structural break in the data makes comparisons with past years difficult. We hope to re-include these countries in the future.
THE GLOBAL COMPETITIVENESS INDEX 2012–2013
RANKINGS
Tables 3 through 7 provide the detailed rankings of this year’s GCI. The following sections discuss the findings of the GCI 2012–2013 for the top performers globally, as well as for a number of selected economies in each of the five following regions: Europe and North
America, Asia and the Pacific, Latin America and the
Caribbean, the Middle East and North Africa, and subSaharan Africa. Box 1 presents a comparative study of the GCI results, highlighting the profound and persisting competitiveness divide across and within the different world regions.
Top 10
As in previous years, this year’s top 10 remain dominated by a number of European countries, with Switzerland,
Finland, Sweden, the Netherlands, Germany, and the
United Kingdom confirming their place among the most competitive economies. Along with the United
States, three Asian economies also figure in top 10, with Singapore remaining the second-most competitive economy in the world, and Hong Kong SAR and Japan placing 9th and 10th.
Switzerland retains its 1st place position again this year as a result of its continuing strong performance across the board. The country’s most notable strengths are related to innovation and labor market efficiency, where it tops the GCI rankings, as well as the sophistication of its business sector, which is ranked
2nd. Switzerland’s scientific research institutions are among the world’s best, and the strong collaboration between its academic and business sectors, combined with high company spending on R&D, ensures that much of this research is translated into marketable products and processes reinforced by strong intellectual property protection. This robust innovative capacity is captured by its high rate of patenting per capita, for which Switzerland ranks a remarkable 2nd worldwide.
Productivity is further enhanced by a business sector that offers excellent on-the-job-training opportunities, both citizens and private companies that are proactive at adapting the latest technologies, and labor markets that balance employee protection with the interests of employers. Moreover, public institutions in Switzerland are among the most effective and transparent in the
world (5th). Governance structures ensure a level playing field, enhancing business confidence; these include an independent judiciary, a strong rule of law, and a highly accountable public sector. Competitiveness is also buttressed by excellent infrastructure (5th), well-functioning goods markets (7th), and highly developed financial markets (9th). Finally, Switzerland’s macroeconomic environment is among the most stable in the world (8th) at a time when many neighboring economies continue to struggle in this area.
While Switzerland demonstrates many competitive strengths, maintaining its innovative capacity will require boosting university enrollment, which continues to lag behind that of many other high-innovation countries, although this has been increasing in recent years.
Singapore retains its place at 2nd position as a result of an outstanding performance across the entire Index. The country features in the top 3 in seven of the 12 categories of the Index and appears in the top 10 of three others. Its public and private institutions are rated as the best in the world for the fifth year in a row. It also ranks 1st for the efficiency of its goods and labor markets, and places 2nd in terms of financial market development. Singapore also has world-class infrastructure (2nd), with excellent roads, ports, and air transport facilities. In addition, the country’s competitiveness is reinforced by a strong focus on education, which has translated into a steady improvement in the higher education and training pillar
(2nd) in recent years, thus providing individuals with the skills needed for a rapidly changing global economy.
Finland moves up one place since last year to reach 3rd position on the back of small improvements in a number of areas. Similar to other countries in the region, the country boasts well-functioning and highly transparent public institutions (2nd), topping several indicators included in this category. Its private institutions, ranked 3rd overall, are also seen to be among the best run and most ethical in the world.
Finland occupies the top position both in the health and primary education pillar as well as the higher education and training pillar, the result of a strong focus on education over recent decades. This has provided the workforce with the skills needed to adapt rapidly to a changing environment and has laid the groundwork for high levels of technological adoption and innovation.
Finland is one of the most innovative countries in
Europe, ranking 2nd, behind only Switzerland, on the related pillar. Improving the country’s capacity to adopt the latest technologies (ranked 25th) could lead to important synergies that in turn could corroborate the country’s position as one of the world’s most innovative economies. Finland’s macroeconomic environment weakens slightly on the back of rising inflation (above 3 percent), but fares comparatively well when contrasted with other euro-area economies.
The Global Competitiveness Report 2012–2013 | 11
1.1: The Global Competitiveness Index 2012–2013
Box 1: Competitiveness from above: The GCI heat map
Figure 1: The GCI heat map
GCI score* n [5.39,5.72†] n [5.00,5.39[ n [4.60,5.00[ n [4.20,4.60[ n [3.80,4.20[ n [2.78††,3.80[ n Not covered
* The interval [x ,y [ is inclusive of x but exclusive of y. † Highest value; † † lowest value.
Figure 1 identifies the competitiveness “hotspots” and the regions or countries with weak performance according to the
Global Competitiveness Index (GCI). The 10 best-performing countries are shaded dark red. The remaining countries are colored in intermediate tones moving from orange, the second-best performing group, through yellow, light blue, medium blue, and dark blue; this last color identifies the leastcompetitive nations according to the GCI.
The map reveals that the hotspots remain concentrated in Europe, North America, and a handful of advanced economies in Asia and the Pacific. Despite decades of brisk economic growth in some developing regions (such as Latin
America and Africa), the map reveals that the profound competitiveness gap of these regions with more advanced economies persists. This competitiveness deficit in vast swaths of the developing world raises questions about the sustainability of growth patterns.
Sub-Saharan Africa, for example, continues to face the biggest competitiveness challenges of all regions (see Box
5). As shown on the map, a vast majority of the continent’s countries covered in this Report fall into the group of leastcompetitive economies (dark blue). Out of the region’s
32 countries included in the GCI, only Botswana, Gabon,
Namibia, the Seychelles (medium blue), Mauritius, Rwanda, and South Africa (light blue) are in the next higher categories.
With six of the ten best-performing countries, Northern and Western Europe is a competitiveness hotspot. The assessment is considerably bleaker when looking at
Southern and Eastern Europe. On the map, the patchwork of colors—ranging from dark red to medium blue—reveals the
12 | The Global Competitiveness Report 2012–2013
“competitiveness divide” within Europe. Indeed, the lack of competitiveness of several of its members is among the root causes of the current difficulties in the euro zone (see Box
2). The map also shows that within the European Union the traditional distinction made between the 15 original members and the 12 countries that joined after 2004 does not hold from a competitiveness point of view.
The map draws a mixed picture of Asia, too. Scattered across the region, the Asian Tigers and Japan can be considered competitiveness hotspots. Within this group of five advanced economies, Singapore, Hong Kong SAR, and
Japan enter the top 10, and Taiwan (China), and the Republic of Korea rank only a few notches behind. The developing nations of Southeast Asia are not yet competitiveness champions, but their group performance is quite remarkable.
Led by Malaysia, all these economies achieve a GCI score above 4.0, the theoretical average of the GCI, and none of them falls into the lowest, dark-blue category. This contrasts starkly with the situation in South Asia, where bestperforming India ranks a middling 59th and several countries appear in dark blue, including Pakistan and Bangladesh.
In the Middle East and North Africa, Israel and the six members of the Gulf Cooperation Council perform strongly.
But elsewhere in the region, the lack of competitiveness of the
Levantine and North African countries is worrisome. Finally, the map also reveals that the BRICS do not form a uniform group in terms of competitiveness, as seen on the map where
China is the only member appearing in a relatively strong yellow. 1.1: The Global Competitiveness Index 2012–2013
Table 3: The Global Competitiveness Index 2012–2013 rankings and 2011–2012 comparisons
GCI 2012–2013
Country/Economy
Switzerland
Singapore
Finland
Sweden
Netherlands
Germany
United States
United Kingdom
Hong Kong SAR
Japan
Qatar
Denmark
Taiwan, China
Canada
Norway
Austria
Belgium
Saudi Arabia
Korea, Rep.
Australia
France
Luxembourg
New Zealand
United Arab Emirates
Malaysia
Israel
Ireland
Brunei Darussalam
China
Iceland
Puerto Rico
Oman
Chile
Estonia
Bahrain
Spain
Kuwait
Thailand
Czech Republic
Panama
Poland
Italy
Turkey
Barbados
Lithuania
Azerbaijan
Malta
Brazil
Portugal
Indonesia
Kazakhstan
South Africa
Mexico
Mauritius
Latvia
Slovenia
Costa Rica
Cyprus
India
Hungary
Peru
Bulgaria
Rwanda
Jordan
Philippines
Iran, Islamic Rep.
Russian Federation
Sri Lanka
Colombia
Morocco
Slovak Republic
Montenegro
Rank/144
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
GCI 2012–2013
Rank among
Score GCI 2011–2012
(1–7)
sample
5.72
5.67
5.55
5.53
5.50
5.48
5.47
5.45
5.41
5.40
5.38
5.29
5.28
5.27
5.27
5.22
5.21
5.19
5.12
5.12
5.11
5.09
5.09
5.07
5.06
5.02
4.91
4.87
4.83
4.74
4.67
4.65
4.65
4.64
4.63
4.60
4.56
4.52
4.51
4.49
4.46
4.46
4.45
4.42
4.41
4.41
4.41
4.40
4.40
4.40
4.38
4.37
4.36
4.35
4.35
4.34
4.34
4.32
4.32
4.30
4.28
4.27
4.24
4.23
4.23
4.22
4.20
4.19
4.18
4.15
4.14
4.14
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
GCI 2011–2012 rank 1
2
4
3
7
6
5
10
11
9
14
8
13
12
16
19
15
17
24
20
18
23
25
27
21
22
29
28
26
30
35
32
31
33
37
36
34
39
38
49
41
43
59
42
44
55
51
53
45
46
72
50
58
54
64
57
61
47
56
48
67
74
70
71
75
62
66
52
68
73
69
60
Country/Economy
Ukraine
Uruguay
Vietnam
Seychelles
Georgia
Romania
Botswana
Macedonia, FYR
Croatia
Armenia
Guatemala
Trinidad and Tobago
Cambodia
Ecuador
Moldova
Bosnia and Herzegovina
Albania
Honduras
Lebanon
Namibia
Mongolia
Argentina
Serbia
Greece
Jamaica
Gambia, The
Gabon
Tajikistan
El Salvador
Zambia
Ghana
Bolivia
Dominican Republic
Kenya
Egypt
Nicaragua
Guyana
Algeria
Liberia
Cameroon
Libya
Suriname
Nigeria
Paraguay
Senegal
Bangladesh
Benin
Tanzania
Ethiopia
Cape Verde
Uganda
Pakistan
Nepal
Venezuela
Kyrgyz Republic
Mali
Malawi
Madagascar
Côte d’Ivoire
Zimbabwe
Burkina Faso
Mauritania
Swaziland
Timor-Leste
Lesotho
Mozambique
Chad
Yemen
Guinea
Haiti
Sierra Leone
Burundi
Rank/144
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
Rank among
Score GCI 2011–2012
(1–7)
sample
4.14
4.13
4.11
4.10
4.07
4.07
4.06
4.04
4.04
4.02
4.01
4.01
4.01
3.94
3.94
3.93
3.91
3.88
3.88
3.88
3.87
3.87
3.87
3.86
3.84
3.83
3.82
3.80
3.80
3.80
3.79
3.78
3.77
3.75
3.73
3.73
3.73
3.72
3.71
3.69
3.68
3.68
3.67
3.67
3.66
3.65
3.61
3.60
3.55
3.55
3.53
3.52
3.49
3.46
3.44
3.43
3.38
3.38
3.36
3.34
3.34
3.32
3.28
3.27
3.19
3.17
3.05
2.97
2.90
2.90
2.82
2.78
73
74
75 n/a 76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
n/a
98
99
100
101
102
103
104
105
106
107
108
n/a
109
n/a
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
n/a
137
n/a
138
GCI 2011–2012 rank 82
63
65 n/a 88
77
80
79
76
92
84
81
97
101
93
100
78
86
89
83
96
85
95
90
107
99
n/a
105
91
113
114
103
110
102
94
115
109
87
n/a
116
n/a
112
127
122
111
108
104
120
106
119
121
118
125
124
126
128
117
130
129
132
136
137
134
131
135
133
142
138
n/a
141
n/a
140
The Global Competitiveness Report 2012–2013 | 13
1.1: The Global Competitiveness Index 2012–2013
Table 4: The Global Competitiveness Index 2012–2013
SUBINDEXES
OV ERALL INDEX
Country/Economy
Switzerland
Singapore
Finland
Sweden
Netherlands
Germany
United States
United Kingdom
Hong Kong SAR
Japan
Qatar
Denmark
Taiwan, China
Canada
Norway
Austria
Belgium
Saudi Arabia
Korea, Rep.
Australia
France
Luxembourg
New Zealand
United Arab Emirates
Malaysia
Israel
Ireland
Brunei Darussalam
China
Iceland
Puerto Rico
Oman
Chile
Estonia
Bahrain
Spain
Kuwait
Thailand
Czech Republic
Panama
Poland
Italy
Turkey
Barbados
Lithuania
Azerbaijan
Malta
Brazil
Portugal
Indonesia
Kazakhstan
South Africa
Mexico
Mauritius
Latvia
Slovenia
Costa Rica
Cyprus
India
Hungary
Peru
Bulgaria
Rwanda
Jordan
Philippines
Iran, Islamic Rep.
Russian Federation
Sri Lanka
Colombia
Morocco
Slovak Republic
Montenegro
Basic requirements
Ef ficiency enhancers
Innovation and sophistication factors
Rank
Score
Rank
Score
Rank
Score
Rank
Score
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
5.72
5.67
5.55
5.53
5.50
5.48
5.47
5.45
5.41
5.40
5.38
5.29
5.28
5.27
5.27
5.22
5.21
5.19
5.12
5.12
5.11
5.09
5.09
5.07
5.06
5.02
4.91
4.87
4.83
4.74
4.67
4.65
4.65
4.64
4.63
4.60
4.56
4.52
4.51
4.49
4.46
4.46
4.45
4.42
4.41
4.41
4.41
4.40
4.40
4.40
4.38
4.37
4.36
4.35
4.35
4.34
4.34
4.32
4.32
4.30
4.28
4.27
4.24
4.23
4.23
4.22
4.20
4.19
4.18
4.15
4.14
4.14
2
1
4
6
10
11
33
24
3
29
7
16
17
14
9
20
22
13
18
12
23
8
19
5
27
37
35
21
31
30
48
15
28
26
25
36
32
45
44
50
61
51
57
38
49
56
34
73
40
58
47
84
63
52
54
39
67
42
85
55
69
65
70
66
80
59
53
72
77
68
62
74
6.22
6.34
6.03
6.01
5.92
5.86
5.12
5.51
6.14
5.30
5.96
5.68
5.67
5.71
5.95
5.63
5.52
5.74
5.66
5.75
5.52
5.96
5.65
6.03
5.38
5.10
5.11
5.56
5.25
5.27
4.86
5.69
5.35
5.47
5.47
5.11
5.21
4.89
4.89
4.83
4.66
4.81
4.75
5.09
4.84
4.76
5.12
4.49
4.96
4.74
4.86
4.28
4.64
4.80
4.79
5.05
4.61
4.94
4.26
4.78
4.57
4.63
4.56
4.61
4.35
4.69
4.79
4.50
4.40
4.60
4.64
4.49
5
1
9
8
7
10
2
4
3
11
22
15
12
6
16
19
17
26
20
13
18
24
14
21
23
27
25
68
30
36
33
45
32
31
35
29
75
47
34
50
28
41
42
49
46
67
40
38
44
58
56
37
53
62
48
55
60
43
39
52
57
59
94
70
61
90
54
77
63
79
51
74
5.48
5.65
5.30
5.32
5.35
5.27
5.63
5.50
5.54
5.27
4.93
5.15
5.24
5.41
5.15
5.01
5.09
4.84
5.00
5.20
5.04
4.87
5.16
4.94
4.89
4.79
4.85
4.05
4.64
4.54
4.61
4.40
4.63
4.63
4.58
4.67
3.98
4.38
4.59
4.36
4.69
4.44
4.42
4.37
4.38
4.05
4.46
4.52
4.40
4.20
4.24
4.53
4.31
4.14
4.37
4.25
4.18
4.41
4.48
4.32
4.23
4.18
3.77
4.03
4.17
3.81
4.26
3.96
4.13
3.94
4.33
3.99
1
11
3
5
6
4
7
9
22
2
15
12
14
21
16
10
13
29
17
28
18
19
27
25
23
8
20
62
34
24
26
44
45
33
53
31
86
55
32
48
61
30
50
38
47
57
46
39
37
40
104
42
49
63
68
36
35
51
43
58
94
97
60
52
64
77
108
41
66
84
74
69
5.79
5.27
5.62
5.56
5.47
5.57
5.42
5.32
4.73
5.67
5.02
5.24
5.08
4.74
5.00
5.30
5.21
4.47
4.96
4.56
4.96
4.89
4.60
4.64
4.70
5.33
4.87
3.64
4.05
4.69
4.64
3.91
3.87
4.06
3.74
4.14
3.36
3.72
4.13
3.83
3.66
4.24
3.79
3.97
3.83
3.68
3.85
3.97
4.01
3.96
3.25
3.94
3.79
3.63
3.57
4.02
4.04
3.77
3.94
3.68
3.31
3.30
3.66
3.74
3.60
3.46
3.16
3.96
3.58
3.38
3.50
3.57
(Cont’d.)
14 | The Global Competitiveness Report 2012–2013
1.1: The Global Competitiveness Index 2012–2013
Table 4: The Global Competitiveness Index 2012–2013 (cont’d.)
SUBINDEXES
OV ERALL INDEX
Country/Economy
Ukraine
Uruguay
Vietnam
Seychelles
Georgia
Romania
Botswana
Macedonia, FYR
Croatia
Armenia
Guatemala
Trinidad and Tobago
Cambodia
Ecuador
Moldova
Bosnia and Herzegovina
Albania
Honduras
Lebanon
Namibia
Mongolia
Argentina
Serbia
Greece
Jamaica
Gambia, The
Gabon
Tajikistan
El Salvador
Zambia
Ghana
Bolivia
Dominican Republic
Kenya
Egypt
Nicaragua
Guyana
Algeria
Liberia
Cameroon
Libya
Suriname
Nigeria
Paraguay
Senegal
Bangladesh
Benin
Tanzania
Ethiopia
Cape Verde
Uganda
Pakistan
Nepal
Venezuela
Kyrgyz Republic
Mali
Malawi
Madagascar
Côte d’Ivoire
Zimbabwe
Burkina Faso
Mauritania
Swaziland
Timor-Leste
Lesotho
Mozambique
Chad
Yemen
Guinea
Haiti
Sierra Leone
Burundi
Basic requirements
Ef ficiency enhancers
Innovation and sophistication factors
Rank
Score
Rank
Score
Rank
Score
Rank
Score
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
4.14
4.13
4.11
4.10
4.07
4.07
4.06
4.04
4.04
4.02
4.01
4.01
4.01
3.94
3.94
3.93
3.91
3.88
3.88
3.88
3.87
3.87
3.87
3.86
3.84
3.83
3.82
3.80
3.80
3.80
3.79
3.78
3.77
3.75
3.73
3.73
3.73
3.72
3.71
3.69
3.68
3.68
3.67
3.67
3.66
3.65
3.61
3.60
3.55
3.55
3.53
3.52
3.49
3.46
3.44
3.43
3.38
3.38
3.36
3.34
3.34
3.32
3.28
3.27
3.19
3.17
3.05
2.97
2.90
2.90
2.82
2.78
79
43
91
46
64
90
78
71
60
76
88
41
97
75
93
81
87
101
116
82
92
96
95
98
114
103
86
105
99
108
112
94
111
123
110
104
107
89
109
115
102
83
130
106
120
119
113
122
118
100
132
134
121
126
128
125
135
129
137
127
133
124
131
117
136
138
139
141
143
140
144
142
4.35
4.91
4.22
4.86
4.63
4.22
4.38
4.52
4.68
4.41
4.23
4.95
4.14
4.42
4.16
4.33
4.24
4.08
3.79
4.33
4.17
4.15
4.15
4.13
3.82
4.01
4.25
3.97
4.13
3.92
3.85
4.15
3.88
3.62
3.91
3.99
3.93
4.22
3.92
3.80
4.06
4.29
3.52
3.94
3.68
3.72
3.83
3.65
3.74
4.08
3.48
3.41
3.65
3.54
3.52
3.55
3.40
3.52
3.29
3.53
3.45
3.60
3.49
3.78
3.32
3.22
3.15
3.01
2.80
3.02
2.77
2.94
65
73
71
91
87
64
89
84
72
82
81
83
85
100
99
97
92
102
66
105
96
86
88
69
80
114
116
112
103
108
95
122
93
76
101
119
109
136
121
111
131
124
78
110
106
107
125
113
123
128
104
98
126
117
118
127
120
132
115
135
129
142
130
138
137
133
141
139
134
143
140
144
4.11
4.00
4.02
3.81
3.84
4.12
3.82
3.85
4.01
3.86
3.92
3.85
3.84
3.68
3.71
3.75
3.80
3.66
4.06
3.64
3.76
3.84
3.83
4.05
3.93
3.54
3.52
3.56
3.66
3.61
3.77
3.35
3.79
3.97
3.67
3.38
3.61
3.08
3.36
3.57
3.19
3.32
3.96
3.59
3.63
3.62
3.31
3.55
3.33
3.22
3.66
3.71
3.30
3.46
3.40
3.26
3.37
3.18
3.53
3.08
3.22
2.88
3.21
2.97
3.05
3.10
2.91
2.95
3.10
2.76
2.94
2.56
79
78
90
87
120
106
82
110
83
98
70
89
72
93
131
99
113
91
81
103
112
88
124
85
80
54
139
76
107
67
102
100
105
56
96
116
71
144
59
95
127
117
73
123
65
122
111
92
125
119
101
75
133
135
140
114
109
115
121
128
126
118
134
136
137
130
129
141
132
143
138
142
3.43
3.46
3.32
3.36
3.00
3.20
3.40
3.13
3.39
3.29
3.56
3.33
3.53
3.32
2.85
3.28
3.11
3.32
3.41
3.25
3.11
3.35
2.96
3.37
3.41
3.74
2.64
3.46
3.16
3.57
3.27
3.28
3.25
3.68
3.31
3.05
3.54
2.31
3.67
3.31
2.92
3.01
3.53
2.97
3.59
2.98
3.12
3.32
2.96
3.01
3.27
3.47
2.82
2.78
2.63
3.11
3.16
3.08
2.99
2.90
2.94
3.01
2.80
2.73
2.72
2.89
2.89
2.50
2.82
2.41
2.69
2.42
Note: Ranks out of 144 economies and scores measured on a 1-to-7 scale.
The Global Competitiveness Report 2012–2013 | 15
1.1: The Global Competitiveness Index 2012–2013
Table 5: The Global Competitiveness Index 2012–2013: Basic requirements
PILLARS
BASIC REQUIREMENTS
Country/Economy
Albania
Algeria
Argentina
Armenia
Australia
Austria
Azerbaijan
Bahrain
Bangladesh
Barbados
Belgium
Benin
Bolivia
Bosnia and Herzegovina
Botswana
Brazil
Brunei Darussalam
Bulgaria
Burkina Faso
Burundi
Cambodia
Cameroon
Canada
Cape Verde
Chad
Chile
China
Colombia
Costa Rica
Côte d’Ivoire
Croatia
Cyprus
Czech Republic
Denmark
Dominican Republic
Ecuador
Egypt
El Salvador
Estonia
Ethiopia
Finland
France
Gabon
Gambia, The
Georgia
Germany
Ghana
Greece
Guatemala
Guinea
Guyana
Haiti
Honduras
Hong Kong SAR
Hungary
Iceland
India
Indonesia
Iran, Islamic Rep.
Ireland
Israel
Italy
Jamaica
Japan
Jordan
Kazakhstan
Kenya
Korea, Rep.
Kuwait
Kyrgyz Republic
Latvia
Lebanon
1. Institutions
2. Infrastructure
3. Macroeconomic environment 4. Health and primary education
Rank
Score
Rank
Score
Rank
Score
Rank
Score
Rank
Score
87
89
96
76
12
20
56
25
119
38
22
113
94
81
78
73
21
65
133
142
97
115
14
100
139
28
31
77
67
137
60
42
44
16
111
75
110
99
26
118
4
23
86
103
64
11
112
98
88
143
107
140
101
3
55
30
85
58
59
35
37
51
114
29
66
47
123
18
32
128
54
116
4.24
4.22
4.15
4.41
5.75
5.63
4.76
5.47
3.72
5.09
5.52
3.83
4.15
4.33
4.38
4.49
5.56
4.63
3.45
2.94
4.14
3.80
5.71
4.08
3.15
5.35
5.25
4.40
4.61
3.29
4.68
4.94
4.89
5.68
3.88
4.42
3.91
4.13
5.47
3.74
6.03
5.52
4.25
4.01
4.63
5.86
3.85
4.13
4.23
2.80
3.93
3.02
4.08
6.14
4.78
5.27
4.26
4.74
4.69
5.11
5.10
4.81
3.82
5.30
4.61
4.86
3.62
5.66
5.21
3.52
4.79
3.79
84
141
138
71
18
25
63
21
127
24
27
99
119
85
33
79
31
108
83
142
73
107
11
57
140
28
50
109
53
129
98
40
82
14
126
131
96
134
30
74
3
32
67
35
61
16
75
111
124
128
100
143
118
10
80
23
70
72
68
19
34
97
87
22
42
66
106
62
51
137
59
125
3.65
2.66
2.85
3.90
5.27
5.04
3.98
5.13
3.20
5.06
5.00
3.51
3.31
3.64
4.82
3.78
4.86
3.39
3.66
2.59
3.84
3.40
5.52
4.07
2.73
4.97
4.22
3.38
4.13
3.16
3.52
4.59
3.67
5.40
3.21
3.16
3.56
3.02
4.94
3.83
6.03
4.83
3.94
4.67
4.00
5.31
3.82
3.37
3.25
3.18
3.50
2.49
3.32
5.53
3.70
5.09
3.91
3.86
3.93
5.22
4.75
3.56
3.62
5.13
4.50
3.96
3.43
3.98
4.20
2.92
4.01
3.22
91
100
86
80
18
15
71
29
134
22
21
122
108
94
87
70
57
76
136
141
104
125
13
114
140
45
48
93
74
102
44
39
38
16
105
90
83
72
41
119
23
4
117
82
53
3
110
43
75
142
109
144
101
1
50
20
84
78
69
25
36
28
85
11
60
67
103
9
52
121
64
127
3.48
3.16
3.58
3.71
5.70
5.80
3.94
5.19
2.22
5.58
5.68
2.56
2.95
3.44
3.58
4.00
4.20
3.79
2.18
1.87
3.08
2.51
5.84
2.80
1.89
4.62
4.46
3.44
3.80
3.10
4.65
4.80
4.81
5.74
3.02
3.51
3.61
3.93
4.72
2.65
5.58
6.28
2.71
3.61
4.35
6.36
2.87
4.70
3.79
1.86
2.91
1.54
3.12
6.72
4.39
5.69
3.60
3.75
4.03
5.34
4.89
5.19
3.59
5.92
4.17
4.05
3.09
5.92
4.38
2.59
4.11
2.46
98
23
94
83
26
33
18
29
100
134
66
76
49
97
81
62
1
31
85
137
91
59
51
121
45
14
11
34
65
130
60
117
42
32
105
37
138
103
20
114
24
68
9
129
88
30
108
144
77
142
109
86
80
15
44
123
99
25
57
131
64
102
141
124
112
16
133
10
4
132
46
135
4.27
5.71
4.33
4.50
5.57
5.35
6.05
5.50
4.24
3.32
4.66
4.57
5.02
4.31
4.52
4.73
7.00
5.42
4.48
3.15
4.39
4.79
4.90
3.80
5.12
6.15
6.22
5.34
4.68
3.48
4.75
3.86
5.19
5.40
4.17
5.30
3.12
4.18
6.01
3.92
5.70
4.64
6.25
3.58
4.40
5.48
4.07
2.42
4.56
2.63
4.02
4.44
4.53
6.07
5.15
3.73
4.25
5.68
4.83
3.44
4.72
4.23
2.89
3.67
3.94
6.07
3.39
6.25
6.58
3.41
5.06
3.32
79
93
59
80
13
20
107
38
103
16
2
111
97
48
114
88
31
49
139
127
102
118
7
71
144
74
35
85
57
140
60
9
53
29
106
67
94
90
27
116
1
21
128
126
61
22
112
41
95
138
99
134
96
26
51
6
101
70
46
12
40
25
104
10
56
92
115
11
72
105
45
32
5.56
5.37
5.82
5.53
6.46
6.32
5.08
6.07
5.20
6.41
6.75
4.68
5.32
5.93
4.60
5.43
6.18
5.92
3.48
4.16
5.25
4.49
6.58
5.66
2.85
5.64
6.11
5.45
5.82
3.40
5.81
6.50
5.87
6.19
5.13
5.73
5.35
5.38
6.21
4.56
6.82
6.31
4.11
4.17
5.79
6.30
4.65
6.04
5.34
3.52
5.29
3.62
5.34
6.24
5.89
6.58
5.27
5.69
5.97
6.46
6.04
6.27
5.19
6.50
5.84
5.37
4.58
6.49
5.66
5.18
5.99
6.18
(Cont’d.)
16 | The Global Competitiveness Report 2012–2013
1.1: The Global Competitiveness Index 2012–2013
Table 5: The Global Competitiveness Index 2012–2013: Basic requirements (cont’d.)
PILLARS
BASIC REQUIREMENTS
Country/Economy
Lesotho
Liberia
Libya
Lithuania
Luxembourg
Macedonia, FYR
Madagascar
Malawi
Malaysia
Mali
Malta
Mauritania
Mauritius
Mexico
Moldova
Mongolia
Montenegro
Morocco
Mozambique
Namibia
Nepal
Netherlands
New Zealand
Nicaragua
Nigeria
Norway
Oman
Pakistan
Panama
Paraguay
Peru
Philippines
Poland
Portugal
Puerto Rico
Qatar
Romania
Russian Federation
Rwanda
Saudi Arabia
Seychelles
Senegal
Serbia
Sierra Leone
Singapore
Slovak Republic
Slovenia
South Africa
Spain
Sri Lanka
Suriname
Swaziland
Sweden
Switzerland
Taiwan, China
Tajikistan
Tanzania
Thailand
Timor-Leste
Trinidad and Tobago
Turkey
Uganda
Ukraine
United Arab Emirates
United Kingdom
United States
Uruguay
Venezuela
Vietnam
Yemen
Zambia
Zimbabwe
1. Institutions
2. Infrastructure
3. Macroeconomic environment 4. Health and primary education
Rank
Score
Rank
Score
Rank
Score
Rank
Score
Rank
Score
136
109
102
49
8
71
129
135
27
125
34
124
52
63
93
92
74
68
138
82
121
10
19
104
130
9
15
134
50
106
69
80
61
40
48
7
90
53
70
13
46
120
95
144
1
62
39
84
36
72
83
131
6
2
17
105
122
45
117
41
57
132
79
5
24
33
43
126
91
141
108
127
3.32
3.92
4.06
4.84
5.96
4.52
3.52
3.40
5.38
3.55
5.12
3.60
4.80
4.64
4.16
4.17
4.49
4.60
3.22
4.33
3.65
5.92
5.65
3.99
3.52
5.95
5.69
3.41
4.83
3.94
4.57
4.35
4.66
4.96
4.86
5.96
4.22
4.79
4.56
5.74
4.86
3.68
4.15
2.77
6.34
4.64
5.05
4.28
5.11
4.50
4.29
3.49
6.01
6.22
5.67
3.97
3.65
4.89
3.78
4.95
4.75
3.48
4.35
6.03
5.51
5.12
4.91
3.54
4.22
3.01
3.92
3.53
121
45
81
60
9
78
136
76
29
120
37
122
39
92
110
113
44
54
112
52
123
7
2
114
117
8
17
115
69
135
105
94
55
46
38
4
116
133
20
15
47
90
130
95
1
104
58
43
48
49
93
88
6
5
26
65
86
77
103
91
64
102
132
12
13
41
36
144
89
139
56
101
3.30
4.31
3.69
4.01
5.60
3.80
2.94
3.82
4.94
3.31
4.61
3.29
4.59
3.59
3.38
3.34
4.38
4.12
3.35
4.19
3.26
5.72
6.06
3.34
3.33
5.66
5.29
3.34
3.92
3.00
3.44
3.57
4.11
4.28
4.61
5.77
3.33
3.09
5.20
5.35
4.25
3.60
3.16
3.56
6.07
3.44
4.05
4.42
4.25
4.24
3.59
3.61
5.73
5.75
5.00
3.96
3.62
3.82
3.45
3.59
3.98
3.49
3.13
5.50
5.41
4.59
4.63
2.36
3.61
2.77
4.09
3.50
126
115
88
40
12
81
137
135
32
107
34
113
54
68
92
112
66
61
129
59
143
7
30
106
130
27
33
116
37
123
89
98
73
24
58
31
97
47
96
26
42
124
77
138
2
56
35
63
10
62
79
99
19
5
17
118
132
46
131
55
51
133
65
8
6
14
49
120
95
139
111
128
2.50
2.77
3.56
4.74
5.84
3.65
2.13
2.19
5.09
2.96
4.91
2.82
4.32
4.03
3.46
2.83
4.06
4.14
2.36
4.18
1.81
6.18
5.18
2.97
2.28
5.19
5.04
2.73
4.82
2.54
3.51
3.19
3.89
5.50
4.18
5.12
3.22
4.52
3.22
5.23
4.71
2.51
3.78
2.09
6.50
4.23
4.91
4.13
5.92
4.13
3.74
3.17
5.69
6.22
5.72
2.66
2.27
4.62
2.27
4.30
4.38
2.27
4.10
6.12
6.22
5.81
4.40
2.64
3.34
2.01
2.85
2.40
113
82
73
75
12
47
95
136
35
74
71
89
87
40
93
52
118
70
125
84
56
41
61
101
39
3
5
139
53
43
21
36
72
116
48
2
58
22
78
6
79
92
115
143
17
54
50
69
104
127
96
128
13
8
28
120
107
27
38
19
55
119
90
7
110
111
63
126
106
140
67
122
3.93
4.51
4.60
4.57
6.18
5.04
4.33
3.30
5.34
4.59
4.60
4.40
4.41
5.21
4.35
4.89
3.85
4.62
3.66
4.50
4.85
5.20
4.75
4.24
5.25
6.60
6.56
3.06
4.88
5.19
5.95
5.33
4.60
3.87
5.04
6.66
4.83
5.80
4.56
6.55
4.55
4.37
3.91
2.47
6.06
4.87
4.94
4.63
4.17
3.66
4.32
3.60
6.16
6.38
5.51
3.82
4.12
5.55
5.29
6.05
4.86
3.83
4.40
6.41
4.01
3.97
4.72
3.66
4.16
2.90
4.65
3.77
136
130
121
39
28
77
110
124
33
141
19
133
54
68
86
76
73
81
137
120
109
5
4
89
142
18
52
117
69
108
91
98
43
30
75
23
83
65
100
58
47
125
66
143
3
42
24
132
36
44
82
135
14
8
15
87
113
78
131
55
63
123
62
37
17
34
50
84
64
122
129
119
3.54
4.10
4.40
6.05
6.20
5.59
4.68
4.30
6.16
3.36
6.34
3.88
5.85
5.71
5.44
5.60
5.65
5.53
3.52
4.44
4.69
6.60
6.63
5.43
3.20
6.34
5.88
4.52
5.70
5.03
5.38
5.31
6.03
6.19
5.61
6.29
5.51
5.75
5.27
5.82
5.95
4.23
5.73
2.95
6.73
6.03
6.29
3.93
6.09
5.99
5.52
3.57
6.46
6.54
6.45
5.43
4.60
5.56
4.09
5.85
5.78
4.35
5.78
6.08
6.39
6.11
5.90
5.49
5.77
4.39
4.11
4.47
Note: Ranks out of 144 economies and scores measured on a 1-to-7 scale.
The Global Competitiveness Report 2012–2013 | 17
1.1: The Global Competitiveness Index 2012–2013
Table 6: The Global Competitiveness Index 2012–2013: Efficiency enhancers
PILLARS
EFFICIENCY
ENHANCERS
Country/Economy
Albania
Algeria
Argentina
Armenia
Australia
Austria
Azerbaijan
Bahrain
Bangladesh
Barbados
Belgium
Benin
Bolivia
Bosnia and Herzegovina
Botswana
Brazil
Brunei Darussalam
Bulgaria
Burkina Faso
Burundi
Cambodia
Cameroon
Canada
Cape Verde
Chad
Chile
China
Colombia
Costa Rica
Côte d’Ivoire
Croatia
Cyprus
Czech Republic
Denmark
Dominican Republic
Ecuador
Egypt
El Salvador
Estonia
Ethiopia
Finland
France
Gabon
Gambia, The
Georgia
Germany
Ghana
Greece
Guatemala
Guinea
Guyana
Haiti
Honduras
Hong Kong SAR
Hungary
Iceland
India
Indonesia
Iran, Islamic Rep.
Ireland
Israel
Italy
Jamaica
Japan
Jordan
Kazakhstan
Kenya
Korea, Rep.
Kuwait
Kyrgyz Republic
Latvia
Lebanon
5. Higher education and training
6. Goods market efficiency 7. Labor market efficiency 8. Financial market development 9. Technological readiness Rank
Score
Rank
Score
Rank
Score
Rank
Score
Rank
Score
Rank
Score
92
136
86
82
13
19
67
35
107
49
17
125
122
97
89
38
68
59
129
144
85
111
6
128
141
32
30
63
60
115
72
43
34
15
93
100
101
103
31
123
9
18
116
114
87
10
95
69
81
134
109
143
102
3
52
36
39
58
90
25
27
41
80
11
70
56
76
20
75
118
48
66
3.80
3.08
3.84
3.86
5.20
5.01
4.05
4.58
3.62
4.37
5.09
3.31
3.35
3.75
3.82
4.52
4.05
4.18
3.22
2.56
3.84
3.57
5.41
3.22
2.91
4.63
4.64
4.13
4.18
3.53
4.01
4.41
4.59
5.15
3.79
3.68
3.67
3.66
4.63
3.33
5.30
5.04
3.52
3.54
3.84
5.27
3.77
4.05
3.92
3.10
3.61
2.76
3.66
5.54
4.32
4.54
4.48
4.20
3.81
4.85
4.79
4.44
3.93
5.27
4.03
4.24
3.97
5.00
3.98
3.40
4.37
4.06
76
108
53
70
11
18
89
34
126
19
4
120
92
72
95
66
57
63
137
143
111
115
15
99
140
46
62
67
41
123
56
32
38
14
97
91
109
105
25
134
1
27
122
94
93
5
107
43
104
136
87
144
106
22
49
13
86
73
78
20
28
45
75
21
55
58
100
17
82
98
42
48
4.11
3.38
4.59
4.22
5.64
5.48
3.91
4.93
2.88
5.38
5.81
3.07
3.83
4.18
3.74
4.27
4.40
4.31
2.50
1.98
3.32
3.25
5.57
3.65
2.34
4.72
4.32
4.27
4.78
2.99
4.47
4.98
4.87
5.59
3.69
3.84
3.32
3.45
5.17
2.67
6.18
5.14
3.05
3.77
3.82
5.80
3.40
4.74
3.52
2.60
3.97
1.90
3.43
5.26
4.67
5.60
3.97
4.17
4.10
5.30
5.07
4.73
4.12
5.28
4.49
4.37
3.59
5.52
4.01
3.66
4.78
4.70
58
143
140
72
24
22
60
16
95
64
15
132
138
109
78
104
73
83
118
139
50
89
13
105
141
30
59
99
62
122
114
33
41
19
101
129
125
74
31
120
18
46
126
94
82
21
76
108
66
127
84
142
92
2
67
45
75
63
98
9
43
65
80
20
44
71
93
29
90
123
47
36
4.33
2.99
3.18
4.22
4.87
4.91
4.31
5.10
4.10
4.29
5.12
3.66
3.40
3.92
4.20
3.94
4.22
4.17
3.80
3.28
4.42
4.15
5.12
3.93
3.08
4.74
4.31
3.98
4.30
3.78
3.85
4.68
4.53
5.03
3.97
3.70
3.76
4.21
4.73
3.79
5.05
4.47
3.73
4.10
4.18
4.92
4.20
3.92
4.29
3.71
4.17
3.03
4.10
5.44
4.28
4.47
4.21
4.29
4.00
5.24
4.51
4.29
4.19
4.98
4.50
4.24
4.10
4.75
4.14
3.78
4.42
4.57
68
144
140
30
42
32
26
21
117
29
50
67
132
99
60
69
13
49
64
112
28
58
4
126
95
34
41
88
52
71
106
44
75
8
107
135
142
121
10
87
15
66
63
31
35
53
97
133
90
56
85
83
134
3
79
12
82
120
141
16
40
127
77
20
101
19
39
73
98
72
27
105
4.40
2.79
3.29
4.72
4.60
4.69
4.80
4.89
3.91
4.75
4.54
4.40
3.58
4.08
4.46
4.39
5.07
4.54
4.42
3.97
4.78
4.48
5.45
3.72
4.12
4.68
4.60
4.17
4.51
4.38
4.00
4.57
4.32
5.22
4.00
3.49
3.06
3.86
5.11
4.18
5.00
4.41
4.43
4.72
4.67
4.51
4.08
3.56
4.16
4.49
4.23
4.24
3.52
5.65
4.27
5.10
4.24
3.87
3.18
5.00
4.61
3.72
4.32
4.89
4.02
4.98
4.62
4.35
4.08
4.36
4.78
4.00
120
142
131
78
8
34
98
18
95
33
31
112
126
119
53
46
56
80
117
144
64
105
11
121
137
28
54
67
101
103
92
38
57
30
96
110
102
81
39
129
4
27
106
69
93
32
59
132
41
135
86
141
51
1
72
97
21
70
123
108
17
111
55
36
65
115
24
71
76
118
52
66
3.38
2.39
3.18
3.97
5.35
4.65
3.73
4.99
3.74
4.66
4.68
3.55
3.33
3.41
4.39
4.45
4.27
3.97
3.43
2.31
4.11
3.64
5.28
3.37
3.01
4.73
4.31
4.10
3.67
3.65
3.79
4.56
4.25
4.69
3.74
3.58
3.67
3.95
4.51
3.24
5.50
4.73
3.62
4.07
3.79
4.66
4.21
3.13
4.48
3.07
3.87
2.55
4.43
5.89
4.05
3.74
4.90
4.07
3.35
3.60
5.03
3.57
4.30
4.63
4.11
3.49
4.74
4.06
4.00
3.42
4.40
4.10
77
133
67
92
19
17
61
39
125
30
22
124
127
68
106
48
64
52
137
144
100
126
20
90
143
44
88
80
46
99
50
37
31
3
78
82
91
102
25
140
10
14
86
109
76
15
108
43
87
142
94
138
97
4
49
8
96
85
111
12
29
40
73
16
69
55
101
18
74
130
38
93
3.69
2.59
3.85
3.40
5.61
5.70
4.04
4.72
2.74
5.14
5.57
2.75
2.73
3.84
3.17
4.43
3.95
4.30
2.52
2.22
3.28
2.73
5.60
3.43
2.23
4.48
3.50
3.62
4.45
3.32
4.36
4.85
5.06
6.17
3.68
3.59
3.43
3.26
5.29
2.48
5.92
5.72
3.53
3.13
3.71
5.71
3.13
4.54
3.52
2.45
3.39
2.49
3.34
6.16
4.43
5.99
3.36
3.56
3.08
5.82
5.23
4.71
3.80
5.70
3.82
4.20
3.27
5.70
3.77
2.63
4.73
3.39
10. Market size Rank Score
98
49
23
115
21
36
76
103
47
134
27
122
82
93
97
9
124
62
114
140
89
87
13
143
112
42
2
31
81
94
71
106
40
53
65
60
29
83
96
66
54
8
110
141
99
5
70
46
73
129
132
127
88
26
52
126
3
16
18
56
51
10
100
4
84
55
75
11
61
117
91
69
2.89
4.34
4.94
2.62
5.10
4.62
3.51
2.86
4.36
1.97
4.81
2.45
3.25
3.07
2.94
5.63
2.39
3.82
2.64
1.57
3.15
3.18
5.45
1.25
2.70
4.44
6.82
4.65
3.35
3.05
3.57
2.81
4.51
4.22
3.66
3.90
4.77
3.23
2.98
3.64
4.18
5.76
2.74
1.42
2.87
6.02
3.57
4.38
3.54
2.27
2.03
2.35
3.16
4.82
4.25
2.36
6.24
5.27
5.16
4.13
4.30
5.63
2.86
6.13
3.23
4.14
3.52
5.60
3.88
2.58
3.11
3.59
(Cont’d.)
18 | The Global Competitiveness Report 2012–2013
1.1: The Global Competitiveness Index 2012–2013
Table 6: The Global Competitiveness Index 2012–2013: Efficiency enhancers (cont’d.)
PILLARS
EFFICIENCY
ENHANCERS
Country/Economy
Lesotho
Liberia
Libya
Lithuania
Luxembourg
Macedonia, FYR
Madagascar
Malawi
Malaysia
Mali
Malta
Mauritania
Mauritius
Mexico
Moldova
Mongolia
Montenegro
Morocco
Mozambique
Namibia
Nepal
Netherlands
New Zealand
Nicaragua
Nigeria
Norway
Oman
Pakistan
Panama
Paraguay
Peru
Philippines
Poland
Portugal
Puerto Rico
Qatar
Romania
Russian Federation
Rwanda
Saudi Arabia
Seychelles
Senegal
Serbia
Sierra Leone
Singapore
Slovak Republic
Slovenia
South Africa
Spain
Sri Lanka
Suriname
Swaziland
Sweden
Switzerland
Taiwan, China
Tajikistan
Tanzania
Thailand
Timor-Leste
Trinidad and Tobago
Turkey
Uganda
Ukraine
United Arab Emirates
United Kingdom
United States
Uruguay
Venezuela
Vietnam
Yemen
Zambia
Zimbabwe
5. Higher education and training
6. Goods market efficiency 7. Labor market efficiency 8. Financial market development 9. Technological readiness Rank
Score
Rank
Score
Rank
Score
Rank
Score
Rank
Score
Rank
Score
137
121
131
46
24
84
132
120
23
127
40
142
62
53
99
96
74
79
133
105
126
7
14
119
78
16
45
98
50
110
57
61
28
44
33
22
64
54
94
26
91
106
88
140
1
51
55
37
29
77
124
130
8
5
12
112
113
47
138
83
42
104
65
21
4
2
73
117
71
139
108
135
3.05
3.36
3.19
4.38
4.87
3.85
3.18
3.37
4.89
3.26
4.46
2.88
4.14
4.31
3.71
3.76
3.99
3.94
3.10
3.64
3.30
5.35
5.16
3.38
3.96
5.15
4.40
3.71
4.36
3.59
4.23
4.17
4.69
4.40
4.61
4.93
4.12
4.26
3.77
4.84
3.81
3.63
3.83
2.94
5.65
4.33
4.25
4.53
4.67
3.96
3.32
3.21
5.32
5.48
5.24
3.56
3.55
4.38
2.97
3.85
4.42
3.66
4.11
4.94
5.50
5.63
4.00
3.46
4.02
2.95
3.61
3.08
135
114
103
26
44
81
133
129
39
130
35
142
65
77
88
83
51
101
138
119
128
6
10
110
113
12
61
124
69
112
80
64
36
30
24
33
59
52
117
40
31
116
85
141
2
54
23
84
29
79
102
125
7
3
9
90
132
60
131
71
74
127
47
37
16
8
50
68
96
139
121
118
2.65
3.30
3.56
5.15
4.74
4.04
2.67
2.81
4.83
2.77
4.93
2.23
4.29
4.11
3.96
3.99
4.63
3.58
2.39
3.14
2.84
5.79
5.66
3.32
3.31
5.61
4.33
2.99
4.22
3.32
4.05
4.30
4.92
4.98
5.19
4.94
4.36
4.59
3.21
4.79
4.98
3.23
3.97
2.30
5.93
4.50
5.20
3.98
5.02
4.06
3.57
2.95
5.75
5.90
5.68
3.86
2.71
4.35
2.75
4.20
4.15
2.86
4.70
4.90
5.57
5.72
4.67
4.24
3.69
2.35
3.07
3.14
102
40
137
56
4
68
115
112
11
111
34
135
27
79
100
85
48
69
124
87
121
6
3
119
88
28
25
97
35
81
53
86
51
61
26
10
113
134
39
14
70
77
136
116
1
54
49
32
55
57
128
107
12
7
8
96
110
37
130
106
38
103
117
5
17
23
52
144
91
131
42
133
3.97
4.54
3.45
4.36
5.32
4.28
3.84
3.86
5.16
3.87
4.62
3.58
4.80
4.20
3.98
4.17
4.42
4.27
3.77
4.16
3.78
5.29
5.35
3.79
4.16
4.79
4.86
4.02
4.59
4.19
4.37
4.17
4.39
4.31
4.86
5.24
3.86
3.62
4.54
5.12
4.27
4.20
3.57
3.84
5.60
4.37
4.42
4.68
4.37
4.33
3.70
3.92
5.14
5.26
5.26
4.04
3.89
4.56
3.69
3.92
4.55
3.95
3.82
5.31
5.09
4.88
4.38
2.78
4.13
3.68
4.53
3.63
116
61
137
65
37
94
54
43
24
118
92
131
70
102
81
33
93
122
128
74
125
17
9
109
55
18
36
130
89
115
45
103
57
123
38
14
104
84
11
59
48
80
100
114
2
86
91
113
108
129
96
119
25
1
22
46
47
76
78
110
124
23
62
7
5
6
136
143
51
138
111
139
3.92
4.45
3.46
4.41
4.65
4.13
4.50
4.58
4.82
3.89
4.14
3.60
4.38
4.01
4.26
4.69
4.14
3.84
3.72
4.33
3.75
4.99
5.19
3.98
4.50
4.98
4.66
3.65
4.17
3.92
4.56
4.01
4.48
3.80
4.62
5.01
4.01
4.23
5.10
4.47
4.54
4.27
4.04
3.92
5.80
4.20
4.15
3.94
3.98
3.66
4.10
3.87
4.81
5.90
4.84
4.55
4.55
4.32
4.29
3.97
3.79
4.83
4.44
5.24
5.42
5.37
3.49
2.88
4.51
3.44
3.97
3.40
122
74
140
87
12
79
138
75
6
113
15
136
35
61
104
127
40
63
134
48
91
20
5
116
68
7
26
73
23
83
45
58
37
99
29
14
77
130
49
22
94
84
100
125
2
47
128
3
82
42
107
89
10
9
19
124
85
43
139
60
44
62
114
25
13
16
90
133
88
143
50
109
3.36
4.03
2.68
3.86
5.21
3.97
2.88
4.00
5.44
3.53
5.11
3.04
4.65
4.15
3.65
3.33
4.49
4.12
3.09
4.44
3.81
4.96
5.48
3.48
4.07
5.42
4.74
4.04
4.88
3.89
4.46
4.25
4.59
3.71
4.69
5.12
3.98
3.19
4.44
4.88
3.79
3.89
3.68
3.34
5.85
4.45
3.29
5.72
3.90
4.46
3.60
3.82
5.29
5.30
4.98
3.35
3.87
4.46
2.68
4.17
4.46
4.14
3.52
4.74
5.16
5.07
3.81
3.11
3.85
2.37
4.43
3.60
136
132
110
33
2
71
135
134
51
119
21
123
63
72
65
70
56
75
121
104
129
9
23
116
112
13
54
118
36
107
83
79
42
28
41
27
59
57
113
35
66
95
58
141
5
45
34
62
26
89
105
128
1
6
24
114
122
84
131
60
53
117
81
32
7
11
47
103
98
139
115
120
2.53
2.62
3.11
5.00
6.21
3.81
2.54
2.54
4.31
2.90
5.59
2.75
3.98
3.80
3.91
3.82
4.15
3.71
2.80
3.23
2.63
5.98
5.47
2.95
3.08
5.78
4.26
2.90
4.87
3.15
3.57
3.63
4.66
5.27
4.70
5.28
4.09
4.13
3.04
4.91
3.88
3.37
4.10
2.46
6.10
4.46
4.96
4.01
5.29
3.45
3.19
2.69
6.29
6.02
5.44
2.97
2.77
3.56
2.62
4.06
4.29
2.93
3.60
5.05
6.00
5.84
4.44
3.25
3.33
2.48
2.96
2.83
10. Market size Rank Score
136
144
102
74
92
104
113
123
28
118
125
131
109
12
121
116
130
57
101
120
95
20
63
108
33
50
72
30
79
90
45
35
19
48
68
58
43
7
128
24
142
105
67
138
37
59
78
25
14
64
139
133
34
39
17
119
77
22
137
107
15
85
38
44
6
1
86
41
32
80
111
135
1.86
1.24
2.86
3.53
3.07
2.85
2.66
2.41
4.78
2.57
2.38
2.07
2.74
5.58
2.51
2.60
2.08
4.11
2.86
2.57
2.98
5.11
3.82
2.76
4.63
4.31
3.55
4.67
3.42
3.11
4.40
4.62
5.12
4.34
3.62
4.01
4.41
5.76
2.28
4.85
1.38
2.83
3.64
1.76
4.61
4.00
3.46
4.85
5.45
3.79
1.74
2.00
4.62
4.52
5.24
2.57
3.50
5.04
1.80
2.80
5.28
3.22
4.60
4.41
5.78
6.93
3.21
4.50
4.63
3.35
2.71
1.90
Note: Ranks out of 144 economies and scores measured on a 1-to-7 scale.
The Global Competitiveness Report 2012–2013 | 19
1.1: The Global Competitiveness Index 2012–2013
Table 7: The Global Competitiveness Index 2012–2013: Innovation and sophistication factors
INNOVATION AND
SOPHISTICATION
FACTORS
Country/Economy
Albania
Algeria
Argentina
Armenia
Australia
Austria
Azerbaijan
Bahrain
Bangladesh
Barbados
Belgium
Benin
Bolivia
Bosnia and Herzegovina
Botswana
Brazil
Brunei Darussalam
Bulgaria
Burkina Faso
Burundi
Cambodia
Cameroon
Canada
Cape Verde
Chad
Chile
China
Colombia
Costa Rica
Côte d’Ivoire
Croatia
Cyprus
Czech Republic
Denmark
Dominican Republic
Ecuador
Egypt
El Salvador
Estonia
Ethiopia
Finland
France
Gabon
Gambia, The
Georgia
Germany
Ghana
Greece
Guatemala
Guinea
Guyana
Haiti
Honduras
Hong Kong SAR
Hungary
Iceland
India
Indonesia
Iran, Islamic Rep.
Ireland
Israel
Italy
Jamaica
Japan
Jordan
Kazakhstan
Kenya
Korea, Rep.
Kuwait
Kyrgyz Republic
Latvia
Lebanon
PILLARS
11. Business sophistication Rank
Score
Rank
Score
Rank
Score
113
144
88
98
28
10
57
53
122
38
13
111
100
99
82
39
62
97
126
142
72
95
21
119
129
45
34
66
35
121
83
51
32
12
105
93
96
107
33
125
3
18
139
54
120
4
102
85
70
132
71
143
91
22
58
24
43
40
77
20
8
30
80
2
52
104
56
17
86
140
68
81
3.11
2.31
3.35
3.29
4.56
5.30
3.68
3.74
2.98
3.97
5.21
3.12
3.28
3.28
3.40
3.97
3.64
3.30
2.94
2.42
3.53
3.31
4.74
3.01
2.89
3.87
4.05
3.58
4.04
2.99
3.39
3.77
4.13
5.24
3.25
3.32
3.31
3.16
4.06
2.96
5.62
4.96
2.64
3.74
3.00
5.57
3.27
3.37
3.56
2.82
3.54
2.41
3.32
4.73
3.68
4.69
3.94
3.96
3.46
4.87
5.33
4.24
3.41
5.67
3.74
3.25
3.68
4.96
3.36
2.63
3.57
3.41
98
144
89
92
30
6
69
39
108
36
12
125
103
109
95
33
65
97
140
143
74
104
26
118
138
48
45
63
34
123
96
52
35
9
80
94
83
82
51
129
7
21
141
59
113
3
102
85
57
139
64
142
77
17
86
29
40
42
93
18
16
28
79
1
55
99
67
22
73
130
71
58
3.59
2.54
3.72
3.70
4.61
5.52
3.91
4.34
3.50
4.39
5.32
3.23
3.55
3.48
3.66
4.51
3.97
3.62
3.01
2.67
3.88
3.52
4.84
3.34
3.04
4.24
4.25
3.98
4.46
3.28
3.66
4.18
4.45
5.41
3.80
3.67
3.77
3.79
4.20
3.18
5.49
5.00
2.93
4.09
3.40
5.71
3.57
3.74
4.15
3.03
3.97
2.77
3.83
5.09
3.74
4.71
4.31
4.30
3.68
5.09
5.10
4.75
3.82
5.80
4.16
3.58
3.96
4.99
3.88
3.18
3.89
4.14
123
141
91
105
23
13
46
72
130
40
11
84
83
80
73
49
59
92
107
140
67
79
22
120
113
44
33
70
38
115
74
53
34
12
118
96
109
128
30
114
2
17
136
52
126
7
95
87
90
125
76
143
112
26
37
20
41
39
65
21
3
36
86
5
57
103
50
16
108
142
64
119
2.63
2.09
2.98
2.89
4.51
5.07
3.45
3.13
2.47
3.56
5.09
3.01
3.01
3.09
3.13
3.42
3.31
2.98
2.87
2.17
3.19
3.09
4.64
2.68
2.74
3.50
3.85
3.17
3.61
2.71
3.12
3.36
3.81
5.08
2.69
2.96
2.84
2.54
3.93
2.73
5.75
4.91
2.35
3.38
2.60
5.42
2.96
3.00
2.98
2.62
3.11
2.05
2.80
4.37
3.61
4.68
3.56
3.61
3.25
4.66
5.57
3.73
3.00
5.54
3.32
2.92
3.41
4.94
2.84
2.08
3.25
2.68
Note: Ranks out of 144 economies and scores measured on a 1-to-7 scale.
20 | The Global Competitiveness Report 2012–2013
INNOVATION AND
SOPHISTICATION
FACTORS
12.
Innovation
Country/Economy
Lesotho
Liberia
Libya
Lithuania
Luxembourg
Macedonia, FYR
Madagascar
Malawi
Malaysia
Mali
Malta
Mauritania
Mauritius
Mexico
Moldova
Mongolia
Montenegro
Morocco
Mozambique
Namibia
Nepal
Netherlands
New Zealand
Nicaragua
Nigeria
Norway
Oman
Pakistan
Panama
Paraguay
Peru
Philippines
Poland
Portugal
Puerto Rico
Qatar
Romania
Russian Federation
Rwanda
Saudi Arabia
Seychelles
Senegal
Serbia
Sierra Leone
Singapore
Slovak Republic
Slovenia
South Africa
Spain
Sri Lanka
Suriname
Swaziland
Sweden
Switzerland
Taiwan, China
Tajikistan
Tanzania
Thailand
Timor-Leste
Trinidad and Tobago
Turkey
Uganda
Ukraine
United Arab Emirates
United Kingdom
United States
Uruguay
Venezuela
Vietnam
Yemen
Zambia
Zimbabwe
PILLARS
11. Business sophistication 12.
Innovation
Rank
Score
Rank
Score
Rank
Score
137
59
127
47
19
110
115
109
23
114
46
118
63
49
131
112
69
84
130
103
133
6
27
116
73
16
44
75
48
123
94
64
61
37
26
15
106
108
60
29
87
65
124
138
11
74
36
42
31
41
117
134
5
1
14
76
92
55
136
89
50
101
79
25
9
7
78
135
90
141
67
128
2.72
3.67
2.92
3.83
4.89
3.13
3.08
3.16
4.70
3.11
3.85
3.01
3.63
3.79
2.85
3.11
3.57
3.38
2.89
3.25
2.82
5.47
4.60
3.05
3.53
5.00
3.91
3.47
3.83
2.97
3.31
3.60
3.66
4.01
4.64
5.02
3.20
3.16
3.66
4.47
3.36
3.59
2.96
2.69
5.27
3.50
4.02
3.94
4.14
3.96
3.01
2.80
5.56
5.79
5.08
3.46
3.32
3.72
2.73
3.33
3.79
3.27
3.43
4.64
5.32
5.42
3.46
2.78
3.32
2.50
3.57
2.90
135
62
116
56
23
111
122
115
20
126
43
117
41
44
120
121
76
81
131
101
127
4
27
114
66
19
37
78
50
107
68
49
60
54
24
11
110
119
70
25
87
72
132
136
14
61
53
38
32
31
112
124
5
2
13
90
106
46
137
84
47
105
91
15
8
10
88
133
100
134
75
128
3.11
3.99
3.35
4.16
4.96
3.44
3.28
3.38
5.02
3.22
4.27
3.35
4.30
4.26
3.30
3.30
3.83
3.80
3.14
3.57
3.21
5.63
4.78
3.39
3.96
5.05
4.38
3.82
4.21
3.51
3.94
4.23
4.06
4.17
4.92
5.33
3.47
3.31
3.91
4.91
3.74
3.89
3.11
3.10
5.14
4.02
4.18
4.34
4.51
4.60
3.41
3.26
5.56
5.79
5.18
3.71
3.51
4.25
3.05
3.76
4.25
3.52
3.70
5.10
5.48
5.34
3.73
3.11
3.57
3.11
3.84
3.21
138
54
129
43
18
110
106
99
25
88
48
121
98
56
135
100
60
97
122
101
133
9
24
116
78
15
47
77
45
132
117
94
63
31
27
19
102
85
51
29
93
62
111
139
8
89
32
42
35
58
124
137
4
1
14
66
75
68
134
104
55
82
71
28
10
6
69
131
81
144
61
127
2.33
3.34
2.50
3.51
4.82
2.83
2.88
2.94
4.38
2.99
3.43
2.68
2.95
3.33
2.40
2.93
3.31
2.95
2.63
2.93
2.42
5.31
4.43
2.71
3.10
4.96
3.44
3.11
3.46
2.43
2.69
2.97
3.25
3.86
4.35
4.71
2.92
3.01
3.40
4.03
2.98
3.29
2.81
2.27
5.39
2.98
3.85
3.55
3.77
3.32
2.62
2.33
5.56
5.78
4.99
3.22
3.12
3.19
2.41
2.90
3.33
3.02
3.16
4.18
5.17
5.50
3.18
2.44
3.07
1.89
3.30
2.59
1.1: The Global Competitiveness Index 2012–2013
Sweden, overtaken by Finland, falls one place to
4th position. Like Switzerland, the country has been placing significant emphasis on creating the conditions for innovation-led growth. The quality of its public institutions remains first-rate, with a very high degree of efficiency, trust, and transparency. Private institutions also receive excellent marks, with firms that demonstrate excellent ethical behavior. Nevertheless, we registered a slight but consistent deterioration in the country’s institutional framework over the past three years.
Additional strengths include goods and financial markets that are very efficient, although the labor market could be more flexible (ranking 92nd on the flexibility subpillar).
Combined with a strong focus on education over the years and a high level of technological readiness (1st),
Sweden has developed a very sophisticated business culture (5th) and is one of the world’s leading innovators
(4th). Last but not least, the country boasts a stable macroeconomic environment (13th), with a balanced budget and manageable public debt levels. These characteristics come together to make Sweden one of the most productive and competitive economies in the world. The Netherlands continues to progress in the rankings, moving up to 5th place this year. The improvement reflects a continued strengthening of its innovative capacity as well as the heightened efficiency and stability of its financial markets. Overall, Dutch businesses are highly sophisticated (4th) and innovative
(9th), and the country is rapidly and aggressively harnessing new technologies for productivity improvements (9th). Its excellent educational system
(ranked 5th for health and primary education and
6th for its higher education and training) and efficient markets—especially its goods market (6th)—are highly supportive of business activity. And although the country has registered fiscal deficits in recent years (5.0 percent of GDP in 2011), its macroeconomic environment is more stable than that of a number of other advanced economies. Last but not least, the quality of its infrastructure is among the best in the world, reflecting excellent facilities for maritime, air, and railroad transport, ranked 1st, 4th, and 9th, respectively.
Germany maintains its position at 6th place this year. The country is ranked an excellent 3rd for the quality of its infrastructure, boasting in particular firstrate facilities across all modes of transport. The goods market is quite efficient, characterized by intense local competition (8th) and low market dominance by large companies (2nd). Germany’s business sector is very sophisticated, especially when it comes to production processes and distribution channels, and German companies are among the most innovative in the world, spending heavily on R&D (4th) and displaying a high capacity for innovation (3rd)—traits that are complemented by the country’s well-developed ability
to absorb the latest technologies at the firm level (16th).
These attributes allow Germany to benefit greatly from its significant market size (5th), which is based on both its large domestic market and its strong exports. On a less positive note and despite some efforts, Germany’s labor market remains rigid (119th for the labor market flexibility subpillar), where a lack of flexibility in wage determination and the high cost of firing hinder job creation, particularly during business cycle downturns. In addition, improving the quality of the educational system—where the country continues to trail its top 10 peers at 28th place—could serve as an important basis for sustained innovation-led growth. In view of continued economic difficulties in the euro area, Germany’s performance in the macroeconomic pillar remains remarkably stable, with the country even registering a reduction in the fiscal deficit to –1 percent of GDP, but concerns about potential effects of the European sovereign debt crisis are reflected in the downgrading of the country’s credit rating. The United States continues the decline that began a few years ago, falling two more positions to take 7th place this year. Although many structural features continue to make its economy extremely productive, a number of escalating and unaddressed weaknesses have lowered the US ranking in recent years. US companies are highly sophisticated and innovative, supported by an excellent university system that collaborates admirably with the business sector in
R&D. Combined with flexible labor markets and the scale opportunities afforded by the sheer size of its domestic economy—the largest in the world by far—these qualities continue to make the United States very competitive.
On the other hand, some weaknesses in particular areas have deepened since past assessments. The business community continues to be critical toward public and private institutions (41st). In particular, its trust in politicians is not strong (54th), perhaps not surprising in light of recent political disputes that threaten to push the country back into recession through automatic spending cuts. Business leaders also remain concerned about the government’s ability to maintain arms-length relationships with the private sector (59th), and consider that the government spends its resources relatively wastefully (76th). A lack of macroeconomic stability continues to be the country’s greatest area of weakness
(111th, down from 90th last year). On a more positive note, measures of financial market development continue to indicate a recovery, improving from 31st two years ago to 16th this year in that pillar, thanks to the rapid intervention that forced the deleveraging of the banking system from its toxic assets following the financial crisis.
The United Kingdom (8th) continues to make up lost ground in the rankings this year, rising by two more places and now settling firmly back in the top 10. The country improves its performance in several areas,
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benefitting from clear strengths such as the efficiency of its labor market (5th), in sharp contrast to the rigidity of those of many other European countries. The United
Kingdom continues to have sophisticated (8th) and innovative (10th) businesses that are highly adept at harnessing the latest technologies for productivity improvements and operating in a very large market (it is ranked 6th for market size). The financial market also continues its recovery, ranked 13th, up from 20th last year. All these characteristics are important for spurring productivity enhancements. On the other hand, the country’s macroeconomic environment (110th, down from 85th last year) represents the greatest drag on its competitiveness, with a fiscal deficit nearing 9 percent in
2011, an increase of 5 percentage points in public debt amounting to 82.5 percent of GDP in 2011 (127th) and a comparatively low national savings rate (12.9 percent of
GDP in 2011, 113th).
As the second-placed Asian economy behind
Singapore (2nd), Hong Kong SAR rises to 9th position while slightly improving its score. The territory’s consistently good performance is reflected in very good showing across most of the areas covered by the GCI. As in previous years, Hong Kong tops the infrastructure pillar, reflecting the outstanding quality of its facilities across all modes of transportation and its telephony and electricity infrastructure. Moreover, the economy’s financial markets are second to none, revealing high efficiency and trustworthiness and stability of the banking sector. The dynamism and efficiency of
Hong Kong’s goods market (2nd) and labor market (3rd) further contribute to the economy’s very good overall positioning. To maintain and enhance its competitiveness going forward, continued improvements in two important areas—higher education (22nd) and innovation (26th)— will be necessary. Although the quality of education in Hong Kong is good (12th), participation remains below levels found in other advanced economies
(53rd). Improving educational outcomes will also help boost Hong Kong’s innovative capacity, which remains constrained by the limited availability of scientists and engineers (36th), among other things.
Japan falls one place to rank 10th this year, with a performance similar to that of last year. The country continues to enjoy a major competitive edge in business sophistication and innovation, ranking 1st and 5th, respectively, in these two pillars. Company spending on
R&D remains high (2nd) and Japan benefits from the availability of many scientists and engineers buttressing a strong capacity for innovation. Indeed, in terms of innovation output, this pays off with the fifth-highest number of patents per capita. Further, companies operate at the highest end of the value chain, producing high-value-added goods and services. The country’s overall competitive performance, however, continues to be dragged down by severe macroeconomic
22 | The Global Competitiveness Report 2012–2013
weaknesses (124th), with the second-highest budget deficit in this year’s sample (143th). Repeated over recent years, this has led to the highest public debt levels in the entire sample (nearly 230 percent of GDP in 2011). In addition, we observe a downward assessment of labor market efficiency (from 13th two years ago to 20th place this year), with the business sector perceiving the alignment between pay and productivity, hiring and firing practices, and brain drain less favorably than in previous years.
Europe and North America
European economies have faced a number of challenges in the past few years. Although they had been recovering from the significant difficulties brought about by the global economic crisis, rising concerns about the sustainability of sovereign debt in Greece and a number of other European countries continue to raise questions about the viability of the euro. Most recently this has led to a double-dip recession in several countries in the region, rising inflation, and great concern about the effects of these difficulties on other parts of the world. Despite these challenges, several European countries continue to feature prominently among the most competitive economies in the world. As described above, six of them are among the top 10. In total, ten are among the top 20, as follows: Switzerland (1st), Finland
(3rd), Sweden (4th), the Netherlands (5th), Germany
(6th), the United Kingdom (8th), Denmark (12th), Norway
(15th), Austria (16th), and Belgium (17th). However,
Europe is also a region with significant disparities in competitiveness (Box 2),24 with several countries from the region significantly lower in the rankings (with Spain at 36th, Italy at 42nd, Portugal at 49th, and Greece at
96th). As in previous years, the two countries from North
America feature among the most competitive economies worldwide, with the United States occupying the 7th position and Canada the 14th.
Denmark loses four positions this year, placing 12th, with a weakening in the assessments of its institutions and financial markets. Similar to its Nordic neighbors, the country benefits from one of the best functioning and most transparent institutional frameworks in the world
(14th), although there has been some decline in this area since last year. Denmark also continues to receive a first-rate assessment for its higher education and training system (14th), which has provided the Danish workforce with the skills needed to adapt rapidly to a changing environment and has laid the ground for their high levels of technological adoption and innovation. A continued strong focus on education would help to reverse the downward trend (from 3rd place in 2010 to 14th this year) and to maintain the skill levels needed to provide the basis for sustained innovation-led growth. A marked difference from the other Nordic countries relates to labor market flexibility, where Denmark (8th) continues to
1.1: The Global Competitiveness Index 2012–2013
distinguish itself as having one of the most efficient labor markets internationally, with more flexibility in setting wages, firing, and therefore hiring, more workers than in the other Nordics and than most European countries more generally.
Canada falls two positions to 14th place in this year’s rankings. Although Canada continues to benefit from highly efficient markets (with its goods, labor, and financial markets ranked 13th, 4th, and 11th, respectively), well-functioning and transparent institutions
(11th), and excellent infrastructure (13th), it is being dragged down by a less favorable assessment of the quality of its research institutions and the government’s role in promoting innovation through procurement practices. In a similar fashion, although Canada has been successful in nurturing its human resources compared with other advanced economies (it is ranked
7th for health and primary education and 15th for higher education and training), the data suggest a slight downward trend of its performance in higher education
(ranking 8th place on higher education and training two years ago), driven by lower university enrollment rates and a decline in the extent to which staff is being trained at the workplace.
Norway is ranked 15th this year, up by one place and showing progress in a number of areas.
Specifically, the country features a notable improvement in its innovative capacity (up from 20th to 15th place), driven by improved R&D spending by business, a better collaboration between the business sector and academia, and increased government procurement of advanced technological products. However, looking forward, reversing the downward trend in the availability of scientists and engineers (from 18th two years ago to
42nd in 2011) will be critical to maintain the country’s high level of innovative activity. Similar to the other
Nordic countries, Norway is further characterized by well-functioning and transparent public institutions; private institutions also get admirable marks for ethics and accountability. Markets in the country are efficient, with labor and financial markets ranked 18th and 7th, respectively. Productivity is also boosted by a good uptake of new technologies, ranked 13th overall for technological readiness. Moreover, Norway’s macroeconomic environment is ranked an impressive
3rd out of all countries (up from 4th last year), driven by windfall oil revenues combined with prudent fiscal management. On the other hand, Norway’s competitiveness would be further enhanced by continuing to upgrade its infrastructure (27th), fostering greater goods market efficiency and competition (28th), and further improving its environment for research and development.
Austria is ranked 16th this year, up three places since last year, with small improvements across a number of areas. The country benefits from excellent
infrastructure (15th) and registers improvements in its innovation capacity (up three places from last year) on the back of resilient R&D spending and improvements in the business sophistication pillar (up one place for business sophistication). Education and training also gets strong marks, particularly for on-the-job training
(3rd). Austria’s competitiveness would be further enhanced by greater flexibility in the labor market
(the country is ranked 72nd in this subpillar), and by continuing to improve the already excellent educational system. Belgium is ranked 17th, down two ranks since last year. The country has outstanding health indicators and a primary education system that is among the best in the world (2nd). Belgium also boasts an exceptional higher education and training system (4th), with excellent math and science education, top-notch management schools, and a strong propensity for on-the-job training that contribute to an overall high capacity to innovate
(11th). Its goods market is characterized by high levels of competition and an environment that facilitates new business creation. Business operations are also distinguished by high levels of sophistication and professional management. On the other hand, there are some concerns about government inefficiency (55th) and its highly distortionary tax system (140th), and its macroeconomic environment is burdened by persistent deficit spending and high public debt.
France is ranked 21st, down three places from last year on the back of falling confidence in public and private institutions (down four places) and the financial sector (down 13 places in trustworthiness). On a positive note, the country’s infrastructure is among the best in the world (4th), with outstanding transport links, energy infrastructure, and communications. The health of the workforce and the quality and quantity of education are other strengths (ranked 21st for health and primary education and 27th for higher education and training).
These elements have provided the basis for a business sector that is aggressive in adopting new technologies for productivity enhancements (France is ranked 14th for technological readiness). In addition, the sophistication of the country’s business culture (21st in the business sophistication pillar) and its good position in innovation
(17th in the innovation pillar, particularly in certain science-based sectors), bolstered by a well-developed financial market (27th) and a large market more generally
(8th), are important attributes that help to boost the country’s growth potential. On the other hand, France’s competitiveness would be enhanced by injecting more flexibility into its labor market, which is ranked a low
111th both because of the strict rules on firing and hiring and the rather conflict-ridden labor-employer relations in the country. The tax regime in the country is also perceived as highly distortive to business decisions
(128th).
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1.1: The Global Competitiveness Index 2012–2013
Box 2: Sovereign debt crisis, macroeconomic imbalances, and the lack of competitiveness in
Southern Europe
From the beginning of the worst financial and economic crisis that the Western world has experienced since the
Great Depression, Southern European economies, along with Ireland, have found themselves in the eye of the storm.
Excessive public spending in the case of Greece, failing banks in Ireland and more recently Spain following the bursting of a decade-long real estate bubble, and Italy’s and
Portugal’s general inability to grow and compete in a globalized environment have brought these economies to the very edge of sovereign bankruptcy for the first time since the end of World War II. As a result, these economies—except Italy— have been forced to request full or partial international bailouts because of their inability to obtain affordable financing in the international financial markets.
In parallel with these events, governments in other euro zone countries (such as Austria, Finland, and Germany) and non–euro zone countries (such as Sweden, Switzerland, and the United Kingdom) have benefited from increasingly low, and sometimes even negative, real interest rates. In some cases this is the result of the countries’ traditionally sound fiscal policies; it is sometimes also a consequence of the high uncertainty that is driving investors to seek “safe” locations.
Overall, the sovereign debt crisis reflects the lack of confidence on the part of the financial markets in the ability of Southern European economies to balance their public accounts by curbing public spending and escaping the vicious circle of high public debt; the need to support banking systems in difficulties (which can increase national debt); and diminishing fiscal revenues. The latter are linked to economic contraction caused by sharp falls in both public and private consumption and investment, lack of credit, and an inability to compete internationally as reflected by the persistent current account deficits (Figure 1).
At present, the vicious cycle seems to be leading these economies toward a downward spiral of worsening financial
and economic crisis. This trend is exacerbating social and political tensions, and there is little sign of improvement.
Although the origins of these crises are diverse, one shared feature at the heart of the current situation in all these economies is their persistent lack of competitiveness and, therefore, their inability to maintain high levels of prosperity.
Overall, low levels of productivity and competitiveness do not warrant the salaries that workers in Southern Europe enjoy and have led to unsustainable imbalances, followed by high and rising unemployment. The map and chart in Figures 2 and 3 reveal the dynamics of the competitiveness divide in the European Union (EU), with Southern, Central, and Eastern
European countries as the least competitive economies.
In order to escape this downward spiral and return
Southern Europe to a positive growth trajectory, a holistic set of competitiveness-enhancing measures that can bring confidence and strengthen the economic fundamentals of these economies will be required. These measures include
(1) regaining financial stability by recognizing and resolving the weaknesses of the banking system and enhancing the financial liquidity of households and enterprises; (2) regaining macroeconomic stability by ensuring fiscal discipline and engaging in structural reforms that can reduce public spending in the medium to longer term; and (3) introducing labor market reforms, fostering competition, and making more and better investments in growth-enhancing areas such as education, technology, and innovation. Some of these measures may have impacts only in the medium to longer run. However, all of them must be adopted sooner rather than later, as they are closely interrelated. An effective implementation will require strong political leadership so that a clear roadmap and efficient communication can be prepared to build public support for the reforms. Only then will these economies find a sustainable exit to the sovereign debt crisis.
Figure 1: Current account balance, percent GDP, 2001–11 (quarterly data)
15
10
Percent
5
0
–5
–10
–15
–20
2002Q1
2003Q1
2004Q1
Netherlands
Germany
2005Q1
2006Q1
Denmark
Italy
2007Q1
2008Q1
Spain
Portugal
2009Q1
2010Q1
2011Q1
Greece
Source: Eurostat.
(Cont’d.)
24 | The Global Competitiveness Report 2012–2013
1.1: The Global Competitiveness Index 2012–2013
Box 2: Sovereign debt crisis, macroeconomic imbalances, and the lack of competitiveness in
Southern Europe (cont’d.)
Figure 2: Competitiveness in the European Union: The GCI heat map
GCI score* n [5.39,5.55†] n [5.00,5.39[ n [4.60,5.00[ n [4.20,4.60[ n [3.86††,4.20[ n Non-EU countries
* The interval [x ,y [ is inclusive of x but exclusive of y. † Highest value; † † lowest value.
Figure 3: Dynamics of the competitiveness divide in Western and Southern Europe
5.5
GCI score (1–7)
5.0
4.5
EU-11
Southern Europe
4.0
3.5
2008–2009
2009–2010
2010–2011
2011–2012
2012–2013
GCI edition
Note: Southern Europe includes Greece, Italy, Portugal, and Spain; EU-11 includes the original 15 member states except Greece, Italy, Portugal, and Spain.
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1.1: The Global Competitiveness Index 2012–2013
Ireland moves up by two positions to 27th place this year after falling in recent editions of the Report. The country continues to benefit from a number of strengths, including its excellent health and primary education (12th) and strong higher education and training (20th), along with its well-functioning goods and labor markets, ranked
9th and 16th, respectively. These attributes have fostered a sophisticated and innovative business culture (ranked
18th for business sophistication and 21st for innovation).
Yet the country’s macroeconomic environment continues to raise significant concern (131st), although matters seem to be moving in the right direction following the government’s massive bailout of the banking sector. Of related and continuing concern is also Ireland’s financial market (108th), although this seems to be tentatively recovering since the trauma faced in recent years.
Iceland maintains its place at 30th position this year. Despite difficulties in recent years, Iceland continues to benefit from a number of clear competitive strengths in moving to a more sustainable economic situation. These include the country’s top-notch educational system at all levels (6th and 13th in the health and primary education and higher education and training pillars, respectively) coupled with an innovative business sector (20th) that is highly adept at adopting new technologies for productivity enhancements (8th).
Business activity is further supported by an extremely flexible labor market (12th) and well-developed infrastructure (20th). On the other hand, a weakened macroeconomic environment (123rd) and financial markets (97th) remain areas of concern.
Despite its very delicate macroeconomic situation and the well-known difficulties of its banking system that restricts the access to financing for local firms, Spain remains stable at 36th place. The country continues to benefit from world-class transport infrastructure facilities
(10th) and a good use of ICT (24th). It also has one of the highest tertiary education enrollment rates (18th), which provides a large pool of skilled labor force that, if properly mobilized, could help the country’s muchneeded economic transition toward higher-value-added activities. Notwithstanding these strengths, Spain’s competitive edge is hampered by its macroeconomic imbalances. Its difficulties in curbing the public deficit
(135th), which continue to add to the already high public debt (112th), in addition to the severe difficulties of a segment of the banking system (109th), have resulted in a lack of confidence in the financial markets and the country’s ability to access affordable financing from the international markets. The bond spread against stronger economies has relentlessly continued to grow, hindering the capacity of the country, its banking system, and finally its business sector to access affordable sources of financing (122nd). In addition, Spain’s labor markets, while improving slightly, remain too rigid (123rd). The recently adopted structural reforms, both in the banking
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system and the labor market, should help in addressing these weaknesses once implemented. However, recent cuts in public research and innovation, coupled with the increasing difficulties of the private sector in obtaining funding for research and development activities, could continue to hold back the capacity of local firms to innovate (44th), which will be crucial to facilitate the economic transformation of the country.
Estonia and the Czech Republic remain the best performers within Eastern Europe, ranking 34th and
39th, respectively. As in previous years, the countries’ competitive strengths are based on a number of common features. They rely on excellent education and highly efficient and well-developed goods and financial markets, as well as their strong commitment to advancing technological readiness, particularly in the case of Estonia. In addition, Estonia’s 20th rank on macroeconomic stability reflects its relatively well managed public finances. The country’s margin ahead of the rest of the region also reflects its more flexible and efficient labor markets (10th), which continue to be rigid in other countries, including in the Czech Republic (75th).
Poland reaffirms its 41st position this year. The country displays a fairly even performance across all 12 pillars of competitiveness. Notable strengths include its large market size (19th) and high educational standards, in particular its high enrollment rates (it is ranked 20th on the quantity of education subpillar). The financial sector is well developed (37th), and confidence in this sector has been increasing for a number of years to rank 14th this year. Indeed, banks are assessed as more sound than they were only three years ago, although additional strengthening will be necessary given the country’s still mediocre 57th rank on this indicator. Further enhancing competitiveness will require a significant upgrading of transport infrastructure, which trails international standards by a considerable margin (ranked 103rd).
Although some progress has been made in this area in the run up to the European Football Championships in 2012, it is not sufficient to create the step change necessary to better connect the different parts of the country. The business sector remains very concerned about some aspects of the institutional framework, including the overall efficiency of government (116th) and government regulation (131st). As Poland transitions to the innovation-driven stage of development, it will have to focus more strongly on developing capacities in R&D and business sophistication. Stronger R&D orientation of companies, easier access to venture capital, and intensified collaboration between universities and the private sector would help the country to move toward a more future-oriented development path.
Italy moves up by one place to reach the 42nd position this year. The country continues to do well in some of the more complex areas measured by the GCI, particularly the sophistication of its businesses, where it
1.1: The Global Competitiveness Index 2012–2013
is ranked 28th, producing goods high on the value chain with one of the world’s best business clusters (2nd). Italy also benefits from its large market size—the 10th largest in the world—which allows for significant economies of scale. However, Italy’s overall competitiveness performance continues to be hampered by some critical structural weaknesses in its economy. Its labor market remains extremely rigid—it is ranked 127th for its labor market efficiency, hindering employment creation.
Italy’s financial markets are not sufficiently developed to provide needed finance for business development (111th).
Other institutional weaknesses include high levels of corruption and organized crime and a perceived lack of independence within the judicial system, which increase business costs and undermine investor confidence—Italy is ranked 97th overall for its institutional environment.
The efforts being undertaken by the present government to address such concerns, if successful, will be an important boost to the country’s competitiveness.
Turkey moves up by 16 places this year to attain the
43rd spot. The country’s economy grew by 8.4 percent in 2011 and benefits from considerable progress in a number of areas covered by the GCI. Macroeconomic stability has improved and the financial sector is assessed as more trustworthy and finance as more easily accessible for businesses. Improvements to the institutional framework and greater competition in local markets have also been registered; these will further strengthen the country’s competitive position. Turkey’s vibrant business sector derives important efficiency gains from its large domestic market (ranked 15th), which is characterized by intense local competition (16th). Turkey also benefits from its reasonably developed infrastructure
(51st), particularly roads and air transport, although ports and the electricity supply require additional upgrading.
In order to further enhance its competitiveness, Turkey must focus on building up its human resources base through better primary education and healthcare (63rd) and higher education and training (74th), increasing the efficiency of its labor market (124th), and reinforcing the efficiency and transparency of its public institutions
(67th).
Portugal falls by four places in the rankings to 49th position. As in the case of other Southern
European economies, Portugal continues to suffer from a deteriorating macroeconomic environment (116th)— despite the recent progress in curbing public deficits— and a worrisome state of the banking system (119th) that has shut down access to affordable financing, affecting the capacity of local firms to obtain loans (109th), equity
(97th), or venture capital (97th) for their investment projects. In addition, labor markets are considered too rigid (137th) and the level of local competition low
(82nd), mainly the result of a lack of liberalization in some services. Several of the structural reforms that Portugal has recently implemented are directed to addressing all
these weaknesses. Ensuring their proper implementation will be crucial to increasing Portugal’s competitive edge and leveraging its traditional strengths in terms of highquality infrastructure (11th) and the highly educated population (29th). However, as for Spain, cuts in research and innovation and a drop in corporate innovationrelated investments could continue to affect the capacity of firms to innovate (40th) and therefore the capacity of the country to transform its economy and move toward higher-value-added activities.
Following a protracted economic crisis, Ukraine bounces back to 73rd position in this year’s GCI. The country’s competitiveness benefits notably from a healthier macroeconomic environment than in previous years. The budget deficit was cut to 2.7 percent of
GDP in 2011, the debt-to-GDP ratio fell somewhat, and inflation was reduced, although it still remains fairly high at almost 8 percent. Overall, Ukraine maintains its competitive strengths; these result from its large market size (38th) and a solid educational system that provides easy access to all levels of education (ranked
47th on higher education and training and 54th on primary education). The good educational outcomes provide a basis for further developing the innovation capacity of the country (71st). Putting economic growth on a more stable footing in future will require Ukraine to address important challenges. Arguably, the country’s most important challenge is the needed overhaul of its institutional framework, which cannot be relied on because it suffers from red tape, lack of transparency, and favoritism. Ukraine could realize further efficiency gains from instilling more competition into the goods and services markets (117th) and continuing the reform of the financial and banking sector (114th).
Kazakhstan moves back up to 51st, a similar position to the one it held a few years ago. This improvement reflects progress in a number of areas, but most importantly in macroeconomic stability, where the country ranks 16th, and technological readiness, where it advances from 87th to 55th. Despite the progress achieved, important challenges related to health and primary education (92nd), business sophistication (99th), and innovation (103rd) remain.
The Russian Federation, at 67th place, drops one position since last year. A sharp improvement in the macroeconomic environment—up from 44th to
22nd position because of low government debt and a government budget that has moved into surplus—has not been enough to allow the country to compensate for the poorer assessment of its already weak public institutions (133rd) and the innovation capacity of the country (85th this year, down from 57th in the
2010–2011 edition of the GCI). The country suffers from inefficiencies in the goods (134th), labor (84th), and financial (130th) markets, where the situation is deteriorating for the second year in a row. The weak
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level of competition (136th)—caused by inefficient antimonopoly policies (124th) and high restrictions on trade and foreign ownership as well as the lack of trust in the financial system (134th)—contributes to this inefficient allocation of Russia’s vast resources, hampering higher levels of productivity in the economy. Moreover, as the country moves toward a more advanced stage of economic development, its lack of business sophistication (119th) and low rates of technological adoption (137th) will become increasingly important challenges for its sustained progress. On the other hand, its high level of education enrollment, especially at the tertiary level; its fairly good infrastructure; and its large domestic market (7th) represent areas that can be leveraged to improve Russia’s competitiveness.
This year Greece falls another six places in the rankings to 96th, remaining the lowest-ranked country of the European Union. In the context of the ongoing sovereign debt crisis, Greece continues to fall in the macroeconomic environment pillar, dropping to rock bottom 144th position this year. Similarly, Greece’s financial markets are assessed more poorly than in the past, down to 132nd from 110th last year, showing particularly low confidence on the part of investors.
The evaluation of public institutions (e.g., government efficiency, corruption, undue influence) continues to suffer and is ranked a low 111th overall. Another major area of concern is the country’s inefficient labor market
(133th), which continues to constrain Greece’s ability to emerge from the crisis, highlighting the importance of recent efforts to increase the retirement age and increase labor market flexibility. In working to overcome the present difficulties, Greece has a number of strengths on which it can build, including a reasonably well educated workforce that is adept at adopting new technologies for productivity enhancements. With the correct growth-enhancing reforms, there is every reason to believe that Greece will improve its competitiveness in the coming years.
Asia and the Pacific
As in previous years, the Asia and Pacific remains among the fastest-growing regions worldwide, and many of its economies have greatly improved their competitiveness over the past years. The excellent performance of some of the regional champions is reflected in the presence of six economies—Singapore; Hong Kong SAR; Japan;
Taiwan, China; the Republic of Korea; and Australia— within the top 20. However, significant and growing differences persist in terms of the competitiveness performance within the region, with countries such as
Bangladesh (118th), Pakistan (124th), and Nepal (125th) lagging further and further behind.
Taiwan, China, maintains its 13th position for the third year in a row. Its competitiveness profile is essentially unchanged and consistently strong. Notable
28 | The Global Competitiveness Report 2012–2013
strengths include its highly efficient markets for goods, where the economy ranks 8th; its solid educational performance (9th); and its sophisticated business sector
(13th), which is inclined to innovate (14th). Strengthening competitiveness will require continued improvements to the economy’s institutional framework as well as stabilizing its macroeconomic environment, which would require fiscal consolidation to reduce the budget deficit.
Reversing the negative trend of recent years, the
Republic of Korea (19th) advances five positions and re-enters the top 20. Despite this clear improvement, the assessment remains uneven across the 12 pillars of the Index. The country boasts outstanding infrastructure
(9th) and a sound macroeconomic environment (10th), with a government budget surplus above 2 percent of
GDP and low level of public indebtedness. Furthermore, primary education (11th) and higher education (17th) are universal and of high quality. These factors, combined with the country’s high degree of technological readiness (18th), partly explain the country’s remarkable capacity for innovation (16th). However, three concerns persist—namely, the quality of its institutions (62nd), its labor market efficiency (73rd), and its financial market development (71th), even though Korea posts improvements in all three areas.
After losing four positions to faster-improving economies last year, Australia retains its rank of
20th and score of 5.1, just behind Korea. Among the country’s most notable advantages is its efficient and well-developed financial system (8th), supported by a banking sector that counts as among the most stable and sound in the world, ranked 5th. The country earns very good marks in education, placing 15th in primary education and 11th in higher education and training.
Australia’s macroeconomic situation is satisfactory in the current context (26th). Despite repeated budget deficits, its public debt amounts to a low 23 percent of GDP, the third lowest ratio among the advanced economies, behind only Estonia and Luxembourg. The main area of concern for Australia is the rigidity of its labor market
(42nd). Indeed, the business community cites the labor regulations as being the most problematic factor for doing business, ahead of red tape. In addition, although the situation has improved since last year, transport infrastructure continues to suffer bottlenecks owing to the boom in commodity exports.
Following improvements in last year’s Report,
Malaysia maintains its score but drops four places as other economies move ahead. The most notable advantages are found in Malaysia’s efficient and competitive market for goods and services (11th) and its remarkably supportive financial sector (6th), as well as its business-friendly institutional framework. In a region where many economies suffer from the lack of transparency and the presence of red tape, Malaysia stands out as particularly successful at tackling those
1.1: The Global Competitiveness Index 2012–2013
two issues. Yet, despite the progress achieved, much remains to be done to put the country on a more solid growth path. Its low level of technological readiness
(51st) is surprising, especially given its achievements in other areas of innovation and business sophistication and the country’s focus on promoting the use of ICT.
Lack of progress in this area will significantly undermine
Malaysia’s efforts to become a knowledge-based economy by the end of the decade.
China (29th) loses some ground in this year’s edition of the Report. After five years of incremental but steady progression, it has now returned to its
2009 level. The country continues to lead the BRICS economies by a wide margin,25 ahead of second-placed
Brazil (48th) by almost 20 ranks. Although China’s decline is small—its overall score barely changes—it affects the rankings of every pillar of the GCI except market size. The deterioration is more pronounced in those areas that have become critical for China’s competitiveness: financial market development (54th, down 6), technological readiness (88th, down 11), and market efficiency (59th, down 14). In this latter pillar, insufficient domestic and foreign competition is of particular concern, as the various barriers to entry appear to be more prevalent and more important than in previous years. On a more positive note, China’s macroeconomic situation remains very favorable (11th), despite a prolonged episode of high inflation. China runs a moderate budget deficit; boasts a low, albeit increasing, government debt-to-GDP ratio of 26 percent; and its gross savings rate remains above 50 percent of GDP. The rating of its sovereign debt is significantly better than that of the other BRICS and indeed of many advanced economies. Moreover, China receives relatively high marks in health and basic education (35th) and enrollment figures for higher education are also on the rise, even though the quality of education—in particular the quality of management schools (68th)—and the disconnect between educational content and business needs (57th) in the country remain important issues.
After having fallen for six years in a row, Thailand
(38th) halts the negative trend and improves by one place in this year’s GCI. Yet the competitiveness challenges the country is facing remain considerable.
Political and policy instability, excessive red tape, pervasive corruption, security concerns, and uncertainty around property rights protection seriously undermine the quality of the institutional framework on which businesses rely heavily. The country loses an additional
10 places in this category to rank a low 77th. Poor public health (71st) and basic education standards (89th), two other critical building blocks of competitiveness, require urgent attention. Turning to more sophisticated areas, which are just as important given Thailand’s stage of development, technological adoption is generally poor
(84th). Less than a quarter of the population accesses
the Internet on a regular basis, and only a small fraction has access to broadband. On a more positive note, the macroeconomic environment continues to improve— albeit marginally (27th, up one spot)—as the budget deficit was reduced to less than 2 percent of GDP and the debt-to-GDP ratio dropped to 42 percent in 2011.
Indonesia drops four places in this year’s edition, but maintains its score and remains in the top 50 of the
GCI. The country remains one of the best performers within the developing Asia region, behind Malaysia,
China, and Thailand yet ahead of the Philippines,
Vietnam, and all South Asian nations. The country’s performance varies considerably across the different pillars. Some of the biggest shortcomings are found in the “basic” areas of competitiveness. The institutional framework (72nd) is undermined by concerns about corruption and bribery, unethical behavior within the private sector, and the cost to business of crime and violence. Yet bureaucracy is less burdensome and public spending less wasteful than in most countries in the region, and the situation keeps improving. And infrastructure remains largely underdeveloped (78th).
Furthermore, the public health situation is a cause of even more concern (103rd). By contrast, Indonesia provides almost universal basic education of satisfactory quality (51st) and the macroeconomic environment is stable, judging by the country’s 25th rank on the related pillar. This macroeconomic stability is buoyed by its solid performance on fundamental indicators: the budget deficit is kept well below 2 percent of GDP, the public debt-to-GDP ratio amounts to only 25 percent, and the savings rate remains high. Inflation was reduced to around 5 percent in recent years after frequent episodes of double-digit inflation in the past decade. These positive developments are reflected in the improving, although still low, country credit rating.
Because the country has entered the efficiencydriven stage of development, its competitiveness increasingly depends on more complex elements, which should be addressed on a priority basis. In this context, addressing the many rigidities (134th) and inefficiencies of the labor market (70th) would allow for a smoother transition of the labor force to more productive sectors of the economy. Additional productivity gains could be reaped by boosting technological readiness (85th), which remains low, with the country exhibiting only a slow and limited adoption of ICT.
India ranks 59th overall, down three places from last year. Since reaching its peak at 49th in 2009, India has lost 10 places. Once ahead of Brazil and South Africa,
India now trails them by some 10 places and lags behind
China by a margin of 30 positions. India continues to be penalized for its disappointing performance in the areas considered to be the basic factors underpinning competitiveness. The country’s supply of transport, ICT, and energy infrastructure remains largely insufficient
The Global Competitiveness Report 2012–2013 | 29
1.1: The Global Competitiveness Index 2012–2013
and ill-adapted to the needs of the economy (84th).
Indeed, the Indian business community repeatedly cites infrastructure as the single biggest hindrance to doing business, well ahead of corruption and bureaucracy.
It must be noted, however, that the situation has been slowly improving since 2006. The picture is even bleaker in the health and basic education pillar (101st). Despite improvements across the board over the past few years, poor public health and education standards remain a prime cause of India’s low productivity. Turning to the country’s institutions, discontent within the business community remains high about the lack of reforms and the perceived inability of the government to push them through. Indeed, public trust in politicians (106th) has been weakening for the past three years. Once ranked a satisfactory 37th in this dimension, India now ranks
70th. Meanwhile, the macroeconomic environment (99th) continues to be characterized by large and repeated public deficits and the highest debt-to-GDP ratio among the BRICS. On a more positive note, inflation returned to single-digit territory in 2011.
Despite these considerable challenges, India does possess a number of strengths in the more advanced and complex drivers of competitiveness. This “reversed” pattern of development is characteristic of India. It can rely on a fairly well developed and sophisticated financial market (21st) that can channel financial resources to good use, and it boasts reasonably sophisticated (40th) and innovative (41th) businesses.
Ranked 65th, the Philippines is one of the countries showing the most improvement in this year’s edition.
Indeed, it has advanced 22 places since reaching its lowest mark in 2009. The Philippines makes important strides this year in improving competitiveness—albeit often from a very low base—especially with respect to its public institutions (94th, up 23 places). Trust in politicians has made considerable progress (95th, up
33), although significant room for improvement remains.
The perception is that corruption (108th, up 11) and red tape (108, up 18) are finally being addressed decisively, even though they remain pervasive. The macroeconomic environment also exhibits marked improvement (36th up 18) and represents one of the strongest aspects of the Philippine’s performance, along with its market size
(35th). In addition, the financial sector has become more efficient and increasingly supportive of business activity
(58th, up 13). Despite these very positive trends, many weaknesses remain to be addressed. The country’s infrastructure is still in a dire state, particularly with respect to sea (120th) and air transport (112th), with little or no progress achieved to date. Furthermore, various market inefficiencies and rigidities continue, most notably in the labor market (103rd).
Vietnam ranks 75th this year and switches positions with the Philippines. Over the last two editions, Vietnam has lost 16 places and is now the second-lowest
30 | The Global Competitiveness Report 2012–2013
ranked among eight members of the Association of
Southeast Asian Nations (ASEAN) covered by the
Report. The country loses ground in 9 of the 12 pillars of the GCI. It ranks below 50th in all of the pillars, and dangerously close to the 100th position on a majority of them. As a sign of its fragility and extreme volatility,
Vietnam plunges 41 places in the macroeconomic environment pillar to 106th after it had recorded a 20place gain in the previous edition. Inflation approached
20 percent in 2011, twice the level of 2010, and the country’s sovereign debt rating worsened. In an effort to stem inflation, the State Bank of Vietnam tightened its monetary policy, thus making access to credit more difficult. Infrastructure (95th), strained by rapid economic growth, remains a major challenge for the country despite some improvement in recent years, with particular concerns about the quality of roads (120th) and ports (113th). Public institutions are characterized by rampant corruption and inefficiencies of all kinds.
Respect of property rights (113th) and protection of intellectual property (123rd) are all insufficient according to the business community. Private institutions suffer from poor ethics and particularly weak accountability
(132nd). Among Vietnam’s few competitive strengths are its fairly efficient labor market (51st), its large market size (32nd), and a satisfactory performance in the public health and basic education pillar (64th). The challenges going forward are therefore numerous and significant and will require decisive policy action in order to put the country’s growth performance on a more stable footing.
Latin America and the Caribbean
Latin America and the Caribbean has continued to grow steadily in the past year at an average rate of 4.5 percent. Strong external demand for local commodities, especially from China and other Asian economies, coupled with good macroeconomic management have allowed the countries in the region to put their short- and medium-term growth outlooks on a “glide path to steady growth.”26 With expected growth rates of 3.4 percent and 4.2 percent for 2012 and 2013, respectively, the region is expected to continue to outperform the rest of the world.
Despite this rather optimistic outlook, the region may face the interrelated potential headwinds of a less robust recovery in the United States, a deceleration in the economic growth of China and other Asian emerging economies, and the sovereign debt crisis in Southern
Europe that is affecting the economic growth forecast in all of Europe. Against this backdrop, boosting national competitiveness by raising productivity is the best way to ensure economic growth over the longer term and increase the region’s resilience to economic shocks.
Over the past year, although several countries have once again made good progress in raising competitiveness, the region as a whole continued to
1.1: The Global Competitiveness Index 2012–2013
face important competitiveness challenges. These pertain in particular to a weak institutional set-up with high insecurity, poor infrastructure, inefficient allocation of production resources caused by insufficient levels of competition, and a low capacity to generate new knowledge to strengthen R&D innovation in the region.
Addressing these weaknesses will allow countries in
Latin America and the Caribbean to be better connected not only among themselves but also to the rest of the world, and to boost productivity levels (Box 3).
Despite a slight drop of two positions, Chile, at
33rd place, shows a rather stable performance and remains the most competitive economy in Latin America.
A very solid macroeconomic framework (14th) with very low levels of public debt (10th) and a government budget in surplus (21st), coupled with well-functioning and transparent public institutions (28th) and fairly well developed transport infrastructures (40th), provide Chile with a solid foundation on which to build and maintain its competitiveness leadership in the region. Moreover, the country’s traditional liberalization policies and its openness to trade have resulted in flexible and efficient markets that ensure a good allocation of resources in the goods (30th), labor (34th), and financial (28th) markets.
Notwithstanding these important strengths, Chile also presents a number of challenges in terms of improving the quality of its educational system (91st), which has created a heated public debate in the country. It also needs to increase the use of ICT (57th) and strengthen its national research and innovation system (44th). Further competitiveness gains will be contingent on successfully addressing these weaknesses. As the economy steadily moves toward a higher stage of development, many economic activities will require higher levels of skills and innovation in order to increase their competitiveness potential. Panama, at 40th place and nine ranks up since last year, continues its steady progress and consolidates its position as the most competitive economy in Central
America. Panama leverages its traditional strengths with its very good transport infrastructure (33rd), especially for ports (4th); its macroeconomic stability (53rd), despite the worrying inflation rate of nearly 6 percent; its efficient financial markets (9th); and its relatively high levels of competition (31st) and openness to FDI (9th). The country has also made progress in addressing some of the most pressing weaknesses that have traditionally hindered its competitiveness potential. More precisely, Panama seems to be improving the quality of its educational system compared with last year, although it still remains a very important challenge (112th). Corporate R&D investments (34th) appear now to contribute more to improving the country’s innovative capacity (94th), which remains one of the biggest challenges to diversifying the national economy. However, little progress is observed in Panama’s institutional set-up, where public trust
Box 3: Connecting the Americas through better transport, energy, and ICT infrastructure
At the Sixth Summit of the Americas, held in Colombia in
April 2012, many Latin American leaders agreed on the need to better connect the Americas—while also keeping the region open to the world—as a way to increase productivity and competitiveness. Amid the five mandates that came out of the Summit, two emphasized the regional commitment to improve the road, rail, and electric networks on the continent, as well as information and communication technologies (ICT), where Latin America and the Caribbean still lag behind.
Transport, energy, and ICT infrastructure is crucial for boosting competitiveness. Good transport infrastructure decreases the costs of moving raw materials and intermediate components to production sites and from there to consumption markets; integrates national and regional markets, thus enhancing the efficiency in the allocation of resources; and reduces the time and cost for people to travel and interact, thus enhancing the flow of ideas and tacit knowledge that is crucial for innovation. Energy networks that provide reliable and affordable electricity are also essential because disruptions in the energy supply can impose large costs on companies, especially large manufacturing electricityintensive businesses, which need to stop and restart their operations after a power interruption. ICT networks have also become more and more essential for competitiveness, not only as a way to reduce transaction costs in running operations and interacting with suppliers, clients, and the administration, but also—and more importantly—as a key enabler of innovation when ICT interacts with other economic activities.
Figure 1: Transport, electricity, and ICT infrastructures in Latin America and the Caribbean and the OECD, 2012
Transport Infrastructure
7
6
5
4
3
2
ICT use
Electricity supply
Latin America and the Caribbean
OECD
(Cont’d.)
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1.1: The Global Competitiveness Index 2012–2013
Box 3: Connecting the Americas through better transport, energy, and ICT infrastructure (cont’d.) divide of the region compared with other areas in the world, notably developed economies (Table 1) but also many
Asian economies.1 The severe lag in the region is clearly reflected in the available Internet bandwidth capacity, which is only slightly above 20 percent of the OECD average. This affects the capacity of the already-low number of Internet users to access fast broadband connections, either through fixed or mobile devices. Addressing these weaknesses by improving national infrastructure and intra-national transport, energy, and ICT connectivity will be crucial moving forward.
Improved infrastructure in all three areas will help increase national and regional productivity by deepening national and regional markets, reducing transaction costs, and creating more favorable conditions for innovation. Engaging in these resource-intensive projects will require closer collaboration between the public and private sectors to leverage each other’s capacities and resources, and between national governments to enhance “connecting the Americas.”
Latin America and the Caribbean has traditionally lagged behind in building a dense network of transport and electricity infrastructure (Figure 1). Partly because of its complex geography and partly because of insufficient public investment and private-sector mobilization, transport and energy infrastructure has not been sufficiently developed in many countries. This remains one of the key challenges that hamper the capacity of local firms to reduce production and distribution costs. During the 1990s and the macroeconomic stabilization process that took place then, government budget cuts were felt particularly severely in infrastructure investment, which was drastically reduced. This affected the quality of all transport infrastructure, which trails sharply behind that of more advanced economies. Despite the region’s rapid economic growth of the past decade, improvements in transport infrastructure have remained insufficient. This is particularly evident in the poor development of railroad networks, almost nonexistent in many Latin American countries, and road networks. Despite the improvements that have taken place around the biggest cities, the rapid urbanization and the traditional poor connectivity of rural areas still pose a severe challenge for competitiveness.
The region also lags behind in ICT use, which shows no sign of improvement. This situation is widening the digital
Note
1
For a more detailed analysis, consult The Global Information
Technology Report 2012, available at www.weforum.org/gitr.
Table 1: Transport, electricity, and ICT infrastructures: Latin America and the Caribbean compared with
OECD countries
Indicator
Latin America and the Caribbean
OECD
Gap
3.30
4.96
1.66
Quality of overall infrastructure
3.86
5.53
1.67
Quality of roads
3.58
5.19
1.61
Quality of railroad infrastructure
1.90
4.47
2.57
Quality of port infrastructure
3.93
5.21
1.27
Quality of air transport infrastructure
4.44
5.58
1.14
397.33
2,373.87
1,976.53
4. 24
6.13
1.89
4.24
6.13
1.89
Transport infrastructure
Available airline seat kms/week, millions*
Electricity supply
Quality and reliability of electricity supply
ICT use
Individuals using Internet, %*
Broadband Internet subscriptions/100 pop.*
Int’l Internet bandwidth, kb/s per user*
Mobile broadband Internet subscriptions/100 pop.*
Mobile telephone subscriptions/100 pop.*
Fixed telephone lines/100 pop.*
2 .72
5. 29
2 .57
35.15
75.02
39.87
6.00
26.51
20.51
17.08
83.03
65.95
40.60
5.35
45.96
112.49
118.16
5.68
17.02
41.46
24.45
Note: The scores range from 1 to 7 for those variables that are collected from the Executive Opinion Survey. Those variables marked with an asterisk are collected from other sources and the values reflect the units indicated in variable. For more information on the definition and sources of these variables, please refer to Part 2.2 of this publication.
32 | The Global Competitiveness Report 2012–2013
1.1: The Global Competitiveness Index 2012–2013
in politicians (101st) is low, security (96th) remains a general concern, and judicial independence is deemed one of the lowest in the region (132nd). Strengthening the functioning of the institutions and persisting with improvements to its education, research, and innovation systems will be crucial for Panama to continue raising its competitiveness performance.
The continued deterioration of the macroeconomic framework has led Barbados to fall two notches in the rankings, to 44th place. With one of the lowest national savings rates (136th) and one of the highest government debt levels (139th), the macroeconomic conditions in the country (134th) are strangling the access of businesses to financing through local equity markets (92nd), loans
(79th), or venture capital (94th). As a result, the business community continues to face important challenges in engaging in new investment projects. Notwithstanding these serious weaknesses, which sharply affect economic activity, the country still benefits from wellfunctioning institutions (24th) and good infrastructure
(22nd). Moreover, a very high quality educational system
(11th), a high use of ICT (32nd), and a fairly sophisticated business community (36th) help foster innovation in a service-oriented economy despite the low R&D investment (72nd) and technological innovation capacity
(91st).
Entering the top 50, Brazil goes up five positions to attain 48th place on the back of a relative improvement in its macroeconomic condition—despite its still-high inflation rate of nearly 7 percent—and the rise in the use of ICT (54th). Overall, Brazil’s fairly sophisticated business community (33rd) enjoys the benefits of one of the world’s largest internal markets (7th), which allows for important economies of scale and continues to have fairly easy access to financing (40th) for its investment projects. Notwithstanding these strengths, the country also faces important challenges. Trust in politicians remains low (121st), as does government efficiency
(111th) because of excessive government regulation
(144th) and wasteful spending (135th). The quality of transport infrastructure (79th) remains an unaddressed long-standing challenge and the quality of education
(116th) does not seem to match the increasing need for a skilled labor force. Moreover, despite increasing efforts to facilitate entrepreneurship, especially for small companies, the procedures and time to start a business remain among the highest in the sample (130th and
139th, respectively) and taxation is perceived to be too high and to have distortionary effects (144th).
Mexico, at 53rd place, moves up five positions and consolidates last year’s positive trend, with small improvements in seven of the 12 pillars. Overall, the country boasts several competitiveness strengths, including its large and deep internal market (11th), a sound macroeconomic framework (40th), fairly good transport infrastructure (41st), and fairly sophisticated
businesses (44th). Notwithstanding these strengths,
Mexico still faces persistent structural challenges that will need to be addressed in order to continue improving the competitive edge of the economy. The functioning of public institutions is still poorly assessed (100th) because of the high costs associated with the lack of security
(137th) and the low trust of the business community in politicians (97th). The functioning of the labor market is considered inefficient (102nd) because of rigidities in hiring and firing practices (113th) and the relatively low female participation (121st). The lack of effective competition (100th), especially in some key strategic sectors, also hinders an efficient allocation of resources that spills over into most sectors of the economy.
Finally, Mexico’s innovative potential is hampered by the low quality of education (100th) especially in math and science (124th), the low use of ICT (81st), and the low uptake by businesses of new technology to spur productivity improvements and innovation (75th).
Costa Rica bounces back four positions to 57th place. An improvement in the macroeconomic conditions of the country thanks to a lower budget deficit and decreasing government debt, coupled with an increase in ICT use, have allowed Costa Rica to obtain this better result. The country leverages its well-functioning public institutions (55th) despite the high costs associated with crime (85th) endemic in the region, the perception of high wastefulness of government spending (105th), and falling trust in politicians (64th). Moreover, Costa Rica has one of the highest innovation potentials in the region thanks to a high-quality educational system (21st), an acceptable use of ICT (58th), and an above-average capacity to innovate and use available technology (39th).
Notwithstanding these strengths, the country still faces significant challenges that it must address to improve its competitive edge. The quality of transport infrastructure is poor (116th), procedures to start a business are lengthy (130th), and available financing for businesses— especially through local equity markets—is scarce
(122nd), affecting the conditions for entrepreneurship.
Continuing its rise of the past several years, Peru climbs six positions in the rankings to reach 61st place. Further improvements to the already-good macroeconomic situation of the country (where it ranks
21st)—despite a rise in inflation—have buttressed this upward trend, while the situation in most of the other pillars has remained stable or slightly deteriorated.
Overall Peru continues to enjoy the benefits of its liberalization policies that have supported the high levels of efficiency in the goods (53rd), labor (45th), and financial markets (45th). However, the country still faces important challenges for strengthening the functioning of its public institutions (118th), where government efficiency
(100th) caused by excessive red tape (128th) and weak judicial independence are questioned. Moreover, the quality of its transport infrastructure (97th) needs to
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1.1: The Global Competitiveness Index 2012–2013
be improved. Furthermore, as the economy moves to higher levels of development and explores ways to diversify away from its large mining sector, its low quality of education (132nd), poor use of ICT (89th), and low
R&D and technological capacity (118th) work against developing the country’s overall capacity to innovate and move toward higher-value-added activities.
Despite the slight decline of one position, Colombia shows a relatively stable picture at 69th place. An improvement in macroeconomic conditions (34th) thanks to the reduction of the government deficit and debt values has compensated for slight drops in those pillars that have traditionally represented competitiveness challenges: weak public institutions (122nd), the poor quality of its transport infrastructure (114th), the poor quality of education in the country (77th), and its low research and innovation capacity (70th). As the economy continues to improve steadily, with a growth rate of 4.5 percent, unaddressed challenges in these areas that hinder the competitive edge of national businesses seem to become more evident, despite recent policy efforts to address them. In order to further improve competitiveness, Colombia should address these weaknesses and further leverage its strengths in terms of the already-mentioned macroeconomic stability, its large and increasing domestic market (27th), and its relatively efficient financial market (55th).
Uruguay sustains one of the region’s sharpest drops, falling 11 places in the rankings to 74th position.
Despite important gains in reducing the procedures and time needed to start a business (29th and 25th, respectively) and slight increases in ICT use (46th) and market size (86th), Uruguay drops systematically in all the remaining eight pillars that drive competitiveness.
Worrying inflationary pressures above 8 percent coupled with relatively high government debt (101th) have deteriorated the macroeconomic conditions (63rd) of the country and cast some doubt about the sustainability of recent growth rates. Although Uruguay still benefits from one of the best functioning institutional set-ups in the region (36th), there are rising concerns about excessive red tape (89th) and wasteful government spending
(95th), as well as about the business cost of crime and violence (88th). Labor markets are considered very rigid (139th), with some of the world’s most restrictive hiring and firing practices (138th) and a lack of flexibility in wage determination (144th) that does not match pay to productivity (143rd). As Uruguay’s economy moves toward higher levels of development, some doubts arise about the ability of the traditionally praised educational system to generate the skills that businesses require
(107th), the overall availability of scientist and engineers
(117th), and the innovation capacity of the country more broadly (69th). Improving the macroeconomic management of the country while addressing its labor market conditions, along with enhancing its innovation
34 | The Global Competitiveness Report 2012–2013
capacity by improving the quality of its educational system and the technological capacity of indigenous firms, will be crucial to shift the declining trend.
In the bottom half of the rankings, at 83rd place,
Guatemala goes up by one place this year. The country boasts some relative competitiveness strengths in terms of flexible labor regulations for hiring and firing staff (54th) and wage determination (43rd), efficient financial market development (41st), and the intensity of local competition
(46th). However, its competitiveness is hampered by a weak public institutional set-up (130th) and hindered by the very high costs of crime and violence (144th) and low trust of the business community in politicians (122nd).
Guatemala’s very low level of innovation capacity is the result of a low-quality educational system (130th), scarce use of ICT (99th), and low R&D-related innovation investments (90th). The weak quality of its transport infrastructure (93rd) also negatively affects its national competitiveness. Falling 10 places, Argentina drops to 94th position this year. The continued deterioration of the country’s macroeconomic conditions (94th) coupled with a very negative assessment of the institutional set-up (138th) and the inefficient functioning of the goods (140th), labor (140th), and financial markets (131st) are the main reasons for this poor evaluation. It appears that the country fails to leverage the important competitiveness potential provided by its large domestic market (21st) that allows for important economies of scale, its relatively high levels of ICT use (56th), and its high number of university enrollment rates (20th) that should provide local firms with a skilled labor force. Argentina’s weak government efficiency (142nd) and high levels of undue influence (140th), along with one of the lowest ratings in terms of trust in politicians (143rd), result in a poor evaluation of its institutional functioning. Structural reforms to improve the functioning of the goods markets by increasing domestic competition (143rd) and reducing the barriers to entrepreneurship, increase the flexibility of the labor markets (142nd), and ease access to financing by deepening the financial market could result in important efficiency gains that could boost Argentina’s productivity. Venezuela, at 126th place, falls two positions in the rankings. As it did last year, the country continues to rank last in terms of the functioning of public institutions (144th), with a very low trust of the business community in politicians or in judicial independence.
This, coupled with weak macroeconomic management
(126th) resulting in inflation rates above 20 percent and a budget deficit above 5 percent of national GDP, as well as poor transport infrastructure (135th), hampers the capacity of the country to count on a solid foundation for enhancing competitiveness. In addition, weaknesses in the functioning of the goods market do not allow for an efficient allocation of resources. Low domestic
1.1: The Global Competitiveness Index 2012–2013
competition (144th), excessive red tape when starting a business (141st), and high trade tariffs (125th) as well as rules and regulations that deter FDI (144th) limit the efficiency of good markets. Rigidities in the labor market
(144th) and weak financial development (133rd) also affect the development of business opportunities. Finally, although tertiary education enrollment is one of the highest in the world (11th), the quality of the educational system is assessed as poor (122nd). This and the low
R&D spending (127th) contribute to the low innovation capacity of the country (134th).
The Middle East and North Africa
The Middle East and North Africa region continues to be affected by political turbulence that has impacted individual countries’ competitiveness. Countries that embarked on partial reforms such as Jordan and
Morocco move up in the rankings, while economies that were more significantly affected by unrest and political transformations tend to drop or stagnate in terms of national competitiveness. Addressing the unemployment challenge will remain the key economic priority of the region as a whole for the foreseeable future. Box 4 discusses how unemployment in the region interacts with competitiveness.
Qatar reaffirms once again its position as the most competitive economy in the region by moving up three places to 11th position, sustained by improvements in its macroeconomic environment, the efficiency of its markets for goods and services, and its institutional framework. Its strong performance in terms of competitiveness rests on solid foundations made up of a high-quality institutional framework, a stable macroeconomic environment (2nd), and an efficient goods market (10th). Low levels of corruption and undue influence on government decisions, high efficiency of government institutions, and high levels of security are the cornerstones of the country’s very solid institutional framework, which provides a good foundation for heightening efficiency. Going forward, as noted in previous editions of this Report, reducing the country’s vulnerability to commodity price fluctuations will require diversification into other sectors of the economy and reinforcing some areas of competitiveness. Qatar’s efforts to strengthen its financial sector appear to be paying off, as the trustworthiness and confidence in the country’s financial markets improved from 80th to
44th this year. However, the legal rights of borrowers and lenders remain underprotected (99th). Given its high wage level, diversification into other sectors will require the country to raise productivity by continuing to promote a greater use of the latest technologies
(27th) and by fostering more openness to foreign competition—currently ranked at 42nd, reflecting barriers to international trade and investment.
Saudi Arabia maintains the second-best place in the region and falls by one position from 17th to 18th position overall. The country has seen a number of improvements to its competitiveness in recent years that have resulted in a solid institutional framework, efficient markets, and sophisticated businesses. Higher macroeconomic stability (6th) and more prevalent use of ICT for productivity improvements contribute to maintaining Saudi Arabia’s strong position in the
GCI. Its macroeconomic environment benefits from rising energy prices, which buoyed the budget balance into an even higher surplus in 2011. As much as the recent developments are commendable, the country faces important challenges going forward. Health and education do not reach the standards of other countries at similar income levels. Although some progress is visible in health outcomes, improvements are being made from a low level. As a result, the country continues to occupy low ranks in the health and primary education pillar (58th), and room for improvement remains on the higher education and training pillar (40th) as well. Boosting these areas, in addition to fostering a more efficient labor market (59th), will be of great significance to Saudi Arabia given its growing number of young people who will enter the labor market over the next several years. More efficient use of talent will increase in importance as global talent shortages loom on the horizon and the country attempts to diversify its economy, which will require a more skilled and educated workforce. Last but not least, although some progress has been recorded over the past years, the use of the latest technologies can be enhanced further
(35th), especially as this is an area where Saudi Arabia continues to lag behind other Gulf economies.
The United Arab Emirates gains three places in the GCI to take the 24th position. The improvement reflects a better institutional framework as well as greater macroeconomic stability. Higher oil prices buoyed the budget surplus and allowed the country to reduce public debt and raise the savings rate. Overall, the country’s competitiveness reflects the high quality of its infrastructure, where it ranks a very good 8th, as well as its highly efficient goods markets (5th). Strong macroeconomic stability (7th) and some positive aspects of the country’s institutions—such as an improving public trust in politicians (3rd) and high government efficiency
(7th)—round up the list of competitive advantages.
Going forward, putting the country on a more stable development path will require further investment to boost health and educational outcomes. Raising the bar with respect to education will require not only measures to improve the quality of teaching and the relevance of curricula, but also incentivizing the population to attend schools at the primary and secondary levels.
Israel falls by four places to 26th in this year’s
GCI, reversing its upward trend of previous years. The
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1.1: The Global Competitiveness Index 2012–2013
Box 4: The employment challenge in the Arab world the untapped potential of domestic and export markets, higher productivity can be expected to also translate into increased employment over the longer term, in addition to leading to wage increases and rising standards of living.
Despite their diversity in terms of national competitiveness, economies of the Arab world share one common challenge: the need to create gainful and sustainable employment for their rising populations. Over the past several decades most countries in the Arab world have relied on the government and state enterprises for employment creation. Although this was an expedient way to create jobs in the shorter term, over the longer term rapid population growth has made it impossible for the public sector to provide a sufficient number of jobs, particularly for the young people entering the labor market. Nor has the private sector been able to fill the gap in most of the countries, as it has remained stifled by a business environment that did not encourage private-sector growth.
As a result, unemployment has risen in many countries in the Middle East over recent decades. Currently, the regional unemployment rate of 10.3 percent is the highest among all the regions, with women and youth most severely affected.1
For example, according to the International Monetary Fund
(IMF), Middle East and North African oil importers need to create 18.5 million full-time jobs over the next decade.
Countries in the region will have to grow significantly above historical levels in order to meet their job creation targets.
While the Middle East and North Africa region is the secondfastest growing region after sub-Saharan Africa according to
IMF estimates, this growth is primarily based on the rise in energy prices. The energy sector is highly capital intensive and is not sufficient to create jobs in the region. In this context, what measures can the region explore to create jobs, in particular for young people?
• Boosting private-sector growth. The Arab region is in need of economic growth based on a vibrant and growing private sector if it is to attain durably higher levels of gainful, sustainable employment. The Global Competitiveness
Index (GCI) sheds light on some of the major stumbling blocks to energizing the private sector, as more competitive economies are those that have in place those factors, policies, and institutions that enable higher productivity.
The latter in turn tends to translate into higher growth that is necessary for higher employment. In the region, given
country’s main strengths remain its world-class capacity for innovation (3rd), which rests on highly innovative businesses that benefit from the presence of the world’s best research institutions geared toward the needs of the business sector. Israel’s excellent innovation capacity, which is supported by the government’s public procurement policies, is reflected in the country’s high number of patents (4th). Its favorable financial environment, particularly evident in the ease of access to venture capital (3rd), has contributed to making Israel an innovation powerhouse. Challenges to maintaining and improving national competitiveness relate to the need for the continued upgrading of institutions (34th) and a renewed focus on raising the bar in terms of the quality of education. If not addressed, poor educational quality—particularly in math and science
(89th)—could undermine the country’s innovation-driven
36 | The Global Competitiveness Report 2012–2013
• Economic diversification. In oil- and gas-exporting countries, where growth has been high over the past years because of high energy prices, creating jobs will require countries to continue efforts to diversify their economies. Given the high wage levels present throughout these economies, appropriate productivity levels can be achieved only through expanding into high-value-added, knowledge-based sectors.
• Addressing the skills mismatch. Much progress has been made in terms of promoting education in the Arab world over the past several decades. However, as more recent data show, university degrees do not increase the chances of finding a job in many Arab countries. This situation points to a misalignment of the skills taught in educational institutions and the needs of the region’s employers.
Indeed, when asked whether their country’s educational systems are supportive of a competitive economy, business leaders in the region said that private-sector training schemes could provide solutions in this context. Training does not appear to be a priority for local businesses, however. • Promoting meritocracy. In many countries, the public sector is the employer of choice and many of the hiring decisions are based on personal networks rather than formal qualifications. In the GCI, meritocracy is captured through two variables: the degree to which employers rely on professional managers when filling positions as opposed to friends and relatives, and the relationship between pay and productivity. On both indicators at least half of the 14
Middle East countries assessed in this Report rank in the bottom half of the rankings.
Note
1
See ILO 2012.
competitiveness strategy over the longer term. As in previous years, the security situation remains fragile and imposes a high cost on business (65th). Room for improvement also remains with respect to the macroeconomic environment (64th), where increased budgetary discipline with a view to reducing debt levels
(121st) would help the country maintain stability and support economic growth going into the future.
Jordan improves by seven positions to 64th rank.
The country was considerably affected by the global financial and economic crisis in recent years. GDP growth slowed down to 2.3 percent annually in 2010 and has not returned to pre-crisis levels since (GDP growth was 8.2 percent in 2007). These growth rates are not sufficient to create the employment necessary to absorb the about 60,000 new entrants into the Jordanian labor market every year.27 Boosting growth over the
1.1: The Global Competitiveness Index 2012–2013
longer term to levels that would result in sustainable job creation will require Jordan’s policymakers to address a number of challenges. Stabilizing the macroeconomic environment should remain on the agenda and should be accompanied by growth-enhancing structural reforms. According to the GCI, there is significant room for improvements in terms of labor market efficiency and the full potential of ICT for productivity improvements has not yet been exploited, as reflected in the 90th rank on ICT use. Jordan could also benefit from more openness to international trade and investment, which would trigger efficiency gains in the domestic economy as well as transfer of knowledge and technology. Tariff barriers remain high in international comparison (104th) and regulatory barriers to FDI remain in place (70th). And although financing appears to be more easily available than in many other countries (i.e., 45th on ease of access to loans) and efforts to further stabilize the banking sector should be continued (90th).
Egypt drops by 13 positions to reach 107th place in this year’s GCI. This assessment was arguably influenced by the uncertainty caused by the political transition the country has experienced since the events of the Arab Spring. According to the business community, government efficiency has deteriorated by 22 positions to 106th and the security situation, which was particularly affected by the events, has dropped 40 ranks to 128th. At the same time, the country has improved in individual areas captured by the institutions pillar, such as less favoritism being displayed by government officials (up by 31 ranks) and stronger corporate ethics (up by 17), suggesting the potential for further positive developments in the future.
Many economic policy challenges lie ahead for the new government to put the country on a sustainable and equitable growth path. For Egypt to more fully benefit from the considerable potential that lies in its large market size and proximity to key global markets, the country will have to raise its productive potential across the domestic economy. According to the GCI, three areas are of particular importance. First, the macroeconomic environment has deteriorated over recent years to reach 138th position mainly because of widening fiscal deficit, rising public indebtedness, and persisting inflationary pressures. A credible fiscal consolidation plan will be necessary in order to maintain macroeconomic stability in the country. This may prove difficult in times of rising energy prices, as energy subsidies account for a considerable share of public expenditure. However, better targeting of subsidies could allow for fiscal consolidation while protecting the most vulnerable. Second, measures to intensify domestic competition would result in efficiency gains and contribute to energizing the economy by allowing for new entrants. And third, making labor markets flexible
(135th) and more efficient (141st) would allow the country to increase employment in the medium term.
Sub-Saharan Africa
Sub-Saharan Africa has grown impressively over the last 15 years: registering growth rates of over 5 percent in the past two years, the region continues to exceed the global average and to exhibit a favorable economic outlook. Indeed, the region has bounced back rapidly from the global economic crisis, when GDP growth dropped to 2.8 percent in 2009. These developments highlight its simultaneous resilience and vulnerability to global economic developments, with regional variations.
Although growth in sub-Saharan middle-income countries seems to have followed the global slowdown more closely (e.g., South Africa), lower-income and oil-exporting countries in the region have been largely unaffected. These regional variations are reflected in this year’s rankings. While some African economies improve with respect to national competitiveness this year,
South Africa and Mauritius, the two African countries in the top half of the rankings, remain stable. However, other countries that were previously striding ahead are registering significant declines (Box 5). More generally, sub-Saharan Africa as a whole lags behind the rest of the world in competitiveness, requiring efforts across many areas to place the region on a firmly sustainable growth and development path going forward.
South Africa is ranked 52nd this year, remaining the highest-ranked country in sub-Saharan Africa and the third-placed among the BRICS economies. The country benefits from the large size of its economy, particularly by regional standards (it ranks 25th in the market size pillar). It also does well on measures of the quality of its institutions and on factor allocation, such as intellectual property protection (20th), property rights (26th), the accountability of its private institutions (2nd), and its goods market efficiency (32rd). Particularly impressive is the country’s financial market development (3rd), indicating high confidence in South Africa’s financial markets at a time when trust is returning only slowly in many other parts of the world. South Africa also does reasonably well in more complex areas such as business sophistication (38th) and innovation (42nd), benefitting from good scientific research institutions (34th) and strong collaboration between universities and the business sector in innovation (30th).
These combined attributes make South Africa the most competitive economy in the region. However, in order to further enhance its competitiveness, the country will need to address some weaknesses.
South Africa ranks 113th in labor market efficiency
(a drop of 18 places from last year), with rigid hiring and firing practices (143rd), a lack of flexibility in wage determination by companies (140th), and significant tensions in labor-employer relations (144th). Efforts
The Global Competitiveness Report 2012–2013 | 37
1.1: The Global Competitiveness Index 2012–2013
Box 5: Is sub-Saharan Africa’s competitiveness improving?
Sub-Saharan Africa has grown impressively over the past
15 years. Indeed, growth rates of over 5 percent in the past two years have made it one of the fastest-growing regions in the world, far exceeding the global average. The region has also bounced back rapidly from the global economic crisis, when GDP regional growth dropped to 2.8 percent in 2009.
These developments highlight both Africa’s resilience as well as its vulnerability to global economic developments, with the region characterized by wide regional disparities. Although growth in sub-Saharan African middle-income countries (e.g.,
South Africa) seems to have declined largely in step with the global slowdown, lower-income countries in the region have been largely unaffected. In this context, a pertinent question is whether sub-Saharan Africa will be able to maintain these impressive growth rates going forward. In other words, have
African countries been making the types of investments and policies that will make them competitive and thus place their economies on sustainable growth paths?
Against this backdrop, the GCI provides a useful diagnostic tool to determine how African countries are faring in putting into place the fundamentals that will keep them growing quickly. Indeed, these fundamentals can place them on the higher growth trajectories needed to ensure rapid increases in living standards, as has been seen in other developing regions—most notably much of emerging Asia.
Figure 1 shows the trends in average GCI scores based on the constant sample of African economies that have been included since the GCI was introduced in 2005. Their performance is benchmarked against that of the Organisation for Economic Co-operation and Development (OECD) average, providing a sense of how Africa’s competitiveness has compared over the period with that of the world’s most advanced economies. Further, recognizing the region’s diversity, the figure breaks down the overall score into three relevant groups, following the International Monetary Fund’s classification of sub-Saharan economies into oil exporters, middle-income economies, and low-income countries.1
The OECD and sub-Saharan economies continue to gradually converge, averaging 4.9 (on a 1-to-7 scale) and 3.7, respectively, up from 3.4 for sub-Saharan Africa eight years ago. The data also reveal that sub-Saharan middle-income countries were catching up with the OECD average prior to the 2008–09 financial crisis, but these countries have since registered a decline in their competitiveness performances on average. The region’s average score has been dragged down by South Africa in particular, which—because of its strong links to international trade and finance—has been affected by the global crisis more than other countries in the region.
Likewise, low-income economies register a slight decline in their average competitiveness score this year, following seven years of small but continuous improvements in their
GCI scores. Finally, oil exporters have seen an improvement in their competitiveness of 0.23 points since 2005, bouncing back from a global crisis–linked decline two years ago brought about by the period’s drop in oil prices. The average competitiveness of the oil exporters remains low overall, which—along with their significant exposure to commodity prices—demonstrates a need to continue to improve their competitiveness by diversifying their economies to make them less vulnerable to such shocks in the future.
To gain a better understanding of the drivers of the region’s competitiveness and future trends, Figure 2 presents the evolution of scores in basic requirements and the respective disaggregates for 2005–12. It also presents the average regional performance in efficiency enhancers.
The reason for focusing on these two areas is that the GCI classifies all sub-Saharan economies in the factor-driven and efficiency-driven stages of development, and these two subindexes capture those elements most critical for improving competitiveness in these stages. The graph shows that gains in competitiveness stem from improvements in institutional quality, most noticeably in health and primary education, reflecting improved health conditions and gradually higher primary enrollment rates. Macroeconomic stability also improved in the pre-crisis years, although double-digit inflation in Eastern Africa on the back of increased food prices and higher fiscal deficits/government debt in other parts of the region have led to a deterioration of macroeconomic stability since 2008. The figure also shows that the region has registered a persistent and worrisome infrastructure deficit: despite gradual improvements in the run-up to the financial crisis, the quality and quantity of infrastructure has largely stagnated at low levels since then, in part due to a decline in investment following the financial crisis. The infrastructure deficit is particularly striking given gradual improvements across the various efficiency enhancers (e.g., market efficiency, technological readiness) in the past years.
Removing this bottleneck would boost intra-regional trade and help the region to further diversify external trade, thereby making it more resilient to external shocks (e.g., decline in demand from the euro area, oil price shocks).
Looking forward, reducing the competitiveness divide between sub-Saharan economies and advanced economies will be the single most determining factor that can launch the region onto a firmly sustainable growth and development path. This will require effort across many areas.
To complement the time-trend analysis, Figure 3 gives an overview of the 33 sub-Saharan economies covered in this year’s GCI (compared with 17 countries in the constant sample). The broader sample allows classification into oil exporters, middle-income countries, non-fragile low-income countries, and fragile countries.2 The data suggest that oilexporting economies trail the performance of even fragile economies in all areas in the basic requirements pillar except for macroeconomic stability, which is bolstered by oil revenues. They exhibit the largest infrastructure deficit in the region, their institutional quality is similar to that of fragile economies, and they perform considerably worse than other countries in the region in educating their young population and providing good conditions for a healthy workforce. This is also reflected in this year’s rankings where first-time entrant
Gabon leads the African oil exporters at 99th place, followed by Cameroon (112th), Nigeria (115th), and Chad at 139th place. Thus, despite a favorable growth outlook according to the International Monetary Fund, their economies remain vulnerable to oil price shocks and they need to improve their competitiveness and encourage greater diversification if they are to place their economies on more sustainable growth paths. (Cont’d.)
38 | The Global Competitiveness Report 2012–2013
1.1: The Global Competitiveness Index 2012–2013
Box 5: Is sub-Saharan Africa’s competitiveness improving? (cont’d.)
Figure 1: Trends in GCI scores, 2005–12
5.0
GCI score (1–7)
4.5
4.0
3.5
3.0
2005–2006
2006–2007
2007–2008
2008–2009
2009–2010
2010–2011
2011–2012
2012–2013
GCI edition
OECD
Sub-Saharan Africa*
Middle-income countries
Low-income countries
Oil exporters
Note: The constant sample includes the following economies: Oil exporters: Cameroon, Chad, and Nigeria; middle-income countries: Botswana, Mauritius, Namibia, and South Africa; low-income countries: Benin, Ethiopia, Gambia, Kenya, Madagascar, Mali, Mozambique, Tanzania, Uganda, and Zimbabwe.
* 2005 constant sample.
Figure 2: Trends in factor-driven and efficiency-driven scores, 2005–12
4.5
GCI score (1–7)
4.0
3.5
3.0
2.5
2005–2006
2006–2007
2007–2008
2008–2009
2009–2010
2010–2011
2011–2012
2012–2013
GCI edition
Macroeconomic environment
Institutions
Health and primary education
Efficiency enhancers
Basic requirements
Infrastructure
(Cont’d.)
The Global Competitiveness Report 2012–2013 | 39
1.1: The Global Competitiveness Index 2012–2013
Box 5: Is sub-Saharan Africa’s competitiveness improving? (cont’d.)
Figure 3: Performance of sub-Saharan Africa and subregions in the GCI 2012–2013
7
6
Score (1–7)
5
4
3
2
OECD
Oil exporters
Middle-income countries
Fragile countries
12. Innovation
11. Business sophistication
10. Market size
9. Technological readiness
8. Financial market development
7. Labor market efficiency
6. Goods market efficiency
5. Higher education and training
4. Health and primary education
3. Macroeconomic environment
2. Infrastructure
1. Institutions
1
Non-fragile low-income countries Note: The constant sample includes the following economies: Oil exporters: Cameroon, Chad, Gabon, and Nigeria; middle-income countries: Botswana, Cape Verde, Ghana,
Lesotho, Mauritius, Namibia, Senegal, Seychelles, South Africa, Swaziland, and Zambia; non-fragile low-income economies: Benin, Burkina Faso, Ethiopia, Gambia,
Kenya, Madagascar, Malawi, Mali, Mozambique, Rwanda, Sierra Leone, Tanzania, and Uganda; fragile economies: Burundi, Côte d’Ivoire, Guinea, Liberia, and Zimbabwe.
The blue bars reflect the dispersion in performance across sub-Saharan countries in the 12 dimensions analyzed in the GCR, the end points presenting the highest and lowest score in the sample, respectively.
Figure 4: The most problematic factors for doing business: Sub-Saharan African average
Access to financing
Corruption
Inadequate supply of infrastructure
Inefficient government bureaucracy
Tax rates
Inadequately educated workforce
Poor work ethic in national labor force
Inflation
Policy instability
Tax regulations
Restrictive labor regulations
Foreign currency regulations
Crime and theft
Government instability/coups
Poor public health
0
5
10
15
20
Percent of responses
(Cont’d.)
40 | The Global Competitiveness Report 2012–2013
1.1: The Global Competitiveness Index 2012–2013
Box 5: Is sub-Saharan Africa’s competitiveness improving? (cont’d.)
Middle-income economies, all currently in the efficiencydriven stage of development, outperform their regional peers in all areas except for labor market efficiency, market size, and innovative capacity. South Africa and Mauritius lead the regional rankings this year, placing 52nd and 54th, respectively, followed by the Seychelles at 76th place. Finally, non-fragile low-income economies enter the pillar rankings as expected, with Rwanda leading at 63rd, and Sierra Leone closing the regional rankings at 143rd place.
These outcomes are further corroborated by the perspective of Africa’s business leaders. Figure 4 presents the most problematic factors for doing business in the region, and reveals that access to financing, corruption, and an inadequate supply of infrastructure are seen to be significant hindrances to doing business in Africa. These are issues that must be tackled in order to encourage the wealth and job creation that are still so needed in the region.
As to whether or not the region will be able to continue on a sustainable growth path will depend on critical improvement across all pillars, with a focus on the infrastructure deficit. Overall, the results provide cause
must also be made to increase the university enrollment rate in order to better develop its innovation potential.
Combined efforts in these areas will be critical in view of the country’s high unemployment rate of almost
25 percent in the second quarter of 2012. In addition,
South Africa’s infrastructure, although good by regional standards, requires upgrading (63rd). The poor security situation remains another important obstacle to doing business in South Africa. The high business costs of crime and violence (134th) and the sense that the police are unable to provide sufficient protection from crime (90th) do not contribute to an environment that fosters competitiveness. Another major concern remains the health of the workforce, which is ranked
132nd out of 144 economies—the result of high rates of communicable diseases and poor health indicators more generally. Mauritius comes in at 54th this year, the secondhighest ranked country in the region after South
Africa. The country benefits from relatively strong and transparent public institutions (40th), with clear property rights, strong judicial independence, and an efficient government. Private institutions are rated as highly accountable (13th), with effective auditing and accounting standards and strong investor protection. The country’s infrastructure is well developed by regional standards, particularly its ports, air transport, and fixed telephony.
Its health standards are also impressive compared with those of other sub-Saharan African countries. Further, its goods markets are efficient (27th). However, efforts are still required in education. Enrollment rates remain low
for cautious optimism. Africa’s competitiveness has been improving in recent years in specific areas. However, looking forward, to better enable national economies to ensure solid future economic performance, African economies must continue to make efforts to develop economic environments that are based on productivity enhancements. This means keeping a clear focus on strengthening the institutional, physical, and human capital prerequisites for a strong and competitive private-sector led development. Only in this way will Africa be able to sustain and even accelerate its progress in the positive direction that it has taken over the past decade. Notes
1
Originally, sub-Saharan economies were grouped into oil exporters, middle-income countries, non-fragile low-income countries, and fragile countries. As Zimbabwe is the only country classified as fragile in the constant sample, we merge fragile and non-fragile low-income countries into a single group of low-income countries for purpose of this trend exercise. See IMF 2012a.
2
See IMF 2012a.
at all levels, and the country’s educational system gets only mediocre marks for quality. Beyond its educational weaknesses, its labor markets could be made more efficient—it has stringent hiring and firing practices
(78th) and wages that are not flexibly determined (108th), reducing the incentive for job creation in the country.
Rwanda moves up by seven places this year to
63rd position, continuing to place third in the subSaharan African region. As do the other comparatively successful African countries, Rwanda benefits from strong and relatively well-functioning institutions, with very low levels of corruption (an outcome that is certainly related to the government’s non-tolerance policy), and a good security environment. Its labor markets are efficient, its financial markets are relatively well developed, and Rwanda is characterized by a capacity for innovation that is quite good for a country at its stage of development. The greatest challenges facing Rwanda in improving its competitiveness are the state of the country’s infrastructure, its low secondary and university enrollment rates, and the poor health of its workforce.
The Seychelles enters the Index for the first time this year at 76th position overall, 4th in the region.
The country benefits from strong and well-functioning institutions by regional standards (47th), with strong public trust in politicians (38th) and a government that is seen as efficient (28th). Infrastructure is also relatively well developed (42nd), and the country has impressive educational outcomes in terms of enrollment rates, although the quality of education—particularly in math and science—is perceived to be rather poor by the
The Global Competitiveness Report 2012–2013 | 41
1.1: The Global Competitiveness Index 2012–2013
business community. Moving forward, the country will need to improve the efficiency of its markets, particularly its goods and financial markets (ranked 70th and 94th, respectively). Further, because the Seychelles is now approaching the innovation-driven stage of development, a more innovative business culture will be critical for ensuring continued productivity enhancements into the future. Botswana moves up one place to 79th, one of the top five economies in the region. Among the country’s strengths are its relatively reliable and transparent institutions (33rd), with efficient government spending, strong public trust in politicians, and low levels of corruption. Although improving since last year,
Botswana’s macroeconomic environment remains of some concern and is ranked 81st this year. However,
Botswana’s primary weaknesses continue to be related to its human resources base. Education enrollment rates at all levels remain low by international standards, and the quality of the educational system receives mediocre marks. Yet it is clear that by far the biggest obstacle facing Botswana in its efforts to improve its competitiveness remains its health situation. The rates of disease in the country remain very high, and health outcomes are poor despite improvements in fighting malaria and reducing infant mortality.
Namibia continues its downward trend and falls nine places this year to 92nd place, with weakening across most areas measured by the Index. The country continues to benefit from a relatively well functioning institutional environment (52nd), with wellprotected property rights, an independent judiciary, and reasonably strong public trust in politicians. The country’s transport infrastructure is also good by regional standards (59th). Financial markets are developed by international standards (47th) and buttressed by solid confidence in financial institutions (23rd), although their overall assessment has weakened for three years in a row. With regard to weaknesses, as in much of the region, Namibia’s health and education indicators are worrisome. The country is ranked a low 120th on the health subpillar, with high infant mortality and low life expectancy—the result, in large part, of the high rates of communicable diseases. On the educational side, enrollment rates remain low and the quality of the educational system remains poor, ranked 127th.
In addition, Namibia could do more to harness new technologies to improve its productivity levels; it currently shows low penetration rates of new technologies such as mobile phones and the Internet.
Ghana is ranked 103rd this year, moving up by an impressive 11 places since last year on the back of improvements in the basic requirements of its macroeconomic stability and health and educational outcomes. Traditionally displaying strong public institutions and governance indicators, especially in
42 | The Global Competitiveness Report 2012–2013
regional comparison, along with increased government regulation and sizeable deteriorations in all indicators have dragged down the country’s score in the institutions pillar to 75th place (from 61st last year). Education levels also continue to lag behind international standards at all levels, labor markets are still characterized by inefficiencies, and the country is not harnessing new technologies for productivity enhancements (ICT adoption rates are very low). On a more positive note, some aspects of its infrastructure are good by regional standards, particularly the state of its ports. Financial markets are also relatively well developed (59th).
Kenya is ranked 106th this year, showing a relatively steady performance. The country’s strengths continue to be found in the more complex areas measured by the
GCI. Kenya’s innovative capacity is ranked an impressive
50th, with high company spending on R&D and good scientific research institutions that collaborate well with the business sector in research activities. Supporting this innovative potential is an educational system that— although educating a relatively small proportion of the population compared with most other countries—gets relatively good marks for quality (37th) as well as for on-the-job training (62nd). The economy is also supported by financial markets that are well developed by international standards (24th) and a relatively efficient labor market (39th). On the other hand, Kenya’s overall competitiveness is held back by a number of factors.
Health is an area of serious concern (115th), with a high prevalence of communicable diseases contributing to the low life expectancy of less than 57 years and reducing the productivity of the workforce. The security situation in Kenya is also worrisome (125th).
Liberia enters the rankings for the first time at 111th place. The country’s institutions receive an impressive assessment (45th), with strong public trust in politicians
(25th) and high marks for the efficiency of government
(30th). Goods markets are also efficient (40th), with few procedures and low cost to start a business in the country, and a taxation regime that is not overly distortive to economic decision making. In order to enhance Liberia’s competitiveness, the country must focus on building physical infrastructure and enhancing human resources by improving the health and education levels of the country’s workforce, as well as encouraging the adoption of the latest technologies for productivity enhancements. After some deterioration in the rankings over recent years, Nigeria has moved up to 115th place this year thanks to improved macroeconomic conditions (reflecting a positive government balance and a drop in inflation, although it remains in the double digits) and a financial sector that is recovering from its 2009 crisis. The country has a number of strengths on which to build, including its relatively large market (33rd), which provides its companies with opportunities for economies of scale.
1.1: The Global Competitiveness Index 2012–2013
Nigeria’s businesses are also sophisticated by regional standards (66th), with some cluster development, companies that tend to hire professional managers, and a willingness to delegate decision-making authority within the organization. Likewise, the country registers improvements in its labor market based on more efficient use of talent. On the other hand, despite a slight improvement since last year, the institutional environment does not support a competitive economy because of concerns about the protection of property rights, ethics and corruption, undue influence, and government inefficiencies. The security situation in the country continues to be dire and has worsened since last year
(134th). Additionally, Nigeria receives poor assessments for its infrastructure (130th) as well as its health and primary education levels (142nd). Furthermore, the country is not harnessing the latest technologies for productivity enhancements, as demonstrated by its low rates of ICT penetration.
Tanzania is ranked 120th this year. Tanzania benefits from public institutions characterized by a relative evenhandedness in the government’s dealings with the private sector (56th) and government regulation that is not seen as overly burdensome (58th). In addition, some aspects of the labor market lend themselves to efficiency, such as a high female participation in the labor force (5th) and reasonable redundancy costs.
On the other hand, infrastructure in the country is underdeveloped (132nd), with low-quality roads and ports and an unreliable electricity supply. And although primary education enrollment is commendably high, providing universal access, enrollment rates at the secondary and university levels are among the lowest in the world (both at 137th place). In addition, the quality of the educational system needs upgrading. A related area of concern is the low level of technological readiness in
Tanzania (122nd), with very low uptake of ICT such as the Internet and mobile telephony. In addition, the basic health of its workforce is also a serious concern; the country is ranked 113th in this area, with poor health indicators and high levels of diseases.
Zimbabwe remains stable at 132nd position.
Public institutions continue to receive a weak assessment, particularly related to corruption, security, and government favoritism, although overall the assessment of this pillar is better than it was just a few years ago. On the other hand, some major concerns linger with regard to the protection of property rights
(137th), where Zimbabwe is among the lowest-ranked countries, reducing the incentive for businesses to invest. And despite efforts to improve its macroeconomic environment—including the dollarization of its economy in early 2009, which brought down inflation and interest rates—the situation continues to be bad enough to place Zimbabwe among the lowest-ranked countries in this pillar (122nd), demonstrating the extent of efforts
still needed to ensure its macroeconomic stability.
Weaknesses in other areas include health (133rd in the health subpillar), low education enrollment rates, and official markets that continue to function with difficulty
(particularly with regard to goods and labor markets, ranked 133rd and 139th, respectively).
Mozambique ranks 138th this year and needs improvements across many areas to lift the economy onto a sustainable growth and development path, particularly in view of its natural resource potential. The country’s public institutions receive a weak assessment on the back of low public trust in politicians, significant red tape faced by companies in their business dealings, and the perceived wastefulness of government spending. Indeed, recurring government deficits are leading to a rising public debt burden. Macroeconomic stability is further undermined by double-digit inflation, although recent efforts seem to be bearing some fruit in containing price rises. Looking ahead, important reform efforts will be needed to improve the country’s long-term competitiveness, including critical investments across all modes of infrastructure (rank 129th), establishing a regulatory framework that encourages competition to foster economic diversification, and developing a sound financial market (134th). Also critical, in view of the country’s rapidly growing population and high unemployment, are investing in the healthcare system and primary education (137th) as well as higher education and training (138th).
CONCLUSIONS
This chapter has discussed the results of the Global
Competitiveness Index, covering 144 economies from all of the world’s regions. The GCI aims to capture the complexity of the phenomenon of national competitiveness, which can be improved only through an array of reforms in different areas that affect the longerterm productivity of a country, which is the key factor affecting economic growth performance of economies.
Recent events related to the financial and economic crisis and the continued uncertain ramifications within the global economy highlight the importance of measures to increase competitiveness in order to put economic growth of countries on a more stable and more sustainable footing.
Since its introduction in 2005, the GCI has been used by an increasing number of countries and institutions to benchmark national competitiveness.
The clear and intuitive structure of the GCI framework is useful for prioritizing policy reforms because it allows each country to identify the strengths and weaknesses of its national competitiveness environment and pinpoint those factors most constraining its economic development. More specifically, the GCI provides a platform for dialogue among government, business, and civil society that can serve as a catalyst for
The Global Competitiveness Report 2012–2013 | 43
1.1: The Global Competitiveness Index 2012–2013
productivity-improving reforms, with the aim of boosting the living standards of the world’s citizens.
Over the years, the GCI has proved to be a very useful tool for advancing competitiveness across countries. More recently, in order to better place the discussion on competitiveness in a societal and environmental context, the World Economic Forum has begun exploring the complex relationship between competitiveness and sustainability as measured by its social and environmental dimensions. The work carried out to date on these important aspects of human and economic development is described in Chapter 1.2.
NOTES
1 The first version of the Global Competitiveness Index was published in 2004. See Sala-i-Martín and Artadi 2004.
2 Schumpeter 1942; Solow 1956; and Swan 1956.
3 See, for example, Sala-i-Martín et al. 2004 for an extensive list of potential robust determinants of economic growth.
4 See Easterly and Levine 1997; Acemoglu et al. 2001, 2002; Rodrik et al. 2002; and Sala-i-Martín and Subramanian 2003.
5 See de Soto 2000.
6 See de Soto and Abbot 1990.
7 See Shleifer and Vishny 1997; Zingales 1998.
8 See Kaufmann and Vishwanath 2001.
9 See Aschauer 1989; Canning et al. 1994; Gramlich 1994; and
Easterly 2002.
10 See Fischer 1993.
11 See Sachs 2001.
20 Some restrictions were imposed on the coefficients estimated. For example, the three coefficients for each stage had to add up to one, and all the weights had to be non-negative.
21 In order to capture the resource intensity of the economy, we use as a proxy the exports of mineral products as a share of overall exports according to the sector classification developed by the
International Trade Centre in their Trade Performance Index.
In addition to crude oil and gas, this category also contains all metal ores and other minerals as well as petroleum products, liquefied gas, coal, and precious stones. The data used cover the years 2006 through 2010 or most recent year available. Further information on these data can be found at http://www.intracen. org/menus/countries.htm. All countries that export more than 70 percent of mineral products are considered to be to some extent factor driven. The stage of development for these countries is adjusted downward smoothly depending on the exact primary export share. The higher the minerals export share, the stronger the adjustment and the closer the country will move to stage 1. For example, a country that exports 95 percent of mineral exports and that, based on the income criteria, would be in stage 3 will be in transition between stages 1 and 2. The income and primary exports criteria are weighted identically. Stages of development are dictated solely by income for countries that export less than 70 percent minerals.
Countries that export only primary products would automatically fall into the factor-driven stage (stage 1).
22 OECD 2012.
23 Further minor adjustments to the data are that the redundancy cost in the labor market efficiency pillar (7th) is now calculated based on a different tenure of the employee than in previous years and that the Internet bandwidth is now indicated per user instead of per capita.
24 See World Economic Forum 2012a.
25 The BRICS countries are Brazil, Russia, India, China, and South
Africa.
26 IMF 2012b.
27 IMF 2012c.
12 See Schultz 1961; Lucas 1988; Becker 1993; and Kremer 1993.
13 See Almeida and Carneiro 2009; Amin 2009; and Kaplan 2009 for country studies demonstrating the importance of flexible labor markets for higher employment rates and, therefore, economic performance. 14 See Aghion and Howitt 1992 and Barro and Sala-i-Martín 2003 for a technical exposition of technology-based growth theories.
15 A general purpose technology (GPT), according to Trajtenberg
(2005), is one that, in any given period, gives a particular contribution to an overall economy’s growth thanks to its ability to transform the methods of production in a wide array of industries.
Examples of GPTs have been the invention of the steam engine and the electric dynamo.
16 See Sachs and Warner 1995; Frenkel and Romer 1999; Rodrik and Rodriguez 1999; Alesina et al. 2005; and Feyrer 2009.
17 This is particularly important in a world in which economic borders are not as clearly delineated as political ones. In other words, when Belgium sells goods to the Netherlands, the national accounts register the transaction as an export (so the Netherlands is a foreign market for Belgium), but when California sells the same kind of output to Nevada, the national accounts register the transaction as domestic (so Nevada is a domestic market for
California).
18 See Romer 1990; Grossman and Helpman 1991; and Aghion and
Howitt 1992.
19 Probably the most famous theory of stages of development was developed by the American historian W. W. Rostow in the 1960s
(see Rostow 1960). Here we adapt Michael Porter’s theory of stages (see Porter 1990). Please see Chapter 1.1 of The Global
Competitiveness Report 2007–2008 for a complete description of how we have adapted Michael Porter’s theory for the present application. 44 | The Global Competitiveness Report 2012–2013
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The Global Competitiveness Report 2012–2013 | 45
1.1: The Global Competitiveness Index 2012–2013
Appendix:
Computation and structure of the Global Competitiveness Index 2012–2013
This appendix presents the structure of the Global
Competitiveness Index 2012–2013 (GCI). The numbering of the variables matches the numbering of the data tables. The number preceding the period indicates to which pillar the variable belongs (e.g., variable 1.11 belongs to the 1st pillar and variable 9.04 belongs to the
9th pillar).
The computation of the GCI is based on successive aggregations of scores from the indicator level (i.e., the most disaggregated level) all the way up to the overall
GCI score. Unless mentioned otherwise, we use an arithmetic mean to aggregate individual variables within a category.a For the higher aggregation levels, we use the percentage shown next to each category. This percentage represents the category’s weight within its immediate parent category. Reported percentages are rounded to the nearest integer, but exact figures are used in the calculation of the GCI. For example, the score a country achieves in the 9th pillar accounts for 17 percent of this country’s score in the efficiency enhancers subindex, irrespective of the country’s stage of development. Similarly, the score achieved on the subpillar transport infrastructure accounts for 50 percent of the score of the infrastructure pillar.
Unlike the case for the lower levels of aggregation, the weight put on each of the three subindexes (basic requirements, efficiency enhancers, and innovation and sophistication factors) is not fixed. Instead, it depends on each country’s stage of development, as discussed in the chapter.b For instance, in the case of Burundi—a country in the first stage of development—the score in the basic requirements subindex accounts for 60 percent of its overall GCI score, while it represents just
20 percent of the overall GCI score of Sweden, a country in the third stage of development. For countries in transition between stages, the weighting applied to each subindex is reported in the corresponding profile at the end of this volume. For instance, in the case of Algeria, currently in transition from stage 1 to stage 2, the weight on each subindex is 59.1 percent, 35.7 percent, and
5.2 percent, respectively, as reported in the country/ economy profile on page 88.
Variables that are not derived from the Executive
Opinion Survey (Survey) are identified by an asterisk
(*) in the following pages. The Technical Notes and
46 | The Global Competitiveness Report 2012–2013
Sources section at the end of the Report provides detailed information about these indicators. To make the aggregation possible, these variables are transformed onto a 1-to-7 scale in order to align them with the
Survey results. We apply a min-max transformation, which preserves the order of, and the relative distance between, country scores.c
Indicators that are followed by the designation “1/2” enter the GCI in two different pillars. In order to avoid double counting, we assign a half-weight to each instance.d Weight (%) within immediate parent category
BASIC REQUIREMENTS
1st pillar: Institutions ...............................................25%
A. Public institutions .................................................... 75%
1. Property rights ....................................................................... 20%
1.01 Property rights
1.02 Intellectual property protection 1/2
2. Ethics and corruption ............................................................. 20%
1.03 Diversion of public funds
1.04 Public trust in politicians
1.05 Irregular payments and bribes
3. Undue influence.....................................................................20%
1.06 Judicial independence
1.07 Favoritism in decisions of government officials
4. Government efficiency............................................................ 20%
1.08 Wastefulness of government spending
1.09 Burden of government regulation
1.10 Efficiency of legal framework in settling disputes
1.11 Efficiency of legal framework in challenging regulations
1.12 Transparency of government policymaking
1.13 Provision of government services for improved business performance 5. Security................................................................................. 20%
1.14 Business costs of terrorism
1.15 Business costs of crime and violence
1.16 Organized crime
1.17 Reliability of police services
B. Private institutions ................................................... 25%
1. Corporate ethics .................................................................... 50%
1.18 Ethical behavior of firms
2. Accountability ........................................................................ 50%
1.19 Strength of auditing and reporting standards
1.20 Efficacy of corporate boards
1.21 Protection of minority shareholders’ interests
1.22 Strength of investor protection*
1.1: The Global Competitiveness Index 2012–2013
2nd pillar: Infrastructure ..........................................25%
6th pillar: Goods market efficiency .........................17%
A. Transport infrastructure ........................................... 50%
2.01 Quality of overall infrastructure
2.02 Quality of roads
2.03 Quality of railroad infrastructure e
2.04 Quality of port infrastructure
2.05 Quality of air transport infrastructure
2.06 Available airline seat kilometers*
A. Competition .............................................................. 67%
B. Electricity and telephony infrastructure ................. 50%
2.07 Quality of electricity supply
2.08 Mobile telephone subscriptions1/2
2.09 Fixed telephone lines1/2
3rd pillar: Macroeconomic environment .................25%
3.01
3.02
3.03
3.04
3.05
Government budget balance*
Gross national savings*
Inflation* f
Government debt*
Country credit rating*
4th pillar: Health and primary education.................25%
A. Health ....................................................................... 50%
4.01 Business impact of malaria g
4.02 Malaria incidence* g
4.03 Business impact of tuberculosis g
4.04 Tuberculosis incidence* g
4.05 Business impact of HIV/AIDS g
4.06 HIV prevalence* g
4.07 Infant mortality*
4.08 Life expectancy*
1. Domestic competition ...................................................... variable h
6.01 Intensity of local competition
6.02 Extent of market dominance
6.03 Effectiveness of anti-monopoly policy
6.04 Extent and effect of taxation1/2
6.05 Total tax rate*
6.06 Number of procedures required to start a business* i
6.07 Time required to start a business* i
6.08 Agricultural policy costs
2. Foreign competition ......................................................... variable h
6.09 Prevalence of trade barriers
6.10 Trade tariffs*
6.11 Prevalence of foreign ownership
6.12 Business impact of rules on FDI
6.13 Burden of customs procedures
6.14 Imports as a percentage of GDP* j
B. Quality of demand conditions ................................. 33%
6.15 Degree of customer orientation
6.16 Buyer sophistication
7th pillar: Labor market efficiency ..........................17%
A. Flexibility .................................................................. 50%
7.01 Cooperation in labor-employer relations
7.02 Flexibility of wage determination
7.03 Hiring and firing practices
7.04 Redundancy costs*
6.04 Extent and effect of taxation 1/2
EFFICIENCY ENHANCERS
B. Efficient
7.05
7.06
7.07
7.08
5th pillar: Higher education and training.................17%
8th pillar: Financial market development ................17%
A. Quantity of education .............................................. 33%
5.01 Secondary education enrollment rate*
5.02 Tertiary education enrollment rate*
A. Efficiency .................................................................. 50%
8.01 Availability of financial services
8.02 Affordability of financial services
8.03 Financing through local equity market
8.04 Ease of access to loans
8.05 Venture capital availability
B. Primary education ................................................... 50%
4.09 Quality of primary education
4.10 Primary education enrollment rate*
B. Quality of education ................................................ 33%
5.03 Quality of the educational system
5.04 Quality of math and science education
5.05 Quality of management schools
5.06 Internet access in schools
C. On-the-job training .................................................. 33%
5.07 Local availability of specialized research and training services
5.08 Extent of staff training
use of talent............................................... 50%
Pay and productivity
Reliance on professional management 1/2
Brain drain
Female participation in labor force*
B. Trustworthiness and confidence ............................. 50%
8.06 Soundness of banks
8.07 Regulation of securities exchanges
8.08 Legal rights index*
9th pillar: Technological readiness ..........................17%
A. Technological adoption ........................................... 50%
9.01 Availability of latest technologies
9.02 Firm-level technology absorption
9.03 FDI and technology transfer
B. ICT use ..................................................................... 50%
9.04 Internet users*
9.05 Broadband Internet subscriptions*
9.06 Internet bandwidth*
9.07 Mobile broadband subscriptions*
2.08 Mobile telephone subscriptions* 1/2
2.09 Fixed telephone lines1/2
The Global Competitiveness Report 2012–2013 | 47
1.1: The Global Competitiveness Index 2012–2013
10th pillar: Market size............................................17%
covered by the GCI. In some instances, adjustments were made to account for extreme outliers. For those indicators for which a higher value indicates a worse outcome (e.g., disease incidence, government debt), the transformation formula takes the following form, thus ensuring that 1 and 7 still corresponds to the worst and best possible outcomes, respectively:
A. Domestic market size .............................................. 75%
10.01 Domestic market size index* k
B. Foreign market size ................................................. 25%
10.02 Foreign market size index* l
–6 x
INNOVATION AND SOPHISTICATION FACTORS
11th pillar: Business sophistication ........................50%
11.01
11.02
11.03
11.04
11.05
11.06
11.07
11.08
11.09
7.06
Local supplier quantity
Local supplier quality
State of cluster development
Nature of competitive advantage
Value chain breadth
Control of international distribution
Production process sophistication
Extent of marketing
Willingness to delegate authority
Reliance on professional management 1/2
(sum of scores on full-weight variables) 1
(count of full-weight variables) 1
f
NOTES a Formally, for a category i composed of K indicators, we have: indicatork k=1
categoryi
K
b As described in the chapter, the weights are as specified below.
Refer to Table 2 of the chapter for country classification according to stage of development:
Stage of development
Factor-driven Transition stage (1) from stage 1 to stage 2
Efficiencydriven stage (2)
)
+7
3 (sum of scores on half-weight variables)
3 (count of half-weight variables)
e “n/appl.” is used for economies where the railroad network totals less than 50 kilometers.
Capacity for innovation
Quality of scientific research institutions
Company spending on R&D
University-industry collaboration in R&D
Government procurement of advanced technology products
Availability of scientists and engineers
PCT patent applications
Intellectual property protection 1/2
K
sample maximum – sample minimum
d For those categories that contain one or several half-weight variables, country scores are computed as follows:
12th pillar: R&D Innovation ......................................50%
12.01
12.02
12.03
12.04
12.05
12.06
12.07
1.02
(
country score – sample minimum
Transition from stage 2 to stage 3
Innovationdriven stage (3)
GDP per capita (US$) thresholds*
In order to capture the idea that both high inflation and deflation are detrimental, inflation enters the model in a U-shaped manner as follows: for values of inflation between 0.5 and 2.9 percent, a country receives the highest possible score of 7. Outside this range, scores decrease linearly as they move away from these values. g The impact of malaria, tuberculosis, and HIV/AIDS on competitiveness depends not only on their respective incidence rates but also on how costly they are for business. Therefore, in order to estimate the impact of each of the three diseases, we combine its incidence rate with the Survey question on its perceived cost to businesses. To combine these data we first take the ratio of each country’s disease incidence rate relative to the highest incidence rate in the whole sample. The inverse of this ratio is then multiplied by each country’s score on the related
Survey question. This product is then normalized to a 1-to-7 scale. Note that countries with zero reported incidence receive a
7, regardless of their scores on the related Survey question. In the case of malaria, countries receive a 7 if they have been classified as non-endemic by the World Health Organization (WHO). h The competition subpillar is the weighted average of two components: domestic competition and foreign competition. In both components, the included variables provide an indication of the extent to which competition is distorted. The relative importance of these distortions depends on the relative size of domestic versus foreign competition. This interaction between the domestic market and the foreign market is captured by the way we determine the weights of the two components.
Domestic competition is the sum of consumption (C), investment
(I), government spending (G), and exports (X), while foreign competition is equal to imports (M). Thus we assign a weight of
(C + I + G + X)/(C + I + G + X + M) to domestic competition and a weight of M/(C + I + G + X + M) to foreign competition.
2,000–2,999 3,000–8,999 9,000–17,000
>17,000
i
Variables 6.06 and 6.07 combine to form one single variable.
j
+15% to +20%
⇗ GCI score changes by +5% to +15%
⇒ GCI score remains stable between +5% and –5%
⇘ GCI score changes by –5% to –15%
⇓ GCI score changes by < –15% to –20%
The Global Competitiveness Report 2012–2013 | 59
1.2: Assessing the Sustainable Competitiveness of Nations
high inequality score of 39.5. On the environmental side,
Japan attains a more mixed performance, doing well in terms of environmental policies (good commitment on regulation and standards), yet it continues to face high emissions. The United States shows middling results in both social and environmental sustainability, which results in a slightly lower score in the sustainabilityadjusted GCI than in the GCI itself. The country’s social sustainability score is affected by increasing inequality and youth unemployment. However, it is the score in the environmental sustainability–adjusted GCI that is a concern for the country’s sustainable prosperity. For example, the United States is among the countries that have ratified the fewest environmental treaties in the sample. Mexico is an economy with somewhat weak sustainable competitiveness in both dimensions. On the social side, Mexico’s performance is affected by high inequality and a large informal economy. Environmentally,
Mexico is penalized for its high and increasing levels of emissions, relatively intense use of water for agriculture, and a perception that the natural environment is highly degraded. Several other Latin American countries see a number of weaknesses in both pillars, with Argentina and the Dominican Republic encountering more concerns on the environmental side and Peru, Colombia, and
Paraguay with more concerns in the social sustainability area. Costa Rica, on the other hand, stands out for its positive environmental performance. Attaining a better result in the environmental sustainability–adjusted GCI than in the underlying GCI, the country could be a reference for the rest of Latin America. First of all, Costa
Rica has low air pollution with levels of particulate matter
(PM2.5) and CO2 among the lowest of the countries studied. The country is actively avoiding deforestation through one of the world’s most extensive programs of rainforest conservation. One area of concern remains overfishing, which would be important to address given the importance of the fishing industry in the country.
Brazil performs slightly better in the overall environmental sustainability–adjusted GCI than in the social sustainability–adjusted GCI. However, Brazil’s overall relatively good performance masks a number of environmental concerns—such as the deforestation of the Amazon—with the country displaying one of the highest rates of deforestation in the world. And although
Brazil demonstrates an overall reasonable performance in the social sustainability area, the country’s very high inequality remains an area of concern.
In general, outside of Brazil, the other three
BRICs (Russia, India, and China) all reveal significant weaknesses in both dimensions of sustainable competitiveness. 60 | The Global Competitiveness Report 2012–2013
The Russian Federation does particularly poorly in terms of environmental sustainability, with some of the poorest ratings globally for three indicators: the strength of environmental regulations, the number of international environmental treaties ratified by the country, and the quality of the natural environment.
India is the worst performer among the BRICs, with concerns in both areas of sustainability. On the social sustainability–adjusted GCI, India is not providing access to some basic services to many of its citizens (only 34 percent of the population has access to sanitation, for example). The employment of much of the population is also vulnerable, which—combined with weak official social safety nets—makes the country vulnerable to economic shocks. In addition, although no official data are reported for youth unemployment, numerous studies indicate that the percentage is very high. In terms of its environmentally sustainable competitiveness, India also has some areas of concern such as its high agricultural water intensity and significant air pollution.
China’s competitiveness performance is notably weakened once the sustainability measures are taken into account, especially in terms of environmental sustainability. Although some political actions toward environmental improvement (such as afforestation) have been taken, the country continues to suffer from high emission levels (high levels of CO2 and particulate matter) and the agricultural sector places a great deal of pressure on the environment (China’s water intensity is very high). Social sustainability is only partially measured for China, as the country does not report data related to youth unemployment or vulnerable employment.
However, the available indicators show a somewhat negative picture, with rising inequality and general access to basic services such as improved sanitation remaining low.
Among other economies analyzed in this section,
Turkey—one of the countries that improved most in the GCI rankings this year—does not sustain its good performance once sustainability matters are taken into account. High inequality, vulnerable employment, and a large informal sector place pressure on the country’s social sustainability. Similarly, high pollution and intensive water use for agriculture, as well as a lack of protected land area and a low commitment to international environmental agreements remain areas of concern for
Turkey’s environmentally sustainable competitiveness.
In contrast, New Zealand, with its strongly articulated political commitment to environmental stewardship, receives a positive assessment for its environmentally sustainable competitiveness. It also performs better than neighboring Australia. The main differences between the two countries lie in the lower level of air pollution in New Zealand and the country’s efforts to set aside protected land areas. Both countries receive strong assessments for their social sustainability.
1.2: Assessing the Sustainable Competitiveness of Nations
Box 5: Plea for better sustainability data
Data availability and quality are critical issues for both research and policymaking, and all projects concerned with assessing environmental or social conditions are limited by one or both of these concerns. These limitations make it difficult to track developments over time or to compare data across countries.
For example, datasets capturing some of the relevant areas of social sustainability—such as the International Labour
Organization (ILO)’s Decent Work initiative (covering indicators such as injuries at work, excessive hours, and numbers of the working poor)—cover a limited number of countries. And some other indicators are not specific enough. For instance, including the indicator “CO2 emissions to energy use” in the sustainability-adjusted GCI may give an idea of how efficiently economies are using fuels with respect to the associated emissions, but it also incorporates other factors (such as the industrial structure, the economic specialization, and the technology used in the country) that make it hard to isolate single elements and compare countries.
The available data concerned with the quality and use of water comprise another prominent example of data inadequacy. Although water has possibly one of the biggest environmental impacts on human life, researchers lack a globally agreed methodology for defining and measuring water scarcity and pollution, while data on water withdrawal— despite great efforts to maintain the Food and Agriculture
Organization (FAO) Aquastat database—are not updated regularly. It is, however, precisely the timeliness of data updates for many of these indicators that is critical for policymakers. For some indicators it is indeed crucial. Youth unemployment, for instance, is changing relatively quickly in many economies, especially after an economic crisis. Yet several datasets on youth unemployment predate the crisis for some specific countries; using out-of-date figures could be
CONCLUSIONS AND NEXT STEPS
Sustainable competitiveness is a nascent area of research and our initial work has shown that much of the data for measuring key concepts are not yet available. We therefore recognize that properly capturing the concept of sustainable competitiveness will require a multi-year effort. As more comprehensive and better data are needed to fully assess sustainable competitiveness, as noted above, there are a number of concepts we have not yet been able to capture (see
Boxes 4 and 5).
However, by combining social and environmental indicators with the GCI we have been able to introduce the concept and carry out a preliminary analysis of national and regional social sustainability.
The main and very important finding is that there is no necessary trade-off between being competitive and being sustainable (by our definitions). On the contrary, many countries at the top of the competitiveness rankings are also the best performers in many areas of sustainability. misleading for policymakers, who need to have statistics that accurately reflect the actual current situation in order to gain a sense of the effectiveness of their reform efforts.
Data on social and environmental performances are particularly complex and intricate, and the challenges and the investments needed to produce sound indicators should not be underestimated. For instance, coming back to the point of the assessment of water pollution, it would be necessary to identify and agree on the list of substances and their relative levels that would define a water course as
“polluted.” Moreover, developing an aggregation methodology to turn local measurement into national statistics would be an important milestone. Such a methodology would help in understanding and monitoring issues that need to be managed to put economies on a more sustainable development path, and would provide statistical evidence to drive the agendas of policymakers.
In order to contribute to such data production and collection, the World Economic Forum has formed a Global
Agenda Council on Measuring Sustainability. The Council aims to design and nurture one or more global public good initiatives to meet the needs of policymakers who must have access to high-quality, verifiable, and readily available contextually specific knowledge and information if they are to formulate responsible policies. Nonetheless, a wider international effort is required to overcome the challenge of measuring sustainability. This challenge can be met by pooling resources to produce and collect the data and by defining global measurement standards. The Global Agenda
Council on Measuring Sustainability aims to participate in this effort by bringing scientists together while focusing the attention of policymakers on the need to develop new sustainability indicators.
While creating value and being productive remain at the basis of economic development, the purpose of this work is to explore how social and environmental elements relate to economic progress and prosperity because the three areas are clearly interlinked. It is highly likely that sustained human progress and prosperity will depend on balancing economic progress with social inclusion and good and effective environmental stewardship. The work presented in this chapter is the result of an ongoing process. We will update and refine our thinking over time, integrating feedback and the latest research on an ongoing basis. As we have already done over the past year, we will continue to carry out workshops and roundtables over the coming year in order to further refine the concept. We will also continue to seek better and more complete datasets in collaboration with the newly created World Economic Forum Global Agenda
Council on Measuring Sustainability.
The Advisory Board on Sustainability and
Competitiveness will continue to deliberate and to work with the Forum to integrate feedback collected into this
The Global Competitiveness Report 2012–2013 | 61
1.2: Assessing the Sustainable Competitiveness of Nations
work. The goal is to present an even more complete measurement of the concept in time for the next Global
Competitiveness Report.
Additionally, because—given its specific economic and political characteristics—the theme of sustainability requires a multi-stakeholder approach, the World
Economic Forum will continue to serve the international community by providing a neutral platform on which to move ahead in this area. Work on sustainable competitiveness is one important component of this platform, and the Forum offers a space for conceptual discussion as well as assessment and analysis.
NOTES
1 See, for example, Atkinson 2003.
Aghion P., P. Howitt, and F. Murtin. 2009. “The Relationship Between
Health and Growth: When Lucas Meets Nelson-Phelps.”
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Alesina, A. and D. Rodrik 1994, “Distributive Politics and Economic
Growth.” Quarterly Journal of Economics 109 (2): 465–90.
Atkinson, A. B. 2003. “Income Inequality in OECD Countries: Data and
Explanations.” CESifo Working Paper Series 881, CESifo Group,
Munich.
Baldini M. and S. Toso. 2009. Diseguaglianza, povertà e politiche pubbliche.Il Mulino.
Berg, A. and J. Ostry. 2011. “Inequality and Unsustainable Growth: Two
Sides of the Same Coin?” IMF Staff Discussion Note. Washington
DC: International Monetary Fund. Available at http://www.imf.org/ external/pubs/ft/sdn/2011/sdn1108.pdf. Bertola, G. 1993. “Factors Shares and Savings in Endogenous Growth.”
American Economic Review 83 (5):1194–98.
2 See, for example, Nordhaus 1994, 2000, 2002; Bovenberg and
Smulders 1996; Aghion et al. 1998; and Acemoglu 2002, 2007,
2009.
Bovenberg, A. L. and J. A. Smulders. 1996. “Transitional Impacts of
Environmental Policy in an Endogenous Growth Model.” Open
Access publications from Tilburg University, urn:nbn:nl:ui:12-73103,
Tilburg University.
3 See, for example, Perotti 1993: Bertola 1993: Alesina and Rodrik
1994: Persson and Tabellini 1994: and Green et al. 2006.
Coman, K. 2011. “Some Unsettled Problems of Irrigation (1911).”
American Economic Review 101 (1): 36–48.
4 See the World Economic Forum 2012a for an assessment of how
Europe is faring in meeting these goals.
Cowen, T., ed. 1992. Public Goods and Market Failures. New
Brunswick, NJ: Transaction Publishers.
5 For more information on this index, see www.oecdbetterlifeindex. org/. Dealkin, S. 2009. “The Evidence-Based Case for Labour Regulation.”
Paper prepared for the Regulating Decent Work Conference, ILO,
Geneva, July 8.
6 See http://hdr.undp.org/en/.
8 See http://www.footprintnetwork.org/en/index.php/GFN/page/ methodology/ for information about information about the Global
Footprint Network.
Driscoll, T., K. Steenland, D. Imel Nelson, and J. Leigh. 2004.
Occupational Airborne Particulates: Assessing the Environmental
Burden of Disease at National and Local Levels. Environmental
Burden of Disease Series, No. 7. Geneva: World Health
Organization.
9 Information about the Global Adaptation Index is available at http://index.gain.org/. Elkington, J. 1997. Cannibals with Forks: The Triple Bottom Line of 21st
Century Business. Oxford, United Kingdom: John Wiley & Sons.
7 For more information on the EPI, see http://www.epi.yale.edu/.
10 The World Bank’s Worldwide Governance Indicators Framework is available at http://info.worldbank.org/governance/wgi/index.asp.
Esteban, J. and D. Ray. 2006. “Inequality, Lobbying and Resource
Allocation.” The American Economic Review 96 (1): 257–79.
11 Information about the Decent Work initiative is available at http:// www.ilo.org/integration/themes/mdw/lang--en/index.htm. Esty, D. C., M. Levy, T. Srebotnjak, and A. de Sherbinin. 2005. 2005
Environmental Sustainability Index: Benchmarking National
Environmental Stewardship. New Haven: Yale Center for
Environmental Law & Policy.
12 See, for example, Marshal et al. 1997.
13 Smith 2012.
14 World Economic Forum. 2012b.
15 UN-HABITAT 2010.
16 Countries from the GCI sample were excluded if they were missing a maximum of two indicators considering both sustainability pillars. 17 See Acemoglu et al. 2012, for example.
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1.2: Assessing the Sustainable Competitiveness of Nations
Appendix A:
Calculation of the sustainability-adjusted GCI
As described in the text, the two areas of sustainability— social and environmental—are treated as independent adjustments to each country’s performance in the
Global Competitiveness Index (GCI). The adjustment is calculated according to the following steps.
AGGREGATION
In the first step, the individual indicators in each area are normalized on a 1-to-7 scale and aggregated by averaging the normalized scores, such that a social sustainability score and an environmental sustainability score are calculated for each country.
In the second step, these scores are normalized again on a 0.8-to-1.2 scale,a which is based on the distribution of each of the two sustainability components.
The purpose of this methodology is to reward the countries attaining a relatively good performance on the two sustainability components while penalizing those that register a poor performance. Applying this methodology corresponds to transforming actual averages into coefficients ranging from 0.8 to 1.2. For example, the worst performer on the social sustainability pillar obtains a score of 0.8 and the best performer a 1.2.
The same calculation is conducted for the environmental sustainability pillar.
Normalizing on a 0.8-to-1.2 scale and using the actual sample maximum and minimum are corroborated by the statistical distribution of the data, so as to ensure that the final data are not skewed. In the absence of empirical evidence, the selection of the impact limits
(0.8–1.2) relies on the best judgment of the authors and is based on the assumption that countries can experience either an opportunity if they manage their resources well or a weakness if they do not.
The selection of this methodology is not intended to be scientific, but it represents a normative approach aimed at stimulating discussions on policy priorities and possibly stimulating scientific research in this field.
In the third step, the GCI score of each country is multiplied twice: once by its social sustainability coefficient and once by its environmental sustainability coefficient, to obtain two separate sustainabilityadjusted GCI scores. Finally, an average of the two scores provides an overall measure of the sustainability adjustment. 64 | The Global Competitiveness Report 2012–2013
STRUCTURE OF THE SUSTAINABILITY PILLARS
The computation of the sustainability components is based on an arithmetic mean aggregation of scores from the indicator level.b
Variables that are not derived from the Executive
Opinion Survey (Survey) are identified by an asterisk (*) in the following pages. To make the aggregation possible, these variables are transformed into a 1-to-7 scale in order to align them with the Survey results. We apply a min-max transformation, which preserves the order of, and the relative distance between, country scores.c
Indicators marked with a “(log)” subscript are transformed applying the logarithm (base 10) to the raw score. Social sustainability pillar
S01
Income Gini index*
S02
Youth unemployment*
S03.01 Access to sanitation* d(log)
S03.02 Access to improved drinking water* d
S03.03 Access to healthcared
S04
Social safety net protection
S05
Extent of informal economy
S06
Social mobility
S07
Vulnerable employment*
Environmental sustainability pillar
S08.01 Stringency of environmental regulation e
S08.02 Enforcement of environmental regulation e
S09
Terrestrial biome protection*
S10
No. of ratified international environmental treaties*
S11
Agricultural water intensity*
S12
CO2 intensity*(log)
S13
Fish stocks overexploited*(log)
S14.01 Forest cover change* f
S14.02 Forest loss* f(log)
S15
Particulate matter (2.5) concentration*(log)
S16
Quality of the natural environment
NOTES a Formally we have
0.4 x
(
country score – sample minimum sample maximum – sample minimum
)
+ 0.8
The sample minimum and sample maximum are, respectively, the lowest and highest country scores in the sample of economies covered by the sustainability-adjusted GCI in each pillar.
1.2: Assessing the Sustainable Competitiveness of Nations
b Formally, for a category i composed of K indicators, we have:
K
indicatork
k=1
categoryi
K
c Formally, we have:
6x
(
country score – sample minimum sample maximum – sample minimum
)
+1
The sample minimum and sample maximum are, respectively, the lowest and highest country scores in the sample of economies covered by the sustainability-adjusted GCI. In some instances, adjustments were made to account for extreme outliers. For those indicators for which a higher value indicates a worse outcome
(e.g., CO2 emission, income Gini index), the transformation formula takes the following form, thus ensuring that 1 and 7 still corresponds to the worst and best possible outcomes, best possible outcomes, respectively:
–6 x
(
country score – sample minimum sample maximum – sample minimum
)
+7
d Variables S03.01, S03.02, and S03.03 are combined to form one single variable. e Variables S08.01 and S08.02 are combined to form one single variable. f
Variables S14.01 and S14.02 are combined to form one single variable. The Global Competitiveness Report 2012–2013 | 65
1.2: Assessing the Sustainable Competitiveness of Nations
Appendix B:
Technical notes and sources for sustainability indicators
The data in this Report represent the best available estimates from various national authorities, international agencies, and private sources at the time the Report was prepared. It is possible that some data will have been revised or updated by the sources after publication.
Throughout the Report, “n/a” denotes that the value is not available or that the available data are unreasonably outdated or do not come from a reliable source.
For each indicator, the title appears on the first line, preceded by its number to allow for quick reference. The numbering is the same as the one used in Appendix A.
Below is a description of each indicator or, in the case of Executive Opinion Survey data, the full question and associated answers. If necessary, additional information is provided underneath.
S01 Income Gini index
Measure of income inequality [0 = perfect equality; 100 = perfect inequality] | 2010 or most recent year available
This indicator measures the extent to which the distribution of income among individuals or households within an economy deviates from a perfectly equal distribution. A Lorenz curve plots the cumulative percentage of total income received against the cumulative percentage of recipients, starting with the poorest individual. The Gini index measures the area between the Lorenz curve and a hypothetical line of absolute equality, expressed as a percentage of the maximum area under the line. Thus a Gini index of 0 represents perfect equality, while a value of 100 implies perfect inequality.
Source: The World Bank, World Development Indicators Online
(retrieved June 1, 2012); CIA World Factbook (retrieved June 6,
2012); national sources
S02 Youth unemployment
Youth unemployment measured as the ratio of total unemployed youth to total labor force aged 15–24 | 2010 or most recent year available.
Youth unemployment refers to the share of the labor force aged
15–24 without work but available for and seeking employment.
Source: International Labour Organization, Key Indicators of the
Labour Markets Net (retrieved June 5, 2012)
S03.01 Access to sanitation
Percent of total population with access to improved sanitation facilities | 2010 or most recent year available.
Percent of the population with at least adequate access to excreta disposal facilities that can effectively prevent human, animal, and insect contact with excreta. Improved facilities range from simple but protected pit latrines to flush toilets with a sewerage connection. To be effective, facilities must be correctly constructed and properly maintained. A logarithm transformation is applied to the ratio of these statistics in order to spread the data distribution.
Source: World Health Organization, World Health Statistics 2012 online database (retrieved June 5, 2012)
66 | The Global Competitiveness Report 2012–2013
S03.02 Access to improved drinking water
Percent of total population with access to improved drinking water | 2010 or most recent year available
Percent of the population with reasonable access to an adequate amount of water from an improved source, such as a household connection, public standpipe, borehole, protected well or spring, or rainwater collection. Unimproved sources include vendors, tanker trucks, and unprotected wells and springs. Reasonable access is defined as the availability of at least 20 liters per person per day from a source within 1 kilometer of the dwelling.
Source: World Health Organization, World Health Statistics 2012 online database (retrieved June 5, 2012)
S03.03 Access to healthcare
How accessible is healthcare in your country? [1 = limited— only the privileged have access; 7 = universal—all citizens have access to healthcare] | 2011–12 weighted average
Source: World Economic Forum, Executive Opinion Survey, 2011 and 2012 editions
S04 Social safety net protection
In your country, does a formal social safety net provide protection from economic insecurity due to job loss or disability? [1 = not at all; 7 = fully] | 2011–12 weighted average
Source: World Economic Forum, Executive Opinion Survey, 2011 and 2012 editions
S05 Extent of informal economy
How much economic activity in your country would you estimate to be undeclared or unregistered? [1 = most economic activity is undeclared or unregistered; 7 = most economic activity is declared or registered] | 2011–12 weighted average
Source: World Economic Forum, Executive Opinion Survey, 2011 and 2012 editions
S06 Social mobility
To what extent do individuals in your country have the opportunity to improve their economic situation through their personal efforts regardless of the socioeconomic status of their parents? [1 = little opportunity exists to improve one’s economic situation; 7 = significant opportunity exists to improve one’s economic situation]
Source: World Economic Forum, Executive Opinion Survey, 2012 edition 1.2: Assessing the Sustainable Competitiveness of Nations
S07 Vulnerable employment
Proportion of own-account and contributing family workers in total employment | 2010 or most recent year available
Vulnerable employment refers to the proportion of unpaid contributing family workers and own-account workers in total employment. Own-account workers are those workers who, working on their own account or with one or more partners, hold the type of job defined as a self-employed job and have not engaged on a continuous basis any employees to work for them during the reference period. A contributing family worker is a person who holds a job in a market-oriented establishment operated by a related person living in the same household and who cannot be regarded as a partner because the degree of his or her commitment to the operation of the establishment, in terms of the working time or other factors to be determined by national circumstances, is not at a level comparable with that of the head of the establishment.
Source: The World Bank, World Development Indicators Online
(retrieved June 1, 2012)
S08.01 Stringency of environmental regulation
How would you assess the stringency of your country’s environmental regulations? [1 = very lax; 7 = among the world’s most stringent] | 2011–12 weighted average
Source: World Economic Forum, Executive Opinion Survey, 2011 and 2012 editions
S08.02 Enforcement of environmental regulation
How would you assess the enforcement of environmental regulations in your country? [1 = very lax; 7 = among the world’s most rigorous] | 2011–12 weighted average
Source: World Economic Forum, Executive Opinion Survey, 2011 and 2012 editions
S09 Terrestrial biome protection
Degree to which a country achieves the target of protecting 17 percent of each terrestrial biome within its borders | 2010 or most recent year available
This indicator is calculated by Columbia University’s Center for
International Earth Science Information Network (CIESIN) by overlaying the protected area mask on terrestrial biome data developed by the World Wildlife Fund (WWF)’s Terrestrial Ecoregions of the World for each country. A biome is defined as a major regional or global biotic community, such as a grassland or desert, characterized chiefly by the dominant forms of plant life and the prevailing climate. Scores are capped at 17 percent per biome such that higher levels of protection of some biomes cannot be used to offset lower levels of protection of other biomes, hence the maximum level of protection a country can achieve is 17 percent. CIESIN uses time series of the World
Database on Protected Areas (WDPA) developed by the United
Nations Environment Programme (UNEP) World Conservation
Monitoring Centre (WCMC) in 2011, which provides a spatial time series of protected area coverage from 1990 to 2010. The WCMC considers all nationally designated protected areas whose location and extent is known. Boundaries were defined by polygons where available; where they were not available, protected-area centroids were buffered to create a circle in accordance with the protected area size. The WCMC removed all overlaps between different protected areas by dissolving the boundaries to create a protected areas mask.
Source: Yale University and Columbia University, Environmental
Performance Index (EPI) 2012 edition, based on WWF World
Wildlife Fund USA and UNEP WCMC data
S10 No. of ratified international environmental treaties
Total number of ratified environmental treaties | 2010
This indicator provides the total number of environmental treaties ratified by a country. It measures the total number of international treaties from a set of 25 for which a state is a participant. A state becomes a “participant” by Ratification, Formal confirmation,
Accession, Acceptance, Definitive signature, Approval, Simplified procedure, Consent to be bound, Succession, and Provisional application (which are here grouped under the term ratification, for reasons of convenience). The treaties included are: the
International Convention for the Regulation of Whaling, 1948
Washington; the International Convention for the Prevention of Pollution of the Sea by Oil, 1954 London, as amended in
1962 and 1969; the Convention on Wetlands of International
Importance especially as Waterfowl Habitat, 1971 Ramsar; the
Convention Concerning the Protection of the World Cultural and
Natural Heritage, 1972 Paris; the Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter,
1972 London, Mexico City, Moscow, Washington; the Convention on International Trade in Endangered Species of Wild Fauna and Flora, 1973 Washington; the International Convention for the Prevention of Pollution from Ships (MARPOL) as modified by the Protocol of 1978, 1978 London; the Convention on the Conservation of Migratory Species of Wild Animals, 1979
Bonn; the United Nations Convention on the Law of the Sea,
1982 Montego Bay; the Convention on the Protection of the
Ozone Layer, 1985 Vienna; the Protocol on Substances that
Deplete the Ozone Layer, 1987 Montreal; the Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, 1989 Basel; the International Convention on Oil Pollution Preparedness, Response and Co-operation,
1990 London; the United Nations Framework Convention on
Climate Change, 1992 New York; the Convention on Biological
Diversity, 1992 Rio de Janeiro; the International Convention to
Combat Desertification in Those Countries Experiencing Serious
Drought and/or Desertification, particularly Africa, 1994 Paris; the
Agreement relating to the Implementation of Part XI of the United
Nations Convention on the Law of the Sea of 10 December
1982, 1994 New York; the Agreement relating to the Provisions of the United Nations Convention on the Law of the Sea relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, 1995 New York; the Kyoto
Protocol to the United Nations Framework Convention on the
Climate Change, Kyoto 1997; the Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous
Chemicals and Pesticides in International Trade, 1998 Rotterdam; the Cartagena Protocol of Biosafety to the Convention on
Biological Diversity, 2000 Montreal; the Protocol on Preparedness,
Response and Cooperation to Pollution Incidents by Hazardous and Noxious Substances, 2000 London; the Stockholm
Convention on Persistent Organic Pollutants, 2001 Stockholm; the International Treaty on Plant Genetic Resources for Food and
Agriculture, 2001 Rome; and the International Tropical Timber
Agreement 206, 1994 Geneva.
Source: The International Union for Conservation of Nature (IUCN)
Environmental Law Centre ELIS Treaty Database
S11 Agricultural water intensity
Agricultural water withdrawal as a percent of total renewable water resources | 2006 or most recent year available
Agricultural water withdrawal as a percent of total renewable water resources is calculated as: 100 × agricultural water withdrawal / total renewable water resources. In turn, total renewable = surface renewable water + renewable water resources groundwater – overlap between surface and groundwater. Where available, this indicator includes water resources coming from desalination used for agriculture (as in Kuwait, Saudi Arabia, the
United Arab Emirates, Qatar, Bahrain, and Spain).
Source: FAO AQUASTAT database, available at http://www.fao. org/nr/water/aquastat/main/index.stm (retrieved May 31, 2012)
The Global Competitiveness Report 2012–2013 | 67
1.2: Assessing the Sustainable Competitiveness of Nations
S12 CO² intensity
S14.02 Forest loss
CO² intensity (kilograms of CO² per kilogram of oil equivalent energy use) | 2008
Forest cover lost over the period 2000–10 based on satellite data | 2010
Carbon dioxide (CO2 ) emissions are those stemming from the burning of fossil fuels and the manufacture of cement. They include carbon dioxide produced during consumption of solid, liquid, and gas fuels and gas flaring. Energy use refers to use of primary energy before transformation to other end-use fuels, which is equal to indigenous production plus imports and stock changes, minus exports and fuels supplied to ships and aircraft engaged in international transport. A logarithm transformation is applied to the ratio of these statistics in order to spread the data distribution. This indicator represents the loss of forest area owing to deforestation from either human or natural causes, such as forest fires. The University of Maryland researchers used Moderate
Resolution Imaging Spectroradiometer (MODIS) 500-meter resolution satellite data to identify areas of forest disturbance, then used Landsat data to quantify the area of forest loss. This indicator uses a baseline forest cover layer (forest cover fraction with a 30 percent forest cover threshold) to measure the area under forest cover in the year 2000. It then combines forest loss estimates from Landsat for the periods 2000–05 and 2005–10 to arrive at a total forest cover change amount for the decade. This total is then divided by the forest area estimate for 2000 to come up with a percent change in forest cover over the decade. Further details on the methods used are found in Hansen, M., S. V.
Stehman, and P. V. Potapov. 2010. “Quantification of Global Gross
Forest Cover Loss.” Proceedings of the National Academies of Science, available at www.pnas.org/cgi/doi/10.1073/ pnas.0912668107. A logarithm transformation is applied to these statistics in order to spread the data distribution.
Source: The World Bank, World Development Indicators Online
(retrieved June 1, 2012)
S13 Fish stocks overexploited
Fraction of country’s exclusive economic zone with overexploited and collapsed stocks | 2006
The Sea Around Us (SAU) project‘s Stock Status Plots (SSPs) are created in four steps (Kleisner and Pauly, 2011). The first step is to define a stock. SAU defines a stock to be a taxon (either at the species, genus, or family level of taxonomic assignment) that occurs in the catch records for at least 5 consecutive years, over a minimum of 10 years, and which has a total catch in an area of at least 1,000 tonnes over the time span. In the second step,
SAU assesses the status of the stock for every year relative to the peak catch. SAU defines five states of stock status for a catch time series. This definition is assigned to every taxon meeting the definition of a stock for a particular spatial area considered
(e.g., exclusive economic zones, or EEZs). Stock status states are: (1) Developing—before the year of peak catch and less than 50 percent of the peak catch; (2) Exploited—before or after the year of peak catch and more than 50 percent of the peak catch; (3) Overexploited—after the year of peak catch and less than 50 percent but more than 10 percent of the peak catch;
(4) Collapsed—after the year of peak catch and less than 10 percent of the peak catch; (5) Rebuilding—occurs after the year of peak catch and after the stock has collapsed, when catch has recovered to between 10 and 50 percent of the peak. In the third step, SAU graphs the number of stocks by status by tallying the number of stocks in a particular state in a given year and presenting these as percentages. In the fourth step, the cumulative catch of stock by status in a given year is summed over all stocks and presented as a percentage in the catch by stock status graph. The combination of these two figures represents the complete Stock Status Plot. The numbers for this indicator are taken from the overexploited and collapsed numbers of stocks over total numbers of stocks per EEZ. A logarithm transformation is applied to these statistics in order to spread the data distribution.
Source: Yale University and Columbia University, Environmental
Performance Index (EPI) 2012 edition based on Sea Around Us data S14.01 Forest cover change
Percent change in forest area over the period 1990–10 | 2010
This measure represents the percent change in forest area, applying a 10 percent crown cover as the definition of forested areas, between time periods. We used total forest extent rather than the extent of primary forest only. The change measure is calculated from forest area data in 1995, 2000, 2005, and 2010.
The data are reported by national governments, and therefore methods and data sources may vary from country to country.
Positive values indicate afforestation or reforestation, and negative values represent deforestation.
Source: Yale University and Columbia University, Environmental
Performance Index (EPI) 2012 edition based on Sea Around Us data 68 | The Global Competitiveness Report 2012–2013
Source: Yale University and Columbia University, Environmental
Performance Index (EPI) 2012 edition, based on University of
Maryland data
S15 Particulate matter (2.5) concentration
Population-weighted exposure to PM2.5 in micrograms per cubic meter, based on satellite data | 2009
This indicator was developed by the Battelle Memorial Institute in collaboration with Columbia University’s Center for International
Earth Science Information Network (CIESIN) and funding from the
NASA Applied Sciences Program. Using relationships between the Moderate Resolution Imaging Spectroradiometer (MODIS)
Aerosol Optical Depth (AOD) and surface PM2.5 concentrations that were modeled by van Donkelaar et al. (2010), annual average
MODIS AOD retrievals were used to estimate surface PM2.5 concentrations from 2001 to 2010. These were averaged into three-year moving averages from 2002 to 2009 to generate global grids of PM2.5 concentrations. The grids were resampled to match CIESIN’s Global Rural-Urban Mapping Project (GRUMP) 1 kilometer population grid. The population-weighted average of the
PM2.5 values were used to calculate the country’s annual average exposure to PM2.5 in micrograms per cubic meter. A logarithm transformation is applied to these statistics in order to spread the data distribution.
Source: Yale University and Columbia University, Environmental
Performance Index (EPI) 2012 edition based on NASA MODIS and MISR data (van Donkelaar et al. [2010]), Battelle, and CIESIN
S16 Quality of the natural environment
How would you assess the quality of the natural environment in your country? [1 = extremely poor; 7 = among the world’s most pristine] | 2011–12 weighted average
Source: World Economic Forum, Executive Opinion Survey, 2011 and 2012 editions
CHAPTER 1.3
The Executive Opinion
Survey: The Voice of the
Business Community
CIARA BROWNE
THIERRY GEIGER
TANIA GUTKNECHT
World Economic Forum
The Global Competitiveness Report provides a useful portrait of a nation’s economic environment and its ability to achieve sustained levels of prosperity and growth. In doing so, the Report continues to be one of the most respected assessments of national competitiveness.
To mirror countries’ economic performance, the World
Economic Forum draws its data from two sources: international organizations and national sources, and its own annual Executive Opinion Survey (Survey).
The Survey is a tool that aims to capture crucial information that is not otherwise available on a global scale. The data gathered thus provide a unique source of insight into each nation’s economic and business environment. The Survey data are used to calculate the Global Competitiveness Index (GCI) and are also used as a prime data source for the Forum’s other industry-specific reports, including The Global
Information Technology Report, The Travel & Tourism
Competitiveness Report, The Global Enabling Trade
Report, The Gender Gap Report, and The Financial
Development Report. The data are also employed for regional studies. Furthermore, the Executive Opinion
Survey data have long served a number of international and national organizations, government bodies, academia, and private-sector companies for their policy or strategy review. For example, the data are used for the elaboration of the renowned Corruption Perceptions
Index and the International Bribe Payers Index published by Transparency International as well as a number of academic publications. Finally, an increasing number of national competitiveness reports draw on or refer to the
Survey data.
The World Economic Forum has conducted its annual Survey for over 40 years, modifying it over time to capture new data points essential to the GCI and other Forum indexes. It has also expanded the scope of its sample, achieving this year a record of over 15,000 surveys almost 150 economies between January and
June 2012.
Following the data editing process (see below), a total of 14,059 surveys were retained.1 This represents an average of 100 respondents per country. Given the extent of the Survey’s country coverage and in order to maximize its outreach, it is translated into over 30 languages. Geographic expansion
Since the first edition of the World Economic Forum report on competitiveness in 1979, the country coverage has expanded from 16 European countries to 144 economies worldwide, which together account for 98 percent of the world’s gross domestic product
(see Figure 1). In this edition, five new economies are included: Gabon, Guinea, Liberia, Sierra Leone, and
Seychelles; also Libya, which has been reinstated following a year of non-inclusion. On the flip side,
The Global Competitiveness Report 2012–2013 | 69
1.3: The Executive Opinion Survey
Figure 1: Country/Economy coverage of the Executive Opinion Survey
n Previous coverage n 2012 additions
Angola and Belize are not included in this year’s edition because of a lack of a sufficient number of surveys.
Furthermore, it was not possible to conduct the Survey in Syria because of the difficult security situation in that country. Finally, the World Economic Forum decided not to use the data collected in Tunisia this year because of a structural break in the data, making comparisons with past years impossible. The Forum’s Global
Benchmarking Network hopes to re-include the above countries in future editions of the Report.
SURVEY STRUCTURE AND METHODOLOGY
The Survey is divided into 14 sections.
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
XI.
XII.
XIII.
XIV.
About Your Company
Overall Perceptions of Your Economy
Government and Public Institutions
Infrastructure
Innovation and Technology
Financial Environment
Foreign Trade and Investment
Domestic Competition
Company Operations and Strategy
Education and Human Capital
Corruption, Ethics and Social
Responsibility
Travel & Tourism
Environment
Health
70 | The Global Competitiveness Report 2012–2013
Box 1: Example of a typical Survey question
To what extent is the judiciary in your country independent from influences of members of government, citizens, or firms?
Heavily influenced < 1 2 3 4 5 6 7 > Entirely independent
Circling 1 ... means you agree completely with the answer on the left-hand side
Circling 2 ... means you largely agree with the left-hand side
Circling 3 ... means you somewhat agree with the left-hand side Circling 4 ... means your opinion is indifferent between the two answers
Circling 5 ... means you somewhat agree with the right-hand side Circling 6 ... means you largely agree with the right-hand side Circling 7 ... means you agree completely with the answer on the right-hand side
Most questions in the Survey ask respondents to evaluate, on a scale of 1 to 7, one particular aspect of their operating environment. At one end of the scale, 1 represents the worst possible situation; at the other end of the scale, 7 represents the best (see Box 1 for an example). 1.3: The Executive Opinion Survey
The yearly administration of the Survey could not be carried out without the strong network of over 160
Partner Institutes worldwide. The Partner Institutes are typically recognized research institutes, universities, business organizations, and in some cases survey consultancies, which are listed in the front section of the Report.2 The Partner Institutes are selected because of their understanding and expertise of the national business environment as well as their capacity to reach out to leading business executives and also for their commitment to the Forum’s research on competitiveness. The Partner Institutes are tasked to follow detailed sampling guidelines in view of capturing a strong and representative sample.
After building a sample frame of potential respondents, the Partner Institutes administer the
Survey. This valuable collaboration helps to ensure that the Survey is conducted according to the sampling guidelines and therefore in a consistent and timely manner across the globe.
The Survey sampling follows a dual stratification procedure based on the size of the company and the sector of activity. Specifically, the Survey sampling guidelines ask the Partner Institutes to carry out the following steps:
1.
2.
3.
Prepare a “sample frame,” or large list of potential respondents, which includes firms representing the main sectors of the economy (agriculture, manufacturing industry, non-manufacturing industry, and services).
Separate the frame into two lists: one that includes only large firms, and a second list that includes all other firms (both lists representing the various economic sectors).3
Based on these lists, and in view of reducing survey bias, choose a random selection of these firms to receive the Survey.
Furthermore, the sampling guidelines specify that the Partner Institute should aim to collect a combination of random respondents with some repeat respondents for further comparative analysis.4 The administration of the Survey may take a variety of formats including face-to-face interviews, with business executives, telephone interviews and mailings, with an online survey as an alternative. Deciding which of these differing methodologies to use may be based on the particular country’s infrastructure, distance between cities, cultural preferences, and other such issues.
For energy, time, and cost considerations, the
Forum encourages the use of the online survey tool, which was available this year in 18 languages. The share of online participation has significantly increased
over the years and now represents almost 37 percent of all responses, with an increase of nearly 40 percent in the last three years. This year, 9 countries used the online tool for 100 percent of respondents (Argentina,
Belgium, Bolivia, Czech Republic, Estonia, Iceland,
Israel, Lebanon, and Venezuela), and 28 economies participated with more than 90 percent online (see
Table 1).
The Partner Institutes also take an active and essential part in disseminating the findings of The Global
Competitiveness Report and additional reports published by The Global Benchmarking Network by holding press events and workshops to highlight the results at the national level to the business community, the public sector, and other stakeholders.
The guidelines and Survey administration process underwent a stringent review in 2007, with the consultation of a renowned survey consultancy. The improved sampling guidelines have now been adopted in all countries for the last five years of the Survey administration process, implementing a best practice procedure and thus ensuring greater data accuracy and allowing for more robust comparison across economies. The entire Survey process will undergo a second audit in 2012 with the aim of implementing those recommendations in the 2013 edition of the Survey.
DATA TREATMENT AND SCORE COMPUTATION
This section details the process whereby individual survey responses are edited and aggregated in order to produce the scores of each economy on each individual question of the Survey. These results, together with other indicators obtained from other sources, feed into the GCI and other projects.5
Data editing
Prior to aggregation, the respondent-level data are subjected to a careful editing process. The first editing rule consists of excluding those surveys with a completion rate inferior to 50 percent.6 This is because a partially completed survey likely demonstrates a lack of sufficient focus on the part of the respondent. In a second step, a multivariate outlier analysis is applied to the data using the Mahalanobis distance technique.
This test assesses whether each individual survey is representative, given the overall sample of survey responses in the specific country, and allows for the deletion of clear outliers.
More specifically, the Mahalonobis distance test estimates the likelihood that one particular point of N dimensions belongs to a set of such points. One single survey made up of N answers can be viewed as the point of N dimensions, while a particular country sample c is the set of points. The Mahalanobis distance is used to compute the probability that any survey i does not belong to the sample c. If the probability is high
The Global Competitiveness Report 2012–2013 | 71
1.3: The Executive Opinion Survey
Table 1: Executive Opinion Survey: Descriptive statistics and weightings
First component*
Country/Economy
Albania
Algeria
Argentina
Armenia
Australia
Austria
Azerbaijan
Bahrain
Bangladesh
Barbados
Belgium
Benin
Bolivia
Bosnia and Herzegovina†
Botswana
Brazil
Brunei Darussalam
Bulgaria
Burkina Faso
Burundi
Cambodia
Cameroon
Canada
Cape Verde
Chad
Chile
Colombia
Costa Rica
Côte d’Ivoire
Croatia
Cyprus
Czech Republic
Denmark
Dominican Republic
Timor-Leste
Ecuador††
Egypt
El Salvador
Estonia
Ethiopia
Finland
Macedonia, FYR
France
Gabon†††
Gambia, The
Georgia††
Germany
Ghana
Greece
Guatemala
Guinea†††
Guyana
Haiti
Honduras
Hong Kong SAR
Hungary
Iceland
India
Indonesia
Iran, Islamic Rep.
Ireland
Israel
Italy
Jamaica
Japan
Jordan
Kazakhstan†
Kenya
Kuwait
Kyrgyz Republic
Latvia
Lebanon
Survey edition
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2010
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011 n/a 2011
2011
2011
2011
2011
2011
n/a
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2010
2011
2011
2011
2011
2011
No. of respondents
79
39
86
83
72
46
96
80
69
37
68
105
79
100
114
185
91
126
40
77
100
83
98
83
113
75
137
99
132
97
99
153
33
54
31
134
121
90
93
100
33
115
109 n/a 91
95
95
84
85
78
n/a
84
146
85
51
50
81
248
86
328
49
47
92
53
105
96
122
104
49
99
176
48
Second component: 2012 Survey*
Weight (%)
44.7
47.1
43.2
45.5
45.7
35.2
45.1
47.6
42.3
37.0
42.5
46.9
46.2
45.0
49.4
48.2
53.7
45.6
44.7
42.8
48.2
48.6
44.4
41.7
45.9
44.5
36.2
45.6
49.5
43.8
47.8
44.2
30.2
38.6
43.5
100.0
51.2
56.3
46.1
51.3
43.9
48.2
42.9 n/a 45.6
100.0
41.4
45.8
45.3
44.2
n/a
44.3
54.3
44.9
41.3
36.3
43.3
53.5
44.7
38.0
42.1
44.0
45.7
40.7
44.3
39.0
47.1
44.1
48.2
45.0
52.1
47.9
No. of respondents
81
33
99
80
68
105
95
65
86
72
83
90
72
100
80
143
44
120
41
92
77
62
103
108
105
78
286
94
92
107
79
163
128
91
35 n/a 73
34
85
60
36
89
129
48
87 n/a 127
79
83
83
60
89
67
86
69
103
93
122
88
585
62
51
87
75
111
156
103
112
38
99
98
38
Use of online tool (%)
Weight (%)
0.0
3.0
100.0
8.8
69.1
53.3
0.0
96.9
0.0
77.8
100.0
0.0
100.0
0.0
31.3
93.7
59.1
0.0
0.0
0.0
0.0
0.0
97.1
24.1
0.0
26.9
83.9
96.8
0.0
47.7
0.0
100.0
0.0
3.3
0.0 n/a 0.0
79.4
100.0
0.0
97.2
1.1
0.8
0.0
0.0 n/a 79.5
21.5
63.9
1.2
0.0
0.0
0.0
12.8
75.4
66.0
100.0
33.6
1.1
36.6
93.5
100.0
3.4
0.0
4.5
16.0
0.0
0.0
31.6
0.0
91.8
100.0
55.3
52.9
56.8
54.5
54.3
64.8
54.9
52.4
57.7
63.0
57.5
53.1
53.8
55.0
50.6
51.8
46.3
54.4
55.3
57.2
51.8
51.4
55.6
58.3
54.1
55.5
63.8
54.4
50.5
56.2
52.2
55.8
69.8
61.4
56.5 n/a 48.8
43.7
53.9
48.8
56.1
51.8
57.1
100.0
54.4 n/a 58.6
54.2
54.7
55.8
100.0
55.7
45.7
55.1
58.8
63.7
56.7
46.5
55.3
62.0
57.9
56.0
54.3
59.3
55.7
61.0
52.9
55.9
51.8
55.0
47.9
52.1
(Cont’d.)
72 | The Global Competitiveness Report 2012–2013
1.3: The Executive Opinion Survey
Table 1: Executive Opinion Survey: Descriptive statistics and weightings (cont’d.)
First component*
Country/Economy
Lesotho
Liberia†††
Libya†††
Lithuania
Luxembourg
Madagascar
Malawi
Malaysia
Mali
Malta
Mauritania
Mauritius
Mexico
Moldova
Mongolia
Morocco†
Mozambique
Namibia
Nepal
Netherlands
New Zealand
Nicaragua
Nigeria
Norway
Oman
Pakistan
Panama
Paraguay
China
Peru
Philippines
Poland
Portugal
Puerto Rico
Qatar†
Korea, Rep.
Montenegro
Serbia
Romania
Russian Federation
Rwanda††
Saudi Arabia†
Senegal
Seychelles†††
Sierra Leone†††
Singapore
Slovak Republic
Slovenia†
South Africa
Spain
Sri Lanka††
Suriname
Swaziland
Sweden
Switzerland
Taiwan, China
Tajikistan
Tanzania
Thailand
Trinidad and Tobago
Turkey
Uganda
Ukraine
United Arab Emirates
United Kingdom
United States
Uruguay
Venezuela
Vietnam
Yemen
Zambia
Zimbabwe
Grand total/Average
Survey edition
2011 n/a n/a
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2010
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2010
2011
2011
2011
2011
2011
2011
2010
2011 n/a n/a
2011
2011
2010
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
No. of respondents
79 n/a n/a
178
35
86
64
87
129
52
71
95
354
108
84
94
112
75
102
87
51
93
110
47
70
130
134
94
370
88
93
198
136
63
75
112
78
81
94
377
40
152
90 n/a n/a
152
78
101
57
103
105
34
40
32
90
68
101
92
55
116
79
94
104
108
93
422
82
45
96
52
88
56
Second component: 2012 Survey*
Weight (%)
43.5 n/a n/a
46.9
41.9
44.2
45.6
46.2
47.9
43.6
43.2
45.5
48.0
44.5
44.9
55.1
47.6
43.9
46.2
45.7
44.1
47.4
45.7
39.3
43.6
47.1
45.1
47.0
45.0
45.7
40.7
44.5
47.1
43.5
38.9
46.7
45.3
42.5
44.5
43.8
100.0
50.8
44.5 n/a n/a
43.0
46.7
43.9
47.9
46.5
100.0
43.9
42.0
34.7
46.6
44.6
45.5
44.1
41.2
41.7
44.1
45.5
44.4
39.5
43.8
45.8
45.2
46.8
45.0
44.8
44.2
43.3
No. of respondents
Use of online tool (%)
Weight (%)
89
85
72
153
45
92
61
79
102
58
82
91
278
112
85
40
91
82
93
82
55
77
104
75
78
110
133
80
371
83
132
206
115
71
123
98
76
99
98
414
n/a
95
94
32
99
178
68
110
45
91
n/a
37
51
77
79
70
97
99
75
151
85
90
109
169
102
397
81
39
96
53
94
64
0.0
0.0
45.8
63.4
93.3
0.0
11.5
38.0
0.0
77.6
0.0
39.6
91.0
0.0
0.0
0.0
0.0
0.0
0.0
98.8
96.4
84.4
1.0
97.3
50.0
23.6
63.2
7.5
0.3
30.1
0.8
93.7
55.7
98.6
16.3
3.1
0.0
0.0
0.0
0.7
n/a
96.8
0.0
34.4
0.0
56.2
80.9
0.0
82.2
83.5
n/a
0.0
68.6
97.4
93.7
50.0
0.0
1.0
73.3
80.1
21.2
0.0
1.8
7.1
96.1
98.2
0.0
100.0
2.1
0.0
0.0
40.6
56.5
100.0
100.0
53.1
58.1
55.8
54.4
53.8
52.1
56.4
56.8
54.5
52.0
55.5
55.1
44.9
52.4
56.1
53.8
54.3
55.9
52.6
54.3
60.7
56.4
52.9
54.9
53.0
55.0
54.3
59.3
55.5
52.9
56.5
61.1
53.3
54.7
57.5
55.5
56.2
n/a
49.2
55.5
100.0
100.0
57.0
53.3
56.1
52.1
53.5
n/a
56.1
58.0
65.3
53.4
55.4
54.5
55.9
58.8
58.3
55.9
54.5
55.6
60.5
56.2
54.2
54.8
53.2
55.0
55.2
55.8
56.7
14,059
36.6
Note: All statistics were computed following the edited process. See text for details.
* The table reports information about the two Survey editions used in the computation of the two-year weighted average score. See Box 2 for details.
Survey edition(s) used for the computation of the two-year weighted average score: † 2010 and 2012; † † 2011; † †† 2012. See Box 2 for details about exceptions.
The Global Competitiveness Report 2012–2013 | 73
1.3: The Executive Opinion Survey
enough—we use 99.9 percent as the threshold—we conclude that the survey is a clear outlier and does not
“belong” to the sample. The implementation of this test requires that the number of responses in a country be greater than the number of answers, N, used in the test.
The test uses 66 questions, selected by their relevance and placement in the Survey instrument.
A univariate outlier test is then applied at the country level for each question of each survey. We use the standardized score—or “z-score”—method, which indicates by how many standard deviations any one individual answer deviates from the mean of the country sample. Individual answers with a standardized score zi,q,c = greater than 3 are dropped.
Data weighting: Sector-weighted country averages
Once the data have been edited, individual answers are aggregated at the country level. We compute sector-weighted country averages to obtain a more representative average that takes into account the structure of a country’s economy. The structure is defined by the estimated contributions to a country’s gross domestic product of each of the four main economic sectors: agriculture, manufacturing industry, non-manufacturing industry, and services (see Table 2).7
An additional step is taken to prevent individual responses within a sample from receiving an excessive weight when the structure of the sample and the underlying economy differ greatly. As an extreme example, imagine the case of a country where just 3 percent of responses come from the services sector, but that sector actually represents 90 percent of the country’s economy. By applying the above sectorweighting scheme, we would be giving a very high weight to a very few surveys. This is avoided by trimming the sector weights. When for a country the ratio of the weight of one sector in the economy to the percentage of surveys from that sector in the country sample exceeds 5, the sector weight used for the weighted average is capped to five times the percentage of surveys from that sector in the sample. The weights of the other sectors are then adjusted proportionally to their weight in the country’s GDP.
Formally, the sector-weighted average of a Survey
S
w s,c q i,s,c indicator i for country c, denoted q i,c =is computed as
,
s follows: q i,c =
S s S
w s,c
q i,s,c
q i,s,c =
N s,c j q i,c = N w s,c q i,s,c ss,c q with i,j,s,c q i,s,c =
N s,c j s,c
N
q i,j,s,c
,
q i,s,c =
N s,c j 74 | The Global Competitiveness Report 2012–2013
q i,j,s,c
N s,c
where ws,c is sector s’s contribution to the economy of country c; qi,s,c is the mean of the answers to question i from sector s in country c; qi,j,s,c is the answer to question i from respondent j in sector s in country c; and
Ns,c is the number of responses from sector s in country c.
When for a given country the sample size is too small or the sectoral representation of the sample is too different from the actual structure in the economy, the xi,q,c – xq,c mechanism described above might not be sufficient σq,c to prevent an individual response from receiving a disproportionate weight.8 In such a case the economic sector stratification average is abandoned and a simple average of the surveys is applied, where all individual responses contribute equally to the country score regardless the sector of activity of the respondents’ companies. In 2012, this was the case for seven countries: Algeria, Burkina Faso, Kuwait, Morocco,
Timor-Leste, Venezuela, and Yemen. Going forward, we will work closely with our Partner Institutes to increase the sample size and improve the sector representation in these countries.
Data weighting: Moving average
As a final step, the sector-weighted country averages for
2012 are combined with the 2011 averages to produce the country scores that are used for the computation of the GCI 2012–2013 and for other projects.
This moving average technique, introduced in 2008, consists of taking a weighted average of the most recent year’s Survey results together with a discounted average of the previous year. There are several reasons for doing this. First, it makes results less sensitive to the specific point in time when the Survey is administered. Second, it increases the amount of available information by providing a larger sample size. Additionally, because the
Survey is carried out during the first quarter of the year, the average of the responses in the first quarter of 2011 and first quarter of 2012 better aligns the Survey data with many of the data indicators from sources other than the Survey, which are often year-average data. For newly introduced questions, for which no time series exists, the final country score simply corresponds to the country score in 2012. Such is the case for indicator 1.13, which is derived from the new Survey question about the provision of government services aiming at improving business performance.
To calculate the moving average, we use a weighting scheme composed of two overlapping elements. On one hand, we want to give each response an equal weight and, therefore, place more weight on the year with the larger sample size. At the same time, we would like to give more weight to the most recent responses because
1.3: The Executive Opinion Survey
Table 2: Sectoral value-added as a share (%) of GDP, most recent year available
Country/Economy
Albania
Argentina
Armenia
Australia
Austria
Azerbaijan
Bahrain
Bangladesh
Barbados
Belgium
Benin
Bolivia
Bosnia and Herzegovina
Botswana
Brazil
Brunei Darussalam
Bulgaria
Burundi
Cambodia
Cameroon
Canada
Cape Verde
Chad
Chile
China
Colombia
Costa Rica
Côte d’Ivoire
Croatia
Cyprus
Czech Republic
Denmark
Dominican Republic
Ecuador
Egypt
El Salvador
Estonia
Ethiopia
Finland
France
Gabon
Gambia, The
Georgia
Germany
Ghana
Greece
Guatemala
Guinea
Guyana
Haiti
Honduras
Hong Kong SAR
Hungary
Iceland
India
Indonesia
Iran, Islamic Rep.
Ireland
Israel
Italy
Jamaica
Japan
Jordan
Kazakhstan
Kenya
Korea, Rep.
Kyrgyz Republic
Latvia
Lebanon
Agriculture
20
9
20
3
2
6
0
19
4
1
32
14
8
3
6
1
5
35
35
19
2
9
14
3
10
7
7
23
7
2
2
1
6
7
10
13
3
48
3
2
4
27
10
1
30
3
12
13
19
25
11
0
4
6
16
16
10
1
3
2
6
1
3
5
19
3
29
4
5
Manufacturing industry 20*
22
15
10
19
4
66*
18
7
14
8
14
13
3
16
10
16
9
15
17
14
7
7
13
32
14
19
19
17
8
23
13
22
11
14
22
17
5
18
11
4
5
9
19
6
10
19
5
7
16*
17
2
22
13
16
26
11
24
32*
16
9
20
19
12
8
28
13
12
8
Nonmanufacturing industry
Services
Country/Economy
Agriculture
n/a
9
18
19
11
65
n/a
11
11
8
6
22
16
42
10
61
14
11
8
14
18
13
42
30
12
18
8
8
12
12
14
9
5
15
15
6
12
9
10
8
50
11
12
7
12
8
8
43
29 n/a 8
6
8
14
12
23
34
8
n/a
9
13
8
11
31
6
9
7
10
8
60
60
47
68
69
24
33
53
78
78
54
50
63
52
68
28
64
45
42
50
67
71
38
54
46
61
66
50
63
78
60
77
67
67
61
59
68
38
69
79
42
57
69
73
51
79
61
40
46
59
64
93
66
66
55
35
45
67
64
73
71
71
66
52
67
61
51
74
78
Lesotho
Liberia
Libya
Lithuania
Luxembourg
Macedonia, FYR
Madagascar
Malawi
Malaysia
Mali
Malta
Mauritania
Mauritius
Mexico
Moldova
Mongolia
Montenegro
Mozambique
Namibia
Nepal
Netherlands
New Zealand
Nicaragua
Nigeria
Norway
Oman
Pakistan
Panama
Paraguay
Peru
Philippines
Poland
Portugal
Puerto Rico
Qatar
Romania
Russian Federation
Rwanda
Saudi Arabia
Senegal
Serbia
Seychelles
Sierra Leone
Singapore
Slovak Republic
Slovenia
South Africa
Spain
Sri Lanka
Suriname
Swaziland
Sweden
Switzerland
Taiwan, China
Tajikistan
Tanzania
Thailand
Trinidad and Tobago
Turkey
Uganda
Ukraine
United Arab Emirates
United Kingdom
United States
Uruguay
Vietnam
Zambia
Zimbabwe
8
61
2
3
0
11
29
31
10
37
2
20
4
4
10
18
10
32
8
33
2
6
18
32
1
2
22
5
19
7
12
4
2
1
0
7
5
34
3
17
11
2
47
0
3
2
3
3
14
5
7
2
1
2
21
28
11
0
9
24
8
2
1
1
12
20
9
17
Manufacturing industry 16
13
4
16
6
23
14
10
25
3
14
4
19
18
12
7
6
13
8
7
13
15
19
3
10
8
17
6
12
14
21
16
13
40
68*
22
15
6
10
13
19*
11
4
22
19
22
15
13
16
20
45
16
19
30*
10
10
34
6
17
8
18
12
11
13
17
20
9
15
Nonmanufacturing industry
Services
19
4
74
11
7
13
2
6
19
21
19
33
10
17
0
29
14
10
12
9
11
10
9
39
31
47
7
11
8
18
11
14
10
3
n/a
4
18
8
52
9
n/a
8
21
6
15
12
16
13
11
19
5
9
8 n/a 13
15
9
46
9
17
11
48
10
8
8
20
28
14
58
22
20
70
87
52
55
53
46
39
65
43
67
61
78
45
70
45
73
52
74
69
53
26
58
43
55
78
62
62
55
66
75
56
32
67
62
52
35
61
70
79
29
72
63
64
66
71
60
56
42
73
72
69
57
47
45
47
65
50
63
38
78
77
63
39
54
53
Sources: World Bank, World Development Indicators (accessed December 8, 2011); Economist Intelligence Unit, CountryData database (accessed December 9, 2011); US Central Intelligence
Agency, The World Factbook (accessed December 9, 2011).
Note: The simple average was used to compute the country scores of Algeria, Burkina Faso, Kuwait, Morocco, Timor-Leste, Venezuela, and Yemen. The values for these countries are therefore not reported. See text for details.
* Combined share of manufacturing and non-manufacturing industries.
The Global Competitiveness Report 2012–2013 | 75
1.3: The Executive Opinion Survey
Box 2: Country score calculation
10–11
q i,
This box presents the method applied to compute the country q i,c scores for the vast majority of economies included in
The Global Competitiveness Report 2012–2013 (see text for exceptions).
10–11
q10–11 i,c q i,
q q10–11 i,c
For any giveni,Survey question i, country c’s final score, q i,c
2011–12
q i, q i,c
10–11
q i,2011–12q i,c 2011
2011
, iw cgiven q i,c s 2011 by:
2012
q i,c
1
–2011
q i,c0–11 q i,c
2012 q i,c
2011–12 q i,c
2012
wc
2011 q i,c
10–11
2012
–2011
2011–12
2011
2012
2012
t
(1)
q2011–12 w2011
0–11
i,c i,c i,c q2011 w2012 q2012 q i,cqq2011–12 qq2012 N ct qq1i,c qq–2011 i,c c i,c c i,c 10–11 q 2011–12 w c2011 q i,c i,c i,c i,c i,c w c2012 q i,c q i,c –2011 q i,c
2011
2012
2011
2011 q 2011–12 q q2012 q 1t0–11 q i,c q i,n,c q i,c i,ci,c wc q i,c wc q i,c i,
Nc
2011 n=1 i,c t i,c
–t
where
1
–2011 q 2012 t 2011–12
2011
2011t
2012
2012 q i,n,c2011–12 qqi,c
(1 )
2011
2012 q i,c q i,c0–11 q i,c
2011
i,c q i,cqt i,c wc q i,c Nt c w c q i,c
Nc
Nc q i,c
N ct i,c 2011 q ti,c t Nc wc t qt i,n,c on question i in year t, with2011 q22011 2012, as computed 2011–12 q 2012 q 10–11 q –2011
2011–12
2012 t 10–11 t i,c 2012
2011
N q i,c i,c t q is
–t N c score q i,c (1 w c2011c qNc2011 = w011, q i,c i,c i,c q 2i,c q i, qqt i,n,c i,c country c’sn=1 ti,n,c
Ni,cc 2012 c
)
q t 2011 n=1 t t q i,c following–ttheN capproach described in the text; c2011 2012 q ti,n,c
(1 )
N 2011 N c q –ti,c n=1q i,n,c
2011
10–11 cN i,c
Ntt c
2011
q2012
Nt c2011 2011c2012
N
i,c q i, q i,c w2011 t (1 qN t
) wc
Nc
q i,c c i,n,c q Nc w c2011 q i,c t N 2 N c Nt c
–t
N ti,n,c
Nt c a q tc
) q 2011–12 N c q t2012 q 10–11 q t; and
2011–12 is respondent n’s response (on (1 1–7 scale) to question i in year –2011 q 2011n=1 ct
2012
2c2011 w 2011
2012
2012
2011
q i,c N i,n,c w c2011 i,c i,c N w c2012 q i,c c2011 i,c i,c i,c q
Nc
Nc
N q i,n,c ct 2012
2012
2011
NN c
2 2012 n=1c i,c c c t 0
1
wc wc w t 10–11
1
2012 c
–2011 –t
2011–12
2011–12
2011
2011
2012
q i,c0–11 q i,c Nq i,c yearqt2011 below). (1 w c) q i, Nwcti,c is the weight i,c q c2012
2012
i,n,c ’s scorec in q applied q i,c country c q 2011
2012
wct i,c to wc q i,c wc q t 2 i,c N 2 2012 N i,c(see
Nc
Nc
2011
2011 c tw 2012 t 2011
2012
N 2011 N 2012 c q i,c c
2011 2012 t
N
Nc c 2012 w c
2011
0
1
wc wc q i,c w2012 N c t N c c N 2011
0
1 wc wc c wc
The weights for each year are i,n,c t q tdetermined as follows: c2011 2c2012c2012 2012 w c2012 0 –2011 w c2011 1 2
N N cc w c2012
N
t
N c 2011–12
10–11
q i,c t 2011–12
2011
2012
2012
2012
2011
Nc
–t2011 n=1 q i,c2 q q i,n,c w c 10–11 qq i,c i,c w c 2011 q i,c w c (1 t ) 2011 2011 2012q2012 wq i,c2011 0q i,c w c 2012 1 2012 t c i,c Nc Nc Nc Nc q i,n,c i,c q i,
N c2011
N c2012
1 2012 w2011 N w2012 0 q i,c
2012 w c
2
2012
N ct N c c 2011
2011
2011
1
2011–122011 1 t –t n=1 w w cc2011 0 )
1
wc 1 w 2011 0 wc c qw cc20122011 c q i,c q i,c t (1 q i,c q i,c q i,n,c
(1 ) i,c q i,c
2012
2011
2012
Nc t 2
2 wc
2 2012 c2011 N c2012 2011
N
N c2011 N c2012 t 02012 w c N c 1 N c
Nc
Nc t N c q i,c
2011
(2a) and 2012
Nc
0
1
wc wc w c (2b) wc t
N c2011 2011 1 0 2011–2011 2012N2012
2011
2012
2012
1
1 q t2
1
Nc
2011
2012w t 2011–12 q 2011–12
2011
2011(1
2012 q2011 2012
N 2011 q d0–11 2011 i,c w 2011c2012 2012
N c2 sample-size weighted average q2012 20122011–12 q2011c2011 c 2012 i,ciscounted-past cweighted average q2012 q i,cq
N1
q i,c i,c i,c
2011–12
i,c w c tq i,cc i,c w c –t 12 q i,c i,n,c w)c) q i,ci,c i,c q q i,c
NcN Nc
N c N N2012 q2011–12 1 n=1 (1
2011
2012 q i,n,c
(1 )q i,c N c 1 2 2012N 2011 c N 2012 q i,c i,c q
2011
2012
2011
2012
0
1 wc wc
N c2011 c2012 c2012
Nc
t c c q 2011 q i,c 2011c2011 22012c q i,c q i,c q i,c i,c 2 N ct (1 )
2012
i,c qN20112012 N2012N N2c N N c2011 c2011c2012 sample-size weighted average c i,c N
2
N c2011 c 2011 N c N c
2011 weighted average
2011
2012 wqcw 2012
1 N c ddiscounted-pastweighted average
1
2011–12 t t
0 in i,c weighted average2012 q i,c 2 q year 20111 q iscounted-pastc
(1 2012)the number of respondents) for 2011 w c 2012 sample-size w ct, with t = 2011, i,c2012. where N c qs thei,csample 2011 N ct (i.e., i i,c q size country c i,c 2
2
N
Nc
Nc
Nc
t
Nc
Ndctiscounted-past weighted average 2 2011 2011 c
N 2011
N c2012 N t
2012
2012 sample-size weighted average1 t
2012
2011
2012
2011–12 q i,n,c c t t 0 q i,c w c 1 N 1 –t (1 1 ) 2011 i,c wc wc
12011 c 2012 N c q i,c t q 2011 t t q tc2012 qN 2011 Nt 2012 t q i,c q i,c
–t
wi,cq i,c 1 q i,c t t Pluggingc Equations (2a) and (2b) into (1) weighted averageN 2012 2 q c 20122w c (1 0 ) weighted average2 i,c yields: w q i,n,c
2n=1 discounted-past and rearranging 2011 i,c
N2
N cN
(1 ) c sample-size q i,c c c
Nc
Nc c Nc c t
N2012 N c t
2011
Nc
0t
w 2012 w2011 N 2011 N 1 c 1 discounted-past tweighted average 2012 t
Nt
Nt t c tw c
1
t sample-size weighted average c c
2012
Nc
Nwc2011t 0 qt i,c w 2011ct tc N tc
N1
qt2012 qti,c q
(1 ) w2011i,c c qt i,c –t 1 1 c t Nt c
12
–
2012
2011 c t
2012
12
2011–12 t c c q q t i,c
Ntc2011c Ntc 2012 qti,cq i,c Ntc N c 2011tc 2012ti,c q i,c .
N
2 (1(1 ) ) q i,c ti,c
(3)
N qq i,c 2 1 q i,c qti,c–t i,ct 2012 c
2
N t c tN N c q i,c
N c N tN ct N q i,c
2
c qN c2011 q i,c
21
2
N
(1 ) q i,c t i,c
2011
2012
2011
N cN t q 2012
Nc
1
1
2011–12 w 2N
N ct 2012cN c1 c t
2
t
1 2012 c
N c 2011 N c2012 w cc2011i,c 0q t q i,c c q t –t q i,c 1 q ti,c w tc
(1 ) q i,c q q i,c –2006
(1iscounted-pasti,c N 2012average
) N 2011 weighted q i,c
N c2005
N c2006 i,c d i,c –2005
2
2
N 201205–06 N1t
Nt
1 sample-sizeN c q –2005 c c
20112 c
Nt
2
(1 ) weighted caverage q i,c N ct qN cc c i,c
2005
2006
N ct q i,c t N 2005 N 2006 i,c Nt
N
t t t
1c
2012
2
Nc c q c2011 1 qN c q i,c c
) 2012 q i,cc–t discounted-past weighted average wi,c 2012 12006 w c sample-size weighted average(1 2011 2w c q i,c 0 i,c N c N 2005 2011
Nc N 2
N t N ct
N ct N ct
2011
2012
2012
1
12
2011–12
2006
c c 1(1 )
05–06
q)i,c q –2005 q i,c q –2006 2 1 2011 N 2005 q i,c q –2005 q i,c c q –2006 q i,c
2012
2011
2012
N c2006 2006 average. The second component
(1
q05–06 first component of –2005 weighting2scheme is the c2005 2011
–2006
–2005
In Equation (3), the 1 the weighted q –2006 i,c i,c i,c i,c
2006
1 N c NN2005 discounted-past N2005 N
2012c
c q –2005 q–2006 (1 ) q i,ci,c2 1 2
0 q i,c N c
N
i,c i,c c c t cN
1 2 N N 2005 c w Nhalf-weightt w c N2005 c1N c2006 5.70i,c
2
N 2006 q –2005 c each. 2006 2006
N c The is the sample-size weighted average. i,c average t components are cgivenc c20060.457i,c N6.03 c2005 0.543 valuei,cfor 5.85 0.6, which q –2006 is c 2005 2005 t
(1 ) t q The q 05–06 1 2 discounted-past weighted two q i,c 1 t t –t i,c
N sample-size weighted N c N i,c q –2005 q –2006 t 1 q i,c q 05–06 1 (1 )
2 score of ccountry c –2005 average cqN c 2 the –2006 t corresponds i,c q i,c discount (1 ) of t q i,c That i,cis, i,c N 2011 N ct N c20052011N c2006 N2i,cit s given 2/3 of 012 weight given to the 2012 to a 2 2 factor N i,c 2/3.
2
N ct q the c q c011 N c 20052012 2006 q i,c c t t t
1
1 t 2006
2 it c N
N c N c Nthat
2012
2011
2012
1 that q t prevents
2011–12
c c (1 score. q i,c additional2characteristic 62011this qapproach is t 1 5.85 i,cN2011 c N2012 a country sample 2012 isq much2005
)
q i,c –t
N c larger in –2005 yearNfrom
One q i,c q i,c 1 of one i,c q t 5.70 q c
(1 0.457 q i,c.03 0.543i,cN 05–06 N
) t Nt
–2005 i,c
–2006
–2006
1
i,c
2011
Nc
2
q q i,c q i,c
(1 )N c q i,c c 0.457 6.03 0.543 c5.70 c
2 2 sample from the otherqyear. 2 5.85 N c
N ci,c N c
2005
2006
2005
i,c overwhelming the smaller 0.457 2011 .03 0.543 20125.70 2
2
Nc
Nc
Nc
N c2006
6
5.85 t
2011
2012 discounted-past weighted average
N
N ct
The formula is easily generalized. For any 01215.70 5.85c sample-size weighted the Survey, country c’s final score on t t
1
2t
0.543 two consecutive editions t1t and tt2 of average q i,c qt q i,c
(1 )0.457011 6.03 q i,c 2 q t –t t t
N c2005 i,c
N 2006 question i ii,c computed as follows: –2005 s 05–06 2 1
N c–2005 N
10–11
2012
–2011
2011–12
–2006
10–11
2012
–2011
2011–12
1 Nc Nc
2011
2–2006
012 2 lower boundc =200551 –2006 5.85q i,cQR
Q c.70 1.5 I q i,c q i,c q i,c q i,c q i,c q i,c q i,c q i,c q i,c 2005 q i,c q i,c
(1 ) i,c 2
2 N c2006 c0.457 c2006 .03 0.543 c
N 2005 N 6
N
Nc
Nc
–2005
–2006
–2005
–2006
1
1
05–06
2011
upper bound 2= Q3 – 1.5 IQR
2011
012 q i,c q i,c q i,c q i,c
(1i,c
q i,c q i,c ) q 2011
2006
2005
2006
10–112005
2
lower bound = N 1 – 1.5 IQR 10–11 t
Q
N ct q i, 2 q i,c N c t t t 1 lower bound t = Qc1 – 1.5 qIi,QR q i,c N c N c
1N c t –t q i,c q i,c q i,c q i,c .
(4)
(1 ) q i,c
2 lower bound == Q3 – 1.5.70QR N ct N 2005ct
N
N ct N ct2006
2011
2011 upper bound Q0.543 5 I 2QR
I 5.85
1.5
0.457 6.03 1 – –2006
Nc
N cc
N
c
–2005 = Q3 – 1.5
–2005
–2006
1
1QR
05–06
upper) bound
I
q q2 q i,c
(1
q i,c
))
2005 lower5.85011 i,c2011= Q12011 i,c012 bound – 1.5 IIQR N 2005 2006 q i,c
2011
2012
2011
2012
–2011
1
2011–12
2012
–2011
2011–12
QR
2
N 2006 1
2011–12
.70 2011–12 2
2012
N cc
N cc 0.457 6.03 0.543 5upper bound = Q3 – 1.5 20122 q 2012c 2011 N c q 2011 q i,cw 2012N c qq2012 c q i,c0–11 q i,c q i,c
N
N q i,c q i,c0–11 q i,c q i,c i,c wc q i,c w c q i,c i,c w c i,c c i,c 1
1
1
2
2
2
1
1
1
1
1
1
2
2
1
2
1
2
1
2
2
1
1
2
1
1
2
1
1
2
1
1
1
1
1
1
2
2
1
2
2
2
2
1
2
1
2
1
1
1
1
1
1
2
2
2
1
1
2
1
1
2
2
2
2
2
1
1
2
2
1
2
1
1
1
2
2011
2
2
1
1
2
2
2
2
1
2
upper bound = Q3 – 1.5
2012
Exceptions
t i,c 2
2
1
1
1
2
2
1
2
2
2
2
1
2
2
1
1
2
2
2
2
1
1
1
2
2
2
1
1
2
2
2
1
2
1
2
IQR lower bound = Q1 – 1.52011 IQR q i,c 2006 t N c2005 N t
–2006
–2005
1
5.70 q5.85 upper bound = Q3 – 1.5 N cIQR
2011 q i,c
–2006 q 1 0.457 6.03 q –2005
05–06
0.543 i,c c q i,c q i,c q i,c
(1 ) q i,c i,c 2006 t
2011
2011
2
N 2005 approach
N c2005 c2006 qt 2011
2012
10–11
10–11
Nc
Asqdescribed in the2text, tthere are a numberi,n,c exceptions toc the N cn=1q i,n,c N c describedNabove. In describing them below, we use t –t lower bound = q –t – n=1 of IQR
Q1 1.5 q qi,c q i,i, i,c q q i,n,c
(1q i,c )
(1 )
N
N
2011
2012
2012
2011
2012
2011 t t2011 N actual0years—rather thani,n,c letters—in i,c equations for the sake of concreteness. c2012 2011
Nc
Nc
Nc
1 IQR w cc w cc
0
1 w Nc
Nc
lower bound = Q1 –w1.5 upper tbound = Q3 – 1.5 IQR w c2011 wc 2
2
In the case of Survey.457 6.03 that were 5.70 ct 5.85 in 2012, where, by definition, no past data exist, the weight applied is
N 0 questions 0.543 introduced
N
c
2
2
10–11
2012
2011 2011
2012
2012
2011–12
bound =
–2011 1 I2012
2011–122011 0 q i, q i,c upper2011–12 w 0 Q3qqw2011 w.2012 qq 2012 (1) simply is qqi,c2011–12 = qqi,c2012. Thei,c0–11 qqi,c–2011 q10–11 i,cis
1 Equation w1.5 wccQR i,c2012 q i,c1 same–2011true for those countries that are newly covered (Gabon, q i,c w q i,c w cc wc2011and i,c cc i,c i,c
2
2012 c i,c i,c 011 t t
2012
2012
10–11
wc
Guinea, Liberia,lower bound = Q1 – 1.5 IQR w creinstated (Libya) in 2012. For these countries too we use
Seychelles, and Sierra Leone) and 2011
Nc
Nc q i, q i,c q i,c q i,c2011
0–11
2011–12
2011–12
2012
2012
tq q 2012 t t N c1i,c q 2012 q –2011 2012
=2011i,c2012. 2012qci,c10–11 q i,c–201120122011–12
2011
2012
2011
2012 q i,c
Nqct2011qi,c
Nc 2011 i,c
N 2012 bound = Q3 – 1.5 IQR q i,c 1 i,c q i,c 1
1
–2011
2011
2011–12
2011 q i,c 2011
2012
N
Nc
cupper q 2012 q i,c0–11 i,c
2012
2011
2012
2011 q i,c that q i,c case t 2012 q w c 2011 qi,c 2012 wq i,c 2011qNNc2011of countriesi,cq i,c failed i,c inter-yearq robustnessc check, the weight2012 0 N c is wN c 1 and w 2012 0 , so that i,c i,c the 1 wc w c w c applied
2011
2011 w c c c
2
N cc2011 N cc2012 Inc the 2011Ncc2011ti,n,cNcc2012
Ni,c q i,n,cN
2
N
N
q q i,c q–t N
N
2011–12
2
t t 2011
2011–12
2011
2012i,c n=1
2012
–t n=1 Equationq(1) simply becomes q i,c (1 =)q i,c2012.2011 qci,c0–11 q i,c of countries that failed the inter-year 2
In c 1 case 10–11 robustness check last year and for q 2011 2011 the 2012 –2011 qq (1 ) i,c q i,n,ci,c wc w c q i,c q i,c t t i,n,c 2012 i,c i,c
2011
2012
2011
2012 t q i,c sample-size weighted average
N
Ncq i,
N
1 w wc t sample-size 2011 data c N cc lower bound
2011
q i,c which the weightedNaveragewerew 2011 = Q1 –2011cc theQR discarded, we 1.5 INSurvey data from 2010 instead, w c combinew c use and 0 them 1 with those of02012 to c
N
2011 wcc t t c Nt 2011
Ncc
i,c
2010,2012
2010
2010
2012
2012
N
N cc compute the scores. Equation (1) = Q3q– 1.5 IQR q i,n,c 2012
2
t
2
upper bound c2011 becomes q i,c then . wc q i,c wc q i,c
(1 )) –t n=1t
N
(1
2011
2011
2012
qti,c
2011
q i,n,c
(1 )
N
N q i,c N ccN c t t N cc
N 2012 N c2011 2012 10–11 –2011 c2012
N
2011
2011 1 2012
2012
2011–12
2011
2011–12
2012 N c
2012
2011
2011
2011
2012
1 2012 2011
1 q i,c c
2011–12
tt q i,c q i,c q i,c2011 q i,c 2011 w cc
N
Nc w 2012 q i,c 2011–12 2011 q i,c q i,c w c q i,c q(1 1 ) w c q i,c q i,c2012 q i,cq i,c q i,c q i,c c N c2011 (1 2012)
Nq i,n,c
2011
w2
2011
2011
2011
i,c tt w cc tt t
–t 2 n=1 c
N
N cc t 2 2012
2
Nc
Nc
N
N c2012 N c2012
2
2c
Nc
N c2012
N cq i,c
Nw c
Nc
Ncc q1 (1t ) tt t
1i,n,c
2011 c 2 c2011 N c 2011 q i,c q q i,c
2011
2012
2012
q i,c
N
tt tt t
Example tt N t2011 q i,c
Ni,ct N
N
N
N cc discounted-past weighted average
N cc
2t
N cc N cc 2012 c
2
N
N 2012
Ncc w ccc
N
discounted-past weighted average
2012
2012
2011
2012
2012
2011 t sample-size weighted average sample-size weighted average
0
1 w2 w
0
1 wct c w cc 2012 q i,c w cc
Ntc
Nw c
N cc
N
t
2
c
2011
Nc
For this example, we compute the score2of Australia for indicator 6.01 i,n,c the intensity of local competition, which is not a newly
2011
2012 q on
2011
2012
Nc
t
N cc
N cc
N
N
2011
2012
2011
2012 t 2012
2012
(1 )
1
w w2011 0 –t n=1cc t test either this year or last year.2012 w i,n,c w cc introducedw c2012 0 Also,2011N c1 question. 20112011 2012 did not fail theqinter-year0q i,c robustness 1
Therefore, the general wc2012 2011 w Australia w c2012 0 N c w ccN 20121 cc 2012
Nc
Nc
Nc
0
1
w wc wc
22005 case of Equation 2006 applies.cAustralia’s score was 6.03c in 2011 and 5.70 in 2012. 2011 weighting scheme described above
2
(1) t 2011
2012
2005
2006
N ct w c The t
N ct
Ntct
N ct
N cc
N
N
2011N
2012
N c 22012N
2011
t N 2011 t t t t 1
1
1t t– 2011
2012
2012 t
–2005
–2005
–2006
1
1
q i,c i,c q i,c t q i,c w c –2006 w ti,c wc 2005 cc 2006 2011 qi,c –t c1 1 2012
)
indicates how2012 0 two scores are combined. In0 i,c Nc cq i,cw 2012q i,c 1size(1 theNcsample wasq72 in 20112andt 68 in 2012. Using =t 0.6 q i,c the Australia, the 2011 t t t q i,c1 wwcc2005 0 2006 2011 cq i,c 1 2 2012 (1 w12012 q N c c2011 2 2011 2of ) N ct q i,c N t q i,c
2011
2012
1
2011–12
2011–12
2006
N 2012 c q i,ci,c
Nc 2 Nc Nc Nc
Nc Nc
0 2011 w c2012 1q i,ci,c w1 c q q q 2012 q i,ci,c
)
(1
2
N cc2005 Nqc2006
N(1 )N cc q i,ci,c 2
2
N 2005 Ncqi,ci,c
Ncc
Nq c 2011
2012
2011
2012
2011 c
2
2
N
N
N
N
2
2
N c cw t N c c
N cc
N cc
2012
2011
2012
c
Nc
0
1
w c 2012
N c2011 ddiscounted-pastweighted2012
N c2012
N c2011 iscounted-past weightedaverage
N c average 2011w c
2012
2011
2012
2012
2011
2012
1
1
(Cont’d.)
2011
2012
q i,c q i,ci,c 2012 2011 q q q N q i,ci,c
Nsample-sizeweighted average sample-size weighted average
2012
c
2011
2012
Nc
Nc
2011–12 i,c 1
(Cont’d.)
2012
2012
2011
2(1 )N c2011q i,cN c2012
2
N c2011 2011 c2012
N
N 2011 N 2012 c 2012 q i,c N c c 1 N c c 2011 q i,c q i,c q5.85 2011
2012
5.85 2 i,c 0
1
wc wc wc
2
N c N 2011
Nc
N c N 2012
Nc
2005
2 N 2006 N 2005 c c
2011
2012
2011
2012
1
ighted 2011–12 average 1
N
N c2006 eighted average c c
–2005
–2005
–2006
–2005c
–2006
–2005
1 2012
1
q i,c sample-sizei,c weighted05–06 q q i,c q 05–062011 q –2006 (1 1q i,c sample-size average
(1 iscounted-past weighted average weighted average 1 2011 (1 2012
)
q i,c
2012
q i,c q i,c2011 q0 q i,c q i,cq i,c d )
)
q i,c2 i,c i,c
2005
2005
2006
i,cN c
2
N c sample-size weighted averagec wc 2N c
2
N c2005 N c2006
N
2N
2 c2005 N c2006 N c2006
Nw c N c1 c Nt
Nt
N ctc
N ctc tt tt tt tt
1
1
1
1 t td–t
–tiscounted-past weighted average q q q q i,ci,c q average t t q i,ci,c
(1 )) q i,ci,c sample-size tweightedq i,c q (1 q i,ci,c i,c 2
Nt Nt
N N ctct
N
2
2
N ctc N c c
N
2
N c2011
N c2012
2012
2011
1 cc
1
2011–12 q 2011 q i,c
(1
qt0.543 5.70 0.457 ) 6.03 i,c 0.543 q5.70 5.85
N ctct
N ctct
N
N i,c 2011
2012
2011 i,c 0.457 6.03
5.85
tt t t
1
1
2
2
Nc
Nc
Nc
N c2012 q i,ci,c t t t 1 t t q i,ci,c N ct qt qt
Nc
|
Global Competitiveness Report 2012–2013 t
R t –qqi,ci,c 1 2 76 N tTt heNq ttt
N
2 (1 Nc)c Nci,c
N
011
2012 i,c
2011
2012 q i,cNc c N c c q2i,c qt q i,c t c t t discounted-past weighted average
2
N ct NN ct
N ct NN ct sample-size weighted average
R t –t 2 c c
1
1 qt qt qt qt
2005
2006
2005
2006
2012
2012
N cc
N
2011
2011
c c t
Nc
2012
2012
c c 11
22
11
11
11
22
1
1
1
2
1
2
2
11
11
11 22
11
1
11
2
22
1
22
11
2
2
11
1
2
2
1
1
1
1
22
1
2
2
1
1
1
2
2
2
1
2
1
1
2
2
1
2
–2006 q i,c
22
22
22
22
2
22
22
11
11
2
1
1
1
11
2012 q i,c
22
22
2
2
2
2012 q i,c
22
2012 q i,c
–2006 q i,c
1
2
t q i,c –t
1
2
(1
)
t q i,c
1
2
t q i,c
1
2
N ct
N c N ct
N ct
N c N ct
1
t1
1.3: The Executive Opinion Survey
2
t q i,c
1
2
t1
t q i,c
2
2
Box 2: Country score calculation (cont’d.)
N c2005
N c2006
–2005
–2006
–2005
1
1
05–06 q i,c q i,c q –2006
(1 ) q i,c and applying Equations (2a) and (2b) yields weights of 45.7q percent2005 2011 andi,c54.3 percent for 2012 (see Table 1). The final for 2006 i,c 2005
2006
2
2
Nc
Nc
Nc
Nc
country score for this question is given by Equation (1):
0.457
6.03
0.543
2011
5.70
5.85 .
2012
This is the final score used in the computation of the GCI and reported in Table 6.01 (see page 450). Although numbers are rounded to two decimal places in this example and to one decimal place in the data tables, exact figures are used in all calculations. lower bound = Q1 – 1.5
10–11 q i,c upper bound = Q3 – 1.5
q i,
2011–12
2011
q i,c
wc
2011
q i,c
2012
wc
IQR
IQR
1
–2011
q i,c0–11 q i,c
2012 q i,c
2011–12 q i,c
2012
q i,c
2011 q i,c t t qhey contain more updated information. That is, we also
Nc
t i,c
2011
qt
N
t
“discount q –t past.” Table 1 reports the exactc weights the n=1 i,n,c q i,n,c
(1 )
2011
2012 i,c N c N ct
2011
used in the computation of cthe scores of ceachNcountry, w t
Nc
2
Based on the IQR test, the 2012 Survey data collected in Ecuador, Georgia, Rwanda, and Sri
Lanka deviate significantly from the 2011 results. The subsequent analysis revealed that this departure was not while Box 2 details the methodology and provides a t 2012 accompanied by a similar trend in indicators taken from clarifying example. wc Nc
2011
2012 other sources, and the recent developments in these
Nc
Nc
2012
2012
2011
0
1
wc wc wc countries do not seem to provide enough justification
Inter-year robustness test
2
2011 forc2012 1
The two tests described above address variability issues 0 w the large swings observed. For these four countries, wc we therefore use only the 2011 Survey data in the among individual responses in a country. Yet they were
N c2011
N c2012
2011
2012
2011
1 not2011–12 1 designed to track the evolution of country scores q i,c q i,c q i,c computation ofi,c this year’s GCI. While this remains a q 2012
(1 ) q i,c
2011
2012
2011
2
2
Nc
N c2012 remedial measure, we will continue to investigate the across time. Therefore, we use an additional N c toc test N discounted-past situation assess the reliability and weighted average of the Survey sample-size weighted average in an effort to improve the reliability of the consistency Survey data in these countries. Last year, the same data. The inter-quartile range test, or IQR test, is used analysis resulted in the Survey data of six countries— to identify large swings—positive and negative—in the
N ct
N ct t t t t t –t
Bosniaqand Herzegovina, Kazakhstan, Morocco, Qatar, country 1 scores. Moreqspecifically, for 1each country q i,c q i,c
(1 ) q i,c i,c i,c
2
N ct N ct
N ct N ct
2
Saudi Arabia, and Slovenia—not being included in the we compute c as the average difference in country analysis. This year, as an intermediate step toward the scores across all the Survey questions from one year to re-establishment of the standard computation method, another. We then compute the inter-quartile range (i.e.,
2005
2006
–2005
–2006
–2006
1
1
05–06 used thei,c difference between the 25th i,c percentile and N c 2006 q i,c the 75th –2005 we N c 2006a weighted average of the Survey data of 2010 q i,c q q i,c
(1 ) q 2005
2005
2
2
Nc
Nc
Nc
Nc
and 2012 for these countries. percentile), denoted iq, of the sample of 144 economies with respect to the previous year. Any value c lying
0.457 6.03 0.543 5 25th percentile minus
CONCLUSION
outside the range bounded by the.70 5.85
2011
2012
The Executive Opinion Survey remains the largest
1.5 times iq and the 75th percentile plus 1.5 times iq is poll of its kind, collecting this year the insight of more identified as a potential outlier. Formally, we have: than 14,000 executives into their business operating environment. This scale could not be achieved without lower bound = Q1 – 1.5 IQR the tremendous efforts of the Forum’s network of over upper bound = Q3 – 1.5 IQR
160 Partner Institutes in carrying out the Survey at a national level. It gathers valuable information on a broad where range of variables for which data sources are scarce
Q1 and Q3 correspond to the 25th and 75th or nonexistent. For this reason, and for the integrity of percentiles of the sample, respectively, and our publications and related research, improving the
IQR is the difference between these two sampling methodology and comparability of data across values. the globe remain an essential and ongoing endeavor of
This test is complemented by an analysis of the
The Global Benchmarking Network. evolution in the results over the past five editions and by a comparison with the evolution in the data used in the
NOTES
GCI that are not derived from the Survey. In addition,
1 Although data were collected for almost 150 economies in 2012, we examine the latest developments in all the countries following the editing process we used the 2012 data for 140 identified as outliers by the tests that might help to economies. Please see the data editing section for further details. explain such large swings.
1
1
2
1
2
2
1
1
2
2
1
2
The Global Competitiveness Report 2012–2013 | 77
1.3: The Executive Opinion Survey
2 The World Economic Forum’s Global Benchmarking Network would like to acknowledge e-Rewards Market Research for carrying out the Executive Opinion Survey 2012 in the United
States, collecting over 450 surveys following the detailed sampling guidelines. Furthermore, e-Rewards supplemented the sample in
Germany.
3 Company size is defined as the number of employees of the firm in the country of the Survey respondent. The company size value used for delineating the large and small company sample frames varies across countries. The size value tracks closely with the overall size of the economy. Adjustments were made to the value based on searches in company directories and data gathered through the administration of the Survey in past years.
4 In order to reach the required number of surveys in each country
(80 for most economies and 300 for the BRIC countries and the
United States), a Partner Institute uses the response rate from previous years.
5 The results are the scores obtained by each economy in the various questions of the Survey. The two terms are used interchangeably throughout the text.
6 The completion rate is the proportion of answered questions among the 130 core questions in the Survey instrument.
7 In some cases, the information about the company’s sector of activity is missing. In these cases, for any given country when the sample includes at least one survey without sector information, the average response values across the surveys are apportioned to the other sectors according to the sample sizes in those other sectors. This has the effect of including these surveys on a one-for-one basis as they occur in the sample—that is, with no adjustment for sector.
8 Concretely, if the weight of an individual response exceeds 10 percent of the country sample, the sector-weighted average is abandoned for the benefit of a simple average.
78 | The Global Competitiveness Report 2012–2013
Part 2
Data Presentation
2.1
Country/Economy Profiles
2.1: Country/Economy Profiles
How to Read the Country/Economy Profiles
The Country/Economy Profiles section presents a twopage profile for each of the 144 economies covered in
The Global Competitiveness Report 2012–2013.
2.1: Country/Economy Profiles
Albania
Key indicators, 2011
GDP (PPP) per capita (int’l $), 1990–2011
Population (millions) .......................................... 3.3
GDP (US$ billions) .......................................... 12.8
GDP per capita (US$) ................................... 3,992
GDP (PPP) as share (%) of world total ............ 0.03
Albania
20,000
Central and Eastern Europe
15,000
10,000
5,000
0
PAGE 1
Rank
(out of 144)
Key indicators
The first section presents a selection of key indicators for the economy under review:
• Population figures are from the World Population
Prospects: The 2010 Revision, (CD-ROM edition), published by the United Nations’ Department of
Economic and Social Affairs, Population Division.
The population figure for Taiwan, China, is sourced from Taiwan’s National Statistics.
• The chart on the upper right-hand side displays the evolution of GDP per capita at purchasing power parity (PPP) from 1990 through 2011 (or the period for which data are available) for the economy under review (blue line). The black line plots the GDPweighted average of GDP per capita of the group of economies to which the economy under review belongs. We draw on the IMF classification, which divides the world into six regions: Central and Eastern
Europe; Commonwealth of Independent States (CIS), which includes Georgia and Mongolia although they are not members; Developing Asia; Middle East and
North Africa; Sub-Saharan Africa; and Latin America and the Caribbean. The last group comprises advanced economies. GDP figures come from the
WEO database. For more information regarding the classification and the data, visit www.imf.org/weo.
Note that no data are available for Puerto Rico.
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Stage of development
Score
(1–7)
GCI 2012–2013 ...................................................... 89 ..... 3.9
Transition
1–2
1
GCI 2011–2012 (out of 142) ..................................... 78 ......4.1
GCI 2010–2011 (out of 139) ..................................... 88 ......3.9
Factor driven Transition
2–3
2
3
Efficiency driven Basic requirements (40.0%) .......................................87 ......4.2
Innovation driven Institutions
Institutions ................................................................ 84 ......3.6
Infrastructure ............................................................ 91 ......3.5
Macroeconomic environment ................................... 98 ......4.3
Health and primary education ................................... 79 ......5.6
7
Innovation
Infrastructure
6
5
Business sophistication Macroeconomic environment 4
3
Efficiency enhancers (50.0%) .....................................92 ......3.8
2
Higher education and training ................................... 76 ......4.1
Goods market efficiency .......................................... 58 ......4.3
Labor market efficiency ............................................ 68 ......4.4
Financial market development ................................ 120 ......3.4
Technological readiness ............................................ 77 ......3.7
Market size ............................................................... 98 ......2.9
Market size
Health and primary education
1
Higher education and training
Technological readiness Financial market development Innovation and sophistication factors (10.0%) .........113 ......3.1
Goods market efficiency Labor market efficiency
Business sophistication ........................................... 98 ......3.6
Innovation ............................................................... 123 ......2.6
Albania
Efficiency-driven economies
The most problematic factors for doing business
Access to financing ...........................................................23.3
Corruption .........................................................................22.2
Inefficient government bureaucracy ...................................11.6
Tax regulations ....................................................................9.8
Policy instability ...................................................................6.1
Tax rates..............................................................................5.2
Foreign currency regulations ................................................4.3
Crime and theft ...................................................................3.9
Inadequate supply of infrastructure ......................................3.0
Poor work ethic in national labor force ................................3.0
Government instability/coups ..............................................2.5
Inflation ................................................................................2.3
Inadequately educated workforce ........................................2.0
Restrictive labor regulations .................................................0.7
Poor public health ...............................................................0.2
0
• Gross domestic product (GDP) data come from the
April 2012 edition of the International Monetary Fund
(IMF)’s World Economic Outlook (WEO) Database, with the exception of Puerto Rico, for which figures were calculated using national sources. Reported
GDP and GDP per capita are valued at current prices.
1991
The Global Competitiveness Index
5
10
15
20
25
30
Percent of responses
Note:
From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between
1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings.
86 | The Global Competitiveness Report 2012–2013
Global Competitiveness Index
This section details the economy’s performance on the various components of the Global Competitiveness Index
(GCI). The first column shows the country’s rank among the 144 economies, while the second column presents the score. The percentage contribution to the overall GCI score of each subindex score is reported next to the subindex name. These weights vary depending on the country’s stage of development. For more information on the methodology of the GCI, refer to Chapter 1.1.
On the right-hand side, a chart shows the country’s performance in the 12 pillars of the GCI (blue line) measured against the average scores across all the economies in the same stage of development (black line). The most problematic factors for doing business
This chart summarizes those factors seen by business executives as the most problematic for doing business in their economy. The information is drawn from the
2012 edition of the World Economic Forum’s Executive
Opinion Survey (Survey). From a list of 16 factors, respondents were asked to select the five most
The Global Competitiveness Report 2012–2013 | 83
2.1: Country/Economy Profiles
problematic and rank them from 1 (most problematic) to 5. The results were then tabulated and weighted according to the ranking assigned by respondents. For
Ecuador, Georgia, Rwanda, and Sri Lanka, we use data from the 2011 edition of the Survey. For these countries, the list comprises only 15 factors—one less than in the 2012 edition. See Chapter 1.3 for details. Due to a logistical issue, the results for Albania were also based on the same list of 15 factors, although the data were collected in 2012.
2.1: Country/Economy Profiles
Albania
The Global Competitiveness Index in detail
INDICATOR
VALUE RANK/144
1st pillar: Institutions
1.01
1.02
1.03
1.04
1.05
1.06
1.07
1.08
1.09
1.10
1.11
1.12
1.13
1.14
1.15
1.16
1.17
1.18
1.19
1.20
1.21
1.22
Property rights ....................................................... 3.1 ..........129
Intellectual property protection ............................... 3.0 ..........103
Diversion of public funds ........................................ 2.8 ............97
Public trust in politicians ......................................... 2.6 ............75
Irregular payments and bribes ................................ 3.6 ............84
Judicial independence............................................ 2.6 ..........121
Favoritism in decisions of government officials ....... 2.9 ............84
Wastefulness of government spending ................... 3.3 ............66
Burden of government regulation ........................... 4.1 ............ 26
Efficiency of legal framework in settling disputes .... 3.3 ............98
Efficiency of legal framework in challenging regs. ... 3.3 ............93
Transparency of government policymaking............. 4.3 ............67
Gov’t services for improved business performance n/a ...........n/a
Business costs of terrorism .................................... 5.6 ............69
Business costs of crime and violence..................... 4.7 ............80
Organized crime ..................................................... 4.7 ............99
Reliability of police services .................................... 4.0 ............77
Ethical behavior of firms ......................................... 3.9 ............71
Strength of auditing and reporting standards ......... 4.2 ..........101
Efficacy of corporate boards .................................. 4.7 ............56
Protection of minority shareholders’ interests ......... 4.2 ............70
Strength of investor protection, 0–10 (best)* .......... 7.3 ............ 16
2.01
2.02
2.03
2.04
2.05
2.06
2.07
2.08
2.09
Quality of overall infrastructure ............................... 4.2 ............77
Quality of roads ...................................................... 4.3 ............59
Quality of railroad infrastructure .............................. 1.2 ..........119
Quality of port infrastructure ................................... 3.7 ............96
Quality of air transport infrastructure....................... 4.8 ............66
Available airline seat kms/week, millions* ............. 22.4 ..........118
Quality of electricity supply ..................................... 4.8 ............71
Mobile telephone subscriptions/100 pop.* ........... 96.4 ............92
Fixed telephone lines/100 pop.* ........................... 10.5 ............91
3.01
3.02
3.03
3.04
3.05
Government budget balance, % GDP* ..................-3.5 ............80
Gross national savings, % GDP* .......................... 11.8 ..........116
Inflation, annual % change* .................................... 3.4 ............ 43
General government debt, % GDP* ..................... 58.9 ..........104
Country credit rating, 0–100 (best)* ...................... 38.9 ............81
2nd pillar: Infrastructure
3rd pillar: Macroeconomic environment
PAGE 2
The Global Competitiveness Index in detail
This page details the country’s performance on each of the indicators entering the composition of the GCI.
Indicators are organized by pillar. For indicators entering at the GCI in two different pillars, only the first instance is shown on this page.
• INDICATOR, UNITS: This column contains the title of each indicator and, where relevant, the units in which it is measured—for example, “days” or
“% GDP.” Indicators that are not derived from the
Survey are identified by an asterisk (*). Indicators derived from the Survey are always expressed as scores on a 1–7 scale, with 7 being the most desirable outcome.
• VALUE: This column reports the country’s score on each indicator.
• R ANK/144: This column reports the country’s position among the 144 economies covered by the GCI 2012–2013. The ranks of those indicators that constitute a notable competitive advantage are highlighted in blue bold typeface (except for inflation). Competitive advantages are defined as follows: For those economies ranked in the top 10 in the overall GCI, individual indicators ranked from 1 through 10 are considered to be advantages.
For instance, in the case of Germany—which is ranked 6th overall—its 7th rank on indicator 1.06
Judicial independence makes this indicator a competitive advantage.
For those economies ranked from 11 through 50 in the overall GCI, variables ranked higher than the economy’s own rank are considered to be advantages. In the case of Iceland, ranked 30th overall, its rank of 12 on indicator 7.08 Female participation in labor force makes this indicator a competitive advantage.
84 | The Global Competitiveness Report 2012–2013
INDICATOR
4th pillar: Health and primary education
4.01
4.02
4.03
4.04
4.05
4.06
4.07
4.08
4.09
4.10
Business impact of malaria .............................. n/appl. .............. 1
Malaria cases/100,000 pop.* ................................(NE) .............. 1
Business impact of tuberculosis ............................. 6.7 .............. 5
Tuberculosis cases/100,000 pop.* ....................... 14.0 ............ 34
Business impact of HIV/AIDS ................................. 6.6 .............. 4
HIV prevalence, % adult pop.* .............................
References: Acemoglu, D. 2002. “Directed Technical Change.” Review of Economic Studies 69 (4): 781–809. — —. 2007. “Equilibrium Bias of Technology.” Econometrica 75 (5): — — —. 2009. Introduction to Modern Economic Growth. New York: — Acemoglu, D., P. Aghion, L. Bursztyn, and D. Hemous. 2012. “The Environment and Directed Technical Change.” American Economic Aghion, P. and P. Howitt. 1998. Endogenous Growth Theory. ILO (International Labour Organization). 2008. Decent Work Indicators for Asia and the Pacific: A Guidebook for Policy-Makers and IOM (International Organization for Migration). 2011. IOM Case Data Global Figures & Trends: Human Trafficking Gleick, P.H. 2003. “Water Use.” Annual Review of Environment and Resources 28: 275–314. Green, A., J. Preston, and G. Janmaat. 2006. Education, Equality and Social Cohesion: A Comparative Analysis Hamilton, K. and M. Clemens. 1998. “Genuine Savings Rates in Developing Countries.” World Bank Economic Review 13 (2): Hanley, N., J. Shogren, and B. White. 2007. Environmental Economics in Theory and Practice Kutzents, S. 1955. “Economic Growth and Income Inequality.” American Economic Review 45 (1):1–28. Marshall, F., M. Ashmore, and F. Hinchcliffe. 1997. A Hidden Threat to Food Production: Air Pollution and Agriculture in the Developing Meyer, S. 1999. The Economic Impact of Environmental Regulation. MIT Project on Environmental Politics & Policy Nordhaus, W. 1994. “Locational Competition and the Environment: Should Countries Harmonize Their Environmental Policies?“ Cowles Foundation Discussion Paper No. 1079, Cowles Foundation for Research in Economics, Yale University. — —. 2012b. Financing Green Growth in a Resource— Constrained World Columbia University). 2012. Environmental Performance Index. — —. 2000. “Alternative Methods for Measuring Productivity Growth,” — Cowles Foundation Discussion Paper No. 1282, Cowles Foundation for Research in Economics, Yale University. — —. 2002. “The Health of Nations: The Contribution of Improved — Health to Living Standards,” NBER Working Paper No. 8818. Perotti R. 1993. “Political Equilibrium, Income Distribution, and Growth.” Review of Economic Studies 60 (4): 755–76. Persson, T. and G.Tabellini 1994. “Is Inequality Harmful for Growth? Theories and Evidence.” American Economic Review 84: (1994): Shorrocks, A. 2005. Inequality Values and Unequal Shares. Helsinki: UNU-WIDER. Smith, A. 2012. “U.S. Drought Drives Up Food Prices Worldwide.” CNNMoney, August 9 Stavins, R. 2011. “The Problem of the Commons: Still Unsettled after 100 Years.” American Economic Review 101 (1): 81–108. Stern, N. 2006. Stern Review on the Economics of Climate Change. Stiglitz, J., A. Sen, and J. Fitoussi. 2009. The Measurement of Economic Performance and Social Progress Revisited: Reflections — —. 2011b. Human Development Report 2011: Sustainability and —
The Global
Competitiveness Report
2012–2013
Klaus Schwab, World Economic Forum
Insight Report
The Global
Competitiveness Report
2012–2013
Full Data Edition
Professor Klaus Schwab
World Economic Forum
Editor
Professor Xavier Sala-i-Martín
Columbia University
Chief Advisor of The Global Benchmarking Network
The Global Competitiveness Report 2012–20013:
Full Data Edition is published by the World Economic
Forum within the framework of The Global
Benchmarking Network.
World Economic Forum
Geneva
Professor Klaus Schwab
Executive Chairman
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, or otherwise without the prior permission of the World Economic Forum.
Professor Xavier Sala-i-Martín
Chief Advisor of The Global Benchmarking Network
Børge Brende
Managing Director, Government Relations and
Constituents Engagement
THE GLOBAL BENCHMARKING NETWORK
Jennifer Blanke, Senior Director,
Lead Economist, Head of The Global
Benchmarking Network
Beñat Bilbao-Osorio, Associate Director,
Senior Economist
Ciara Browne, Associate Director
Roberto Crotti, Quantitative Economist
Margareta Drzeniek Hanouz, Director, Senior
Economist, Head of Competitiveness Research
Brindusa Fidanza, Associate Director,
Environmental Initiatives
Thierry Geiger, Associate Director, Economist
Tania Gutknecht, Community Manager
Caroline Ko, Junior Economist
Cecilia Serin, Team Coordinator
We thank Hope Steele for her excellent editing work and
Neil Weinberg for his superb graphic design and layout.
We are grateful to Annabel Guinault for her invaluable research assistance.
The terms country and nation as used in this report do not in all cases refer to a territorial entity that is a state as understood by international law and practice. The terms cover well-defined, geographically self-contained economic areas that may not be states but for which statistical data are maintained on a separate and independent basis.
Copyright © 2012 by the World Economic Forum
ISBN-13: 978-92-95044-35-7
ISBN-10: 92-95044-35-5
This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources.
Printed and bound in Switzerland by SRO-Kundig.
The Report and an interactive data platform are available at www.weforum.org/gcr.
Contents
Partner Institutes
Preface
v xiii by Klaus Schwab
Part 2: Data Presentation
79
2.1 Country/Economy Profiles
81
How to Read the Country/Economy Profiles ..................................83
Index of Countries/Economies ........................................................85
Country/Economy Profiles ..............................................................86
Part 1: Measuring Competitiveness
1.1 The Global Competitiveness Index
2012–2013: Strengthening Recovery by
Raising Productivity
1
3
2.2 Data Tables
375
How to Read the Data Tables .......................................................377
Index of Data Tables .....................................................................379
Data Tables ..................................................................................381
by Xavier Sala-i-Martín, Beñat Bilbao-Osorio, Jennifer
Technical Notes and Sources
519
About the Authors
523
Acknowledgments
Blanke, Roberto Crotti, Margareta Drzeniek Hanouz,
527
Thierry Geiger, and Caroline Ko
1.2 Assessing the Sustainable Competitiveness of Nations
49
by Beñat Bilbao-Osorio, Jennifer Blanke, Roberto Crotti,
Margareta Drzeniek Hanouz, Brindusa Fidanza, Thierry
Geiger, Caroline Ko, and Cecilia Serin
1.3 The Executive Opinion Survey: The Voice of the Business Community
69
by Ciara Browne, Thierry Geiger, and Tania Gutknecht
The Global Competitiveness Report 2012–2013 | iii
Partner Institutes
The World Economic Forum’s Global Benchmarking
Network is pleased to acknowledge and thank the following organizations as its valued Partner
Institutes, without which the realization of The Global
Competitiveness Report 2012–2013 would not have been feasible:
Albania
Institute for Contemporary Studies (ISB)
Artan Hoxha, President
Elira Jorgoni, Senior Expert
Endrit Kapaj, Expert
Algeria
Centre de Recherche en Economie Appliquée pour le Développement (CREAD)
Youcef Benabdallah, Assistant Professor
Yassine Ferfera, Director
Argentina
IAE—Universidad Austral
Eduardo Luis Fracchia, Professor
Santiago Novoa, Project Manager
Armenia
Economy and Values Research Center
Manuk Hergnyan, Chairman
Sevak Hovhannisyan, Board Member and Senior Associate
Gohar Malumyan, Research Associate
Australia
Australian Industry Group
Colleen Dowling, Senior Research Coordinator
Innes Willox, Chief Executive
Austria
Austrian Institute of Economic Research (WIFO)
Karl Aiginger, Director
Gerhard Schwarz, Coordinator, Survey Department
Azerbaijan
Azerbaijan Marketing Society
Fuad Aliyev, Deputy Chairman
Ashraf Hajiyev, Consultant
Bahrain
Bahrain Economic Development Board
Kamal Bin Ahmed, Minister of Transportation and Acting Chief
Executive of the Economic Development Board
Nada Azmi, Manager, Economic Planning and Development
Maryam Matter, Coordinator, Economic Planning and
Development
Bangladesh
Centre for Policy Dialogue (CPD)
Khondaker Golam Moazzem, Senior Research Fellow
Kishore Kumer Basak, Research Associate
Mustafizur Rahman, Executive Director
Barbados
Sir Arthur Lewis Institute of Social and Economic Studies,
University of West Indies (UWI)
Judy Whitehead, Director
Belgium
Vlerick Business School
Priscilla Boiardi, Associate, Competence Centre
Entrepreneurship, Governance and Strategy
Wim Moesen, Professor
Leo Sleuwaegen, Professor, Competence Centre
Entrepreneurship, Governance and Strategy
Benin
CAPOD—Conception et Analyse de Politiques de
Développement
Epiphane Adjovi, Director
Maria-Odile Attanasso, Deputy Coordinator
Fructueux Deguenonvo, Researcher
Bosnia and Herzegovina
MIT Center, School of Economics and Business in Sarajevo,
University of Sarajevo
Zlatko Lagumdzija, Professor
Zeljko Sain, Executive Director
Jasmina Selimovic, Assistant Director
Botswana
Botswana National Productivity Centre
Letsogile Batsetswe, Research Consultant and Statistician
Baeti Molake, Executive Director
Phumzile Thobokwe, Manager, Information and Research
Services Department
Brazil
Fundação Dom Cabral, Bradesco Innovation Center
Carlos Arruda, International Relations Director, Innovation and Competitiveness Professor
Daniel Berger, Bachelor Student in Economics
Fabiana Madsen, Economist and Associate Researcher
Movimento Brasil Competitivo (MBC)
Carolina Aichinger, Project Coordinator
Erik Camarano, Chief Executive Officer
Brunei Darussalam
Ministry of Industry and Primary Resources
Pehin Dato Yahya Bakar, Minister
Normah Suria Hayati Jamil Al-Sufri, Permanent Secretary
Bulgaria
Center for Economic Development
Adriana Daganova, Expert, International Programmes and
Projects
Anelia Damianova, Senior Expert
Burkina Faso lnstitut Supérieure des Sciences de la Population (ISSP),
University of Ouagadougou
Baya Banza, Director
The Global Competitiveness Report 2012–2013 | v
Partner Institutes
Burundi
University Research Centre for Economic and Social
Development (CURDES), National University of Burundi
Banderembako Deo, Director
Gilbert Niyongabo, Dean, Faculty of Economics &
Management
Cambodia
Economic Institute of Cambodia
Sok Hach, President
Sokheng Sam, Researcher
Cameroon
Comité de Compétitivité (Competitiveness Committee)
Lucien Sanzouango, Permanent Secretary
Canada
The Conference Board of Canada
Michael R. Bloom, Vice-President, Organizational
Effectiveness & Learning
Douglas Watt, Associate Director
Cape Verde
INOVE RESEARCH—Investigação e Desenvolvimento, Lda
Júlio Delgado, Partner and Senior Researcher
José Mendes, Chief Executive Officer
Sara França Silva, Project Manager
Chad
Groupe de Recherches Alternatives et de Monitoring du Projet
Pétrole-Tchad-Cameroun (GRAMP-TC)
Antoine Doudjidingao, Researcher
Gilbert Maoundonodji, Director
Celine Nénodji Mbaipeur, Programme Officer
Chile
Universidad Adolfo Ibáñez
Fernando Larrain Aninat, Director MBA
Leonidas Montes, Dean, School of Government
China
Institute of Economic System and Management, National
Development and Reform Commission
Chen Wei, Research Fellow
Dong Ying, Professor
Zhou Haichun, Deputy Director and Professor
China Center for Economic Statistics Research, Tianjin
University of Finance and Economics
Bojuan Zhao, Professor
Fan Yang, Professor Jian Wang, Associate Professor
Hongye Xiao, Professor
Lu Dong, Professor
Colombia
National Planning Department
Sara Patricia Rivera, Advisor
John Rodríguez, Coordinator, Competitiveness Observatory
Javier Villarreal, Enterprise Development Director
Colombian Private Council on Competitiveness
Rosario Córdoba, President
Marco Llinás, Vicepresident
Côte d’Ivoire
Chambre de Commerce et d’Industrie de Côte d’Ivoire
Jean-Louis Billon, President
Mamadou Sarr, Director General
Croatia
National Competitiveness Council
Jadranka Gable, Advisor
Kresimir Jurlin, Research Fellow
vi | The Global Competitiveness Report 2012–2013
Cyprus
The European University
Bambos Papageorgiou, Head of Socioeconomic and
Academic Research cdbbank—The Cyprus Development Bank
Maria Markidou-Georgiadou, Manager, Business Development and Special Projects
Czech Republic
CMC Graduate School of Business
Tomas Janca, Executive Director
Denmark
Danish Technological Institute, Center for Policy and Business
Development
Hanne Shapiro, Center Manager
Ecuador
ESPAE Graduate School of Management, Escuela Superior
Politécnica del Litoral (ESPOL)
Elizabeth Arteaga, Project Assistant
Virginia Lasio, Director
Sara Wong, Professor
Egypt
The Egyptian Center for Economic Studies (ECES)
Iman Al-Ayouty, Senior Economist
Omneia Helmy, Acting Executive Director and Director of Research
Estonia
Estonian Institute of Economic Research
Evelin Ahermaa, Head of Economic Research Sector
Marje Josing, Director
Estonian Development Fund
Kitty Kubo, Head of Foresight
Ott Pärna, Chief Executive Officer
Ethiopia
African Institute of Management, Development and
Governance
Zebenay Kifle, General Manager
Tegenge Teka, Senior Expert
Finland
ETLA—The Research Institute of the Finnish Economy
Markku Kotilainen, Research Director
Petri Rouvinen, Research Director
Pekka Ylä-Anttila, Managing Director
France
HEC School of Management, Paris
Bertrand Moingeon, Professor and Deputy Dean
Bernard Ramanantsoa, Professor and Dean
Gabon
Confédération Patronale Gabonaise
Regis Loussou Kiki, General Secretary
Gina Eyama Ondo, Assistant General Secretary
Henri Claude Oyima, President
Gambia, The
Gambia Economic and Social Development Research Institute
(GESDRI)
Makaireh A. Njie, Director
Georgia
Business Initiative for Reforms in Georgia
Tamara Janashia, Executive Director
Giga Makharadze, Founding Member of the Board of Directors
Mamuka Tsereteli, Founding Member of the Board of Directors
Partner Institutes
Germany
WHU—Otto Beisheim School of Management
Ralf Fendel, Professor of Monetary Economics
Michael Frenkel, Professor, Chair of Macroeconomics and
International Economics
Ghana
Association of Ghana Industries (AGI)
Patricia Addy, Projects Officer
Nana Owusu-Afari, President
Seth Twum-Akwaboah, Executive Director
Greece
SEV Hellenic Federation of Enterprises
Michael Mitsopoulos, Senior Advisor, Entrepreneurship
Thanasis Printsipas, Economist, Entrepreneurship
Guatemala
FUNDESA
Felipe Bosch G., President of the Board of Directors
Pablo Schneider, Economic Director
Juan Carlos Zapata, General Manager
Guinea
Confédération Patronale des Entreprises de Guinée
Mohamed Bénogo Conde, Secretary-General
Guyana
Institute of Development Studies, University of Guyana
Karen Pratt, Research Associate
Clive Thomas, Director
Haiti
Group Croissance SA
Pierre Lenz Dominique, Coordinator, Survey Department
Kesner Pharel, Chief Executive Officer and Chairman
Hong Kong SAR
Hong Kong General Chamber of Commerce
David O’Rear, Chief Economist
Federation of Hong Kong Industries
Alexandra Poon, Director
The Chinese General Chamber of Commerce
Hungary
KOPINT-TÁRKI Economic Research Ltd.
Éva Palócz, Chief Executive Officer
Peter Vakhal, Project Manager
Iceland
Innovation Center Iceland
Ardis Armannsdottir, Marketing Manager
Karl Fridriksson, Managing Director of Human Resources and Marketing
Thorsteinn I. Sigfusson, Director
India
Confederation of Indian Industry (CII)
Chandrajit Banerjee, Director General
Marut Sengupta, Deputy Director General
Gantakolla Srivastava, Head, Financial Services
Indonesia
Center for Industry, SME & Business Competition Studies,
University of Trisakti
Tulus Tambunan, Professor and Director
Iran, Islamic Republic of
The Center for Economic Studies and Surveys (CESS), Iran
Chamber of Commerce, Industries, Mines and Agriculture
Mohammad Janati Fard, Research Associate
Hamed Nikraftar, Project Manager
Farnaz Safdari, Research Associate
Ireland
Institute for Business Development and Competitiveness
School of Economics, University College Cork
Justin Doran, Principal Associate
Eleanor Doyle, Director
Catherine Kavanagh, Principal Associate
Forfás, Economic Analysis and Competitiveness Department
Adrian Devitt, Manager
Conor Hand, Economist
Israel
Manufacturers’ Association of Israel (MAI)
Dan Catarivas, Director
Amir Hayek, Managing Director
Zvi Oren, President
Italy
SDA Bocconi School of Management
Secchi Carlo, Full Professor of Economic Policy, Bocconi
University
Paola Dubini, Associate Professor, Bocconi University
Francesco A. Saviozzi, SDA Professor, Strategic and
Entrepreneurial Management Department
Jamaica
Mona School of Business (MSB), The University of the West
Indies
Patricia Douce, Project Administrator
Evan Duggan, Executive Director and Professor
William Lawrence, Director, Professional Services Unit
Japan
Keio University
Yoko Ishikura, Professor, Graduate School of Media Design
Heizo Takenaka, Director, Global Security Research Institute
Jiro Tamura, Professor of Law, Keio University
Keizai Doyukai (Japan Association of Corporate Executives)
Kiyohiko Ito, Managing Director, Keizai Doyukai
Jordan
Ministry of Planning & International Cooperation
Jordan National Competitiveness Team
Kawther Al-Zou’bi, Head of Competitiveness Division
Basma Arabiyat, Researcher
Mukhallad Omari, Director of Policies and Studies Department
Kazakhstan
National Analytical Centre
Diana Tamabayeva, Project Manager
Vladislav Yezhov, Chairman
Kenya
Institute for Development Studies, University of Nairobi
Mohamud Jama, Director and Associate Research Professor
Paul Kamau, Senior Research Fellow
Dorothy McCormick, Research Professor
Korea, Republic of
College of Business School, Korea Advanced Institute of
Science and Technology KAIST
Byungtae Lee, Acting Dean
Soung-Hie Kim, Associate Dean and Professor
Jinyung Cha, Assistant Director, Exchange Programme
Korea Development Institute
Joohee Cho, Senior Research Associate
Yongsoo Lee, Head, Policy Survey Unit
Kuwait
Kuwait National Competitiveness Committee
Adel Al-Husainan, Committee Member
Fahed Al-Rashed, Committee Chairman
Sayer Al-Sayer, Committee Member
The Global Competitiveness Report 2012–2013 | vii
Partner Institutes
Kyrgyz Republic
Economic Policy Institute “Bishkek Consensus”
Lola Abduhametova, Program Coordinator
Marat Tazabekov, Chairman
Latvia
Stockholm School of Economics in Riga
Karlis Kreslins, EMBA Programme Director
Anders Paalzow, Rector
Lebanon
Bader Young Entrepreneurs Program
Antoine Abou-Samra, Managing Director
Farah Shamas, Program Coordinator
Lesotho
Private Sector Foundation of Lesotho
O.S.M. Moosa, President
Thabo Qhesi, Chief Executive Officer
Nteboheleng Thaele, Researcher
Libya
Libya Development Policy Center
Yusser Al-Gayed, Project Director
Ahmed Jehani, Chairman
Mohamed Wefati, Director
Lithuania
Statistics Lithuania
Ona Grigiene, Deputy Head, Knowledge Economy and Special Surveys Statistics Division
Vilija Lapeniene, Director General
Gediminas Samuolis, Head, Knowledge Economy and Special Surveys Statistics Division
Luxembourg
Luxembourg Chamber of Commerce
Christel Chatelain, Research Analyst
Stephanie Musialski, Research Analyst
Carlo Thelen, Chief Economist, Member of the
Managing Board
Macedonia, FYR
National Entrepreneurship and Competitiveness
Council (NECC)
Mirjana Apostolova, President of the Assembly
Dejan Janevski, Project Coordinator
Madagascar
Centre of Economic Studies, University of Antananarivo
Ravelomanana Mamy Raoul, Director
Razato Rarijaona Simon, Executive Secretary
Malawi
Malawi Confederation of Chambers of Commerce and
Industry
Hope Chavula, Public Private Dialogue Manager
Chancellor L. Kaferapanjira, Chief Executive Officer
Malaysia
Institute of Strategic and International Studies (ISIS)
Jorah Ramlan, Senior Analyst, Economics
Steven C.M. Wong, Senior Director, Economics
Mahani Zainal Abidin, Chief Executive
Malaysia Productivity Corporation (MPC)
Mohd Razali Hussain, Director General
Lee Saw Hoon, Senior Director
Mali
Groupe de Recherche en Economie Appliquée et
Théorique (GREAT)
Massa Coulibaly, Executive Director
viii | The Global Competitiveness Report 2012–2013
Malta
Competitive Malta—Foundation for National Competitiveness
Margrith Lutschg-Emmenegger, Vice President
Adrian Said, Chief Coordinator
Caroline Sciortino, Research Coordinator
Mauritania
Centre d’Information Mauritanien pour le Développement
Economique et Technique (CIMDET/CCIAM)
Lô Abdoul, Consultant and Analyst
Mehla Mint Ahmed, Director
Habib Sy, Administrative Agent and Analyst
Mauritius
Board of Investment of Mauritius
Nirmala Jeetah, Director, Planning and Policy
Ken Poonoosamy, Managing Director
Joint Economic Council
Raj Makoond, Director
Mexico
Center for Intellectual Capital and Competitiveness
Erika Ruiz Manzur, Executive Director
René Villarreal Arrambide, President and Chief Executive
Officer
Rodrigo David Villarreal Ramos, Director
Instituto Mexicano para la Competitividad (IMCO)
Priscila Garcia, Researcher
Manuel Molano, Deputy General Director
Juan E. Pardinas, General Director
Ministry of the Economy
Jose Antonio Torre, Undersecretary for Competitiveness and Standardization
Enrique Perret Erhard, Technical Secretary for
Competitiveness
Narciso Suarez, Research Director, Technical Secretary for Competitiveness
Moldova
Academy of Economic Studies of Moldova (AESM)
Grigore Belostecinic, Rector
Centre for Economic Research (CER)
Corneliu Gutu, Director
Mongolia
Open Society Forum (OSF)
Munkhsoyol Baatarjav, Manager of Economic Policy
Erdenejargal Perenlei, Executive Director
Montenegro
Institute for Strategic Studies and Prognoses (ISSP)
Maja Drakic, Project Manager
Petar Ivanovic, Chief Executive Officer
Veselin Vukotic, President
Morocco
Comité National de l’Environnement des Affaires
Seloua Benmbarek, Head of Mission
Mozambique
EconPolicy Research Group, Lda.
Peter Coughlin, Director
Donaldo Miguel Soares, Researcher
Ema Marta Soares, Assistant
Namibia
Institute for Public Policy Research (IPPR)
Graham Hopwood, Executive Director
Partner Institutes
Nepal
Centre for Economic Development and Administration (CEDA)
Ramesh Chandra Chitrakar, Professor, Country Coordinator and Project Director
Mahendra Raj Joshi, Member
Hari Dhoj Pant, Officiating Executive Director, Advisor, Survey project Netherlands
INSCOPE: Research for Innovation, Erasmus University
Rotterdam
Frans A. J. Van den Bosch, Professor
Henk W. Volberda, Director and Professor
New Zealand
The New Zealand Initiative
Catherine Harland, Research Fellow
Oliver Hartwich, Executive Director
Nigeria
Nigerian Economic Summit Group (NESG)
Frank Nweke Jr., Director General
Chris Okpoko, Associate Director, Research
Foluso Phillips, Chairman
Norway
BI Norwegian Business School
Eskil Goldeng, Researcher
Torger Reve, Professor
Oman
The International Research Foundation
Salem Ben Nasser Al-Ismaily, Chairman
Public Authority for Investment Promotion and Export
Development (PAIPED)
Mehdi Ali Juma, Expert for Economic Research
Pakistan
Mishal Pakistan
Puruesh Chaudhary, Director Content
Amir Jahangir, Chief Executive Officer
Paraguay
Centro de Análisis y Difusión de Economia Paraguaya
(CADEP)
Dionisio Borda, Research Member
Fernando Masi, Director
María Belén Servín, Research Member
Peru
Centro de Desarrollo Industrial (CDI), Sociedad Nacional de Industrias
Néstor Asto, Project Director
Luis Tenorio, Executive Director
Philippines
Makati Business Club (MBC)
Michael B. Mundo, Chief Economist
Marc P. Opulencia, Deputy Director
Peter Angelo V. Perfecto, Executive Director
Management Association of the Philippines (MAP)
Arnold P. Salvador, Executive Director
Poland
Economic Institute, National Bank of Poland
Piotr Boguszewski, Advisor
Jarosław T. Jakubik, Deputy Director
Portugal
PROFORUM, Associação para o Desenvolvimento da
Engenharia
Ilídio António de Ayala Serôdio, Vice President of the Board of Directors
Fórum de Administradores de Empresas (FAE)
Paulo Bandeira, General Director
Pedro do Carmo Costa, Member of the Board of Directors
Esmeralda Dourado, President of the Board of Directors
Puerto Rico
Puerto Rico 2000, Inc.
Ivan Puig, President
Instituto de Competitividad Internacional, Universidad
Interamericana de Puerto Rico
Francisco Montalvo, Project Coordinator
Qatar
Qatari Businessmen Association (QBA)
Sarah Abdallah, Deputy General Manager
Issa Abdul Salam Abu Issa, Secretary-General
Social and Economic Survey Research Institute (SESRI)
Hanan Abdul Ibrahim, Associate Director
Darwish Al Emadi, Director
Romania
SC VBD Alliance Consulting Srl
Irina Ion, Program Coordinator
Rolan Orzan, General Director
Russian Federation
Bauman Innovation & Eurasia Competitiveness Institute
Katerina Marandi, Programme Manager
Alexey Prazdnichnykh, Principal and Managing Director
Stockholm School of Economics, Russia
Igor Dukeov, Area Principal
Carl F. Fey, Associate Dean of Research
Rwanda
Private Sector Federation (PSF)
Hannington Namara, Chief Executive Officer
Andrew O. Rwigyema, Head of Research and Policy
Saudi Arabia
National Competitiveness Center (NCC)
Awwad Al-Awwad, President
Khaldon Mahasen, Vice President
Senegal
Centre de Recherches Economiques Appliquées (CREA),
University of Dakar
Diop Ibrahima Thione, Director
Serbia
Foundation for the Advancement of Economics (FREN)
Mihail Arandarenko, Director
Aleksandar Radivojevic, Project Coordinator
Bojan Ristic, Researcher
Seychelles
Plutus Auditing & Accounting Services
Nicolas Boulle, Partner
Marco L. Francis, Partner
Singapore
Economic Development Board
Anna Chan, Assistant Managing Director, Planning & Policy
Cheng Wai San, Head, Research & Statistics Unit
Teo Xinyu, Executive, Research & Statistics Unit
Slovak Republic
Business Alliance of Slovakia (PAS)
Robert Kicina, Executive Director
The Global Competitiveness Report 2012–2013 | ix
Partner Institutes
Slovenia
Institute for Economic Research
Peter Stanovnik, Professor
Sonja Uršic, Senior Research Assistant
University of Ljubljana, Faculty of Economics
Mateja Drnovšek, Professor
Aleš Vahcic, Professor
South Africa
Business Leadership South Africa
Friede Dowie, Director
Thero Setiloane, Chief Executive Officer
Business Unity South Africa
Nomaxabiso Majokweni, Chief Executive Officer
Joan Stott, Executive Director, Economic Policy
Spain
IESE Business School, International Center for
Competitiveness
María Luisa Blázquez, Research Associate
Antoni Subirà, Professor
Sri Lanka
Institute of Policy Studies of Sri Lanka (IPS)
Ayodya Galappattige, Research Officer
Dilani Hirimuthugodage, Research Officer
Saman Kelegama, Executive Director
Suriname
Suriname Trade & Industry Association (VSB)
Helen Doelwijt, Executive Secretary
Rene van Essen, Director
Dayenne Wielingen Verwey, Economic Policy Officer
Swaziland
Federation of Swaziland Employers and Chamber of
Commerce
Mduduzi Lokotfwako, Research Analyst
Zodwa Mabuza, Chief Executive Officer
Nyakwesi Motsa, Administration & Finance Manager
Sweden
International University of Entrepreneurship and Technology
Niclas Adler, President
Switzerland
University of St. Gallen, Executive School of Management,
Technology and Law (ES-HSG)
Rubén Rodriguez Startz, Head of Project
Tobias Trütsch, Communications Manager
Taiwan, China
Council for Economic Planning and Development, Executive
Yuan
Hung, J. B., Director, Economic Research Department
Shieh, Chung Chung, Researcher, Economic Research
Department
Wu, Ming-Ji, Deputy Minister
Tajikistan
The Center for Sociological Research “Zerkalo”
Rahima Ashrapova, Assistant Researcher
Qahramon Baqoev, Director
Gulnora Beknazarova, Researcher
Tanzania
Research on Poverty Alleviation (REPOA)
Cornel Jahari, Assistant Researcher
Johansein Rutaihwa, Commissioned Researcher
Samuel Wangwe, Professor and Executive Director
x | The Global Competitiveness Report 2012–2013
Thailand
Sasin Graduate Institute of Business Administration,
Chulalongkorn University
Pongsak Hoontrakul, Senior Research Fellow
Narudee Kiengsiri, President of Sasin Alumni Association
Toemsakdi Krishnamra, Director of Sasin
Thailand Development Research Institute (TDRI)
Somchai Jitsuchon, Research Director
Chalongphob Sussangkarn, Distinguished Fellow
Yos Vajragupta, Senior Researcher
Timor-Leste
East Timor Development Agency (ETDA)
Jose Barreto, Survey Manager
Palmira Pires, Director
Chambers of Commerce and Industry of Timor-Leste
Kathleen Fon Ha Tchong Goncalves, Vice-President
Trinidad and Tobago
Arthur Lok Jack Graduate School of Business
Miguel Carillo, Executive Director and Professor of Strategy
Nirmala Harrylal, Director, Internationalisation and Institutional
Relations Centre
The Competitiveness Company
Rolph Balgobin, Chairman
Tunisia
Institut Arabe des Chefs d’Entreprises
Ahmed Bouzguenda, President
Majdi Hassen, Executive Counsellor
Turkey
TUSIAD Sabanci University Competitiveness Forum
Izak Atiyas, Director
Selcuk Karaata, Vice Director
Sezen Ugurlu, Project Specialist
Uganda
Kabano Research and Development Centre
Robert Apunyo, Program Manager
Delius Asiimwe, Executive Director
Francis Mukuya, Research Associate
Ukraine
CASE Ukraine, Center for Social and Economic Research
Dmytro Boyarchuk, Executive Director
Vladimir Dubrovskiy, Leading Economist
United Arab Emirates
Abu Dhabi Department of Economic Development
H.E. Mohammed Omar Abdulla, Undersecretary
Dubai Economic Council
H.E. Hani Al Hamly, Secretary General
Institute for Social and Economic Research (ISER), Zayed
University
Mouawiya Alawad, Director
Emirates Competitiveness Council
H.E. Abdulla Nasser Lootah, Secretary General
United Kingdom
LSE Enterprise Ltd, London School of Economics and
Political Science
Adam Austerfield, Director of Projects
Niccolo Durazzi, Project Manager
Robyn Klingler Vidra, Researcher
Uruguay
Universidad ORT Uruguay
Isidoro Hodara, Professor
Partner Institutes
Venezuela
CONAPRI—The Venezuelan Council for Investment Promotion
Litsay Guerrero, Economic Affairs and Investor Services
Manager
Eduardo Porcarelli, Executive Director
Vietnam
Ho Chi Minh City Institute for Development Studies (HIDS)
Nguyen Trong Hoa, Professor and President
Du Phuoc Tan, Head of Department
Trieu Thanh Son, Researcher
Yemen
Yemeni Businessmen Club (YBC)
Mohammed Esmail Hamanah, Executive Manager
Fathi Abdulwasa Hayel Saeed, Chairman
Moneera Abdo Othman, Project Coordinator
MARcon Marketing Consulting
Margret Arning, Managing Director
Zambia
Institute of Economic and Social Research (INESOR),
University of Zambia
Patricia Funjika, Research Fellow
Jolly Kamwanga, Senior Research Fellow and Project
Coordinator
Mubiana Macwan’gi, Director and Professor
Zimbabwe
Graduate School of Management, University of Zimbabwe
A. M. Hawkins, Professor
Bolivia, Costa Rica, Dominican Republic, Ecuador,
El Salvador, Honduras, Nicaragua, Panama
INCAE Business School, Latin American Center for
Competitiveness and Sustainable Development (CLACDS)
Ronald Arce, Researcher
Arturo Condo, Rector
Marlene de Estrella, Director of External Relations
Lawrence Pratt, Director
Liberia and Sierra Leone
FJP Development and Management Consultants
Omodele R. N. Jones, Chief Executive Officer
The Global Competitiveness Report 2012–2013 | xi
Preface
KLAUS SCHWAB
Executive Chairman, World Economic Forum
The Global Competitiveness Report 2012–2013 is being released amid a long period of economic uncertainty.
The tentative recovery that seemed to be gaining ground during 2010 and the first half of 2011 has given way to renewed concerns. The global economy faces a number of significant and interrelated challenges that could hamper a genuine upturn after an economic crisis half a decade long in much of the world, especially in the most advanced economies. The persisting financial difficulties in the periphery of the euro zone have led to a long-lasting and unresolved sovereign debt crisis that has now reached the boiling point. The possibility of Greece and perhaps other countries leaving the euro is now a distinct prospect, with potentially devastating consequences for the region and beyond.
This development is coupled with the risk of a weak recovery in several other advanced economies outside of Europe—notably in the United States, where political gridlock on fiscal tightening could dampen the growth outlook. Furthermore, given the expected slowdown in economic growth in China, India, and other emerging markets, reinforced by a potential decline in global trade and volatile capital flows, it is not clear which regions can drive growth and employment creation in the short to medium term.
Policymakers are struggling to find ways to cooperate and manage the current economic challenges while preparing their economies to perform well in an increasingly difficult and unpredictable global landscape.
Amid the short-term crisis management, it remains critical for countries to establish the fundamentals that underpin economic growth and development for the longer term. The World Economic Forum has, for more than three decades, played a facilitating role in this process by providing detailed assessments of the productive potential of nations worldwide. The Report contributes to an understanding of the key factors that determine economic growth, helps to explain why some countries are more successful than others in raising income levels and opportunities for their respective populations, and offers policymakers and business leaders an important tool in the formulation of improved economic policies and institutional reforms.
The complexity of today’s global economic environment has made it more important than ever
to recognize and encourage the qualitative as well as the quantitative aspects of growth, integrating such concepts as social and environmental sustainability to provide a fuller picture of what is needed and what works. In this context, the Forum’s Global Benchmarking
Network has continued to push forward with its research on how sustainability relates to competitiveness and economic performance. To this end, Chapter 1.2 of this
Report presents our evolving analysis of how country competitiveness can be assessed once issues of social and environmental sustainability are taken into account. This represents an important area for the World
Economic Forum’s research going forward.
This year’s Report features a record number of
144 economies, and thus continues to be the most comprehensive assessment of its kind. It contains a detailed profile for each of the economies included in the study as well as an extensive section of data tables with global rankings covering over 100 indicators.
This Report remains the flagship publication within the
Forum’s Global Benchmarking Network, which produces a number of research studies that mirror the increased integration and complexity of the world economy.
The Global Competitiveness Report 2012–2013 could not have been put together without the thought leadership of Professor Xavier Sala-i-Martín at Columbia
University, who has provided ongoing intellectual support for our competitiveness research. Further, this Report would have not been possible without the commitment and enthusiasm of our network of over 150
Partner Institutes worldwide. The Partner Institutes are instrumental in carrying out the Executive Opinion Survey that provides the foundation data of this Report as well as imparting the results of the Report at the national level. We would also like to convey our sincere gratitude to all the business executives around the world who took the time to participate in our Executive Opinion Survey.
We are also grateful to the members of our Advisory
Board on Competitiveness and Sustainability, who have provided their valuable time and knowledge to help us develop the framework on sustainability and competitiveness presented in this Report: James
Cameron, Chairman, Climate Change Capital; Dan Esty,
Commissioner, Connecticut Department of Energy and
Environmental Protection; Edwin J. Feulner Jr, President,
The Global Competitiveness Report 2012–2013 | xiii
Preface
The Heritage Foundation; Clément Gignac, Minister of Natural Resources and Wildlife of Quebec; Jeni
Klugman, Director for Gender, The World Bank; Marc A.
Levy, Deputy Director, CIESIN, Columbia University; John
McArthur, Senior Fellow, United Nations Foundation;
Kevin X. Murphy, President and Chief Executive Officer,
J.E. Austin Associates Inc.; Mari Elka Pangestu, Minister of Tourism and Creative Economy of Indonesia; Mark
Spelman, Global Head of Strategy, Accenture; and
Simon Zadek, Senior Visiting Fellow, Global Green
Growth Institute.
Appreciation also goes to Børge Brende, Managing
Director at the Forum, and Jennifer Blanke, Head of
The Global Benchmarking Network, as well as team members Beñat Bilbao-Osorio, Ciara Browne, Roberto
Crotti, Margareta Drzeniek Hanouz, Thierry Geiger, Tania
Gutknecht, Caroline Ko, and Cecilia Serin. Finally, we would like to thank the Africa Commission and FedEx, our partners in this Report, for their support in this important publication.
xiv |The Global Competitiveness Report 2012–2013
Part 1
Measuring Competitiveness
CHAPTER 1.1
The Global
Competitiveness Index
2012–2013: Strengthening
Recovery by Raising
Productivity
XAVIER SALA-I-MARTÍN
BEÑAT BILBAO-OSORIO
JENNIFER BLANKE
ROBERTO CROTTI
MARGARETA DRZENIEK HANOUZ
THIERRY GEIGER
CAROLINE KO
World Economic Forum
At the time of releasing The Global Competitiveness
Report 2012–2013, the outlook for the world economy is once again fragile. Global growth remains historically low for the second year running with major centers of economic activity—particularly large emerging economies and key advanced economies—expected to slow in
2012–13, confirming the belief that the global economy is troubled by a slow and weak recovery. As in previous years, growth remains unequally distributed. Emerging and developing countries are growing faster than advanced economies, steadily closing the income gap.
The International Monetary Fund (IMF) estimates that, in 2012, the euro zone will have contracted by
0.3 percent, while the United States is experiencing a weak recovery with an uncertain future. Large emerging economies such as Brazil, the Russian Federation, India,
China, and South Africa are growing somewhat less than they did in 2011. At the same time, other emerging markets—such as developing Asia—will continue to show robust growth rates, while the Middle East and
North Africa as well as sub-Saharan African countries are gaining momentum.
Recent developments—such as the danger of a property bubble in China, a decline in world trade, and volatile capital flows in emerging markets—could derail the recovery and have a lasting impact on the global economy. Arguably, this year’s deceleration to a large extent reflects the inability of leaders to address the many challenges that were already present last year.
Policymakers around the world remain concerned about high unemployment and the social conditions in their countries. The political brinkmanship in the United
States continues to affect the outlook for the world’s largest economy, while the sovereign debt crises and the danger of a banking system meltdown in peripheral euro zone countries remain unresolved. The high levels of public debt coupled with low growth, insufficient competitiveness, and political gridlock in some European countries stirred financial markets’ concerns about sovereign default and the very viability of the euro.
Given the complexity and the urgency of the situation,
European countries are facing particularly difficult economic management decisions with challenging political and social ramifications. Although European leaders do not agree on how to address the immediate challenges, there is recognition that, in the longer term, stabilizing the euro and putting Europe on a higher and more sustainable growth path will necessitate improvements to the competitiveness of the weaker member states.
All these developments are highly interrelated and demand timely, decisive, and coordinated action by policymakers. In light of these uncertain global ramifications, sustained structural reforms aimed at enhancing competitiveness will be necessary for
The Global Competitiveness Report 2012–2013 | 3
1.1: The Global Competitiveness Index 2012–2013
countries to stabilize economic growth and ensure the rising prosperity of their populations going into the future.
Competitive economies drive productivity enhancements that support high incomes by ensuring that the mechanisms enabling solid economic performance are in place.
For more than three decades, the World Economic
Forum’s annual Global Competitiveness Reports have studied and benchmarked the many factors underpinning national competitiveness. From the onset, the goal has been to provide insight and stimulate the discussion among all stakeholders on the best strategies and policies to help countries to overcome the obstacles to improving competitiveness. In the current challenging economic environment, our work is a critical reminder of the importance of structural economic fundamentals for sustained growth.
Since 2005, the World Economic Forum has based its competitiveness analysis on the Global
Competitiveness Index (GCI), a comprehensive tool that measures the microeconomic and macroeconomic foundations of national competitiveness.1
We define competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country. The level of productivity, in turn, sets the level of prosperity that can be earned by an economy. The productivity level also determines the rates of return obtained by investments in an economy, which in turn are the fundamental drivers of its growth rates. In other words, a more competitive economy is one that is likely to sustain growth.
The concept of competitiveness thus involves static and dynamic components. Although the productivity of a country determines its ability to sustain a high level of income, it is also one of the central determinants of its returns to investment, which is one of the key factors explaining an economy’s growth potential.
THE 12 PILLARS OF COMPETITIVENESS
Many determinants drive productivity and competitiveness. Understanding the factors behind this process has occupied the minds of economists for hundreds of years, engendering theories ranging from Adam Smith’s focus on specialization and the division of labor to neoclassical economists’ emphasis on investment in physical capital and infrastructure,2 and, more recently, to interest in other mechanisms such as education and training, technological progress, macroeconomic stability, good governance, firm sophistication, and market efficiency, among others.
While all of these factors are likely to be important for competitiveness and growth, they are not mutually exclusive—two or more of them can be significant at the same time, and in fact that is what has been shown in the economic literature.3
4 | The Global Competitiveness Report 2012–2013
This open-endedness is captured within the GCI by including a weighted average of many different components, each measuring a different aspect of competitiveness. These components are grouped into 12 pillars of competitiveness (see Figure 1):
First pillar: Institutions
The institutional environment is determined by the legal and administrative framework within which individuals, firms, and governments interact to generate wealth. The importance of a sound and fair institutional environment became even more apparent during the recent economic and financial crisis and is especially crucial for further solidifying the fragile recovery given the increasing role played by the state at the international level and for the economies of many countries.
The quality of institutions has a strong bearing on competitiveness and growth.4 It influences investment decisions and the organization of production and plays a key role in the ways in which societies distribute the benefits and bear the costs of development strategies and policies. For example, owners of land, corporate shares, or intellectual property are unwilling to invest in the improvement and upkeep of their property if their rights as owners are not protected.5
The role of institutions goes beyond the legal framework. Government attitudes toward markets and freedoms and the efficiency of its operations are also very important: excessive bureaucracy and red tape,6 overregulation, corruption, dishonesty in dealing with public contracts, lack of transparency and trustworthiness, inability to provide appropriate services for the business sector, and political dependence of the judicial system impose significant economic costs to businesses and slow the process of economic development. In addition, the proper management of public finances is also critical to ensuring trust in the national business environment. Indicators capturing the quality of government management of public finances are therefore included here to complement the measures of macroeconomic stability captured in pillar 3 below.
Although the economic literature has focused mainly on public institutions, private institutions are also an important element in the process of creating wealth.
The recent global financial crisis, along with numerous corporate scandals, have highlighted the relevance of accounting and reporting standards and transparency for preventing fraud and mismanagement, ensuring good governance, and maintaining investor and consumer confidence. An economy is well served by businesses that are run honestly, where managers abide by strong ethical practices in their dealings with the government, other firms, and the public at large.7 Private-sector transparency is indispensable to business, and can be brought about through the use of standards as well as
1.1: The Global Competitiveness Index 2012–2013
auditing and accounting practices that ensure access to information in a timely manner.8
Second pillar: Infrastructure
Extensive and efficient infrastructure is critical for ensuring the effective functioning of the economy, as it is an important factor in determining the location of economic activity and the kinds of activities or sectors that can develop in a particular instance. Well-developed infrastructure reduces the effect of distance between regions, integrating the national market and connecting it at low cost to markets in other countries and regions. In addition, the quality and extensiveness of infrastructure networks significantly impact economic growth and reduce income inequalities and poverty in a variety of ways.9 A well-developed transport and communications infrastructure network is a prerequisite for the access of less-developed communities to core economic activities and services.
Effective modes of transport—including quality roads, railroads, ports, and air transport—enable entrepreneurs to get their goods and services to market in a secure and timely manner and facilitate the movement of workers to the most suitable jobs.
Economies also depend on electricity supplies that are free of interruptions and shortages so that businesses and factories can work unimpeded. Finally, a solid and extensive telecommunications network allows for a rapid and free flow of information, which increases overall economic efficiency by helping to ensure that businesses can communicate and decisions are made by economic actors taking into account all available relevant information.
Third pillar: Macroeconomic environment
The stability of the macroeconomic environment is important for business and, therefore, is important for the overall competitiveness of a country.10 Although it is certainly true that macroeconomic stability alone cannot increase the productivity of a nation, it is also recognized that macroeconomic instability harms the economy, as we have seen over the past years, notably in the European context. The government cannot provide services efficiently if it has to make high-interest payments on its past debts. Running fiscal deficits limits the government’s future ability to react to business cycles and to invest in competitiveness-enhancing measures. Firms cannot operate efficiently when inflation rates are out of hand. In sum, the economy cannot grow in a sustainable manner unless the macro environment is stable. Macroeconomic stability has captured the attention of the public most recently when some
European countries needed the support of the IMF and other euro zone economies to prevent sovereign default, as their public debt reached unsustainable levels.
It is important to note that this pillar evaluates the stability of the macroeconomic environment, so it does not directly take into account the way in which public accounts are managed by the government. This qualitative dimension is captured in the institutions pillar described above.
Fourth pillar: Health and primary education
A healthy workforce is vital to a country’s competitiveness and productivity. Workers who are ill cannot function to their potential and will be less productive. Poor health leads to significant costs to business, as sick workers are often absent or operate at lower levels of efficiency. Investment in the provision of health services is thus critical for clear economic, as well as moral, considerations.11
In addition to health, this pillar takes into account the quantity and quality of the basic education received by the population. Basic education increases the efficiency of each individual worker. Moreover, workers who have received little formal education can carry out only simple manual tasks and find it much more difficult to adapt to more advanced production processes and techniques, and therefore contribute less to come up with or execute innovations. In other words, lack of basic education can become a constraint on business development, with firms finding it difficult to move up the value chain by producing more sophisticated or value-intensive products with existing human resources.
For the longer term, it will be essential to avoid significant reductions in resource allocation to these critical areas, in spite of the fact that government budgets will need to be cut to reduce the deficits and debt burden.
Fifth pillar: Higher education and training
Quality higher education and training is particularly crucial for economies that want to move up the value chain beyond simple production processes and products.12 In particular, today’s globalizing economy requires countries to nurture pools of well-educated workers who are able to perform complex tasks and adapt rapidly to their changing environment and the evolving needs of the economy. This pillar measures secondary and tertiary enrollment rates as well as the quality of education as evaluated by the business community. The extent of staff training is also taken into consideration because of the importance of vocational and continuous on-the-job training—which is neglected in many economies—for ensuring a constant upgrading of workers’ skills.
Sixth pillar: Goods market efficiency
Countries with efficient goods markets are well positioned to produce the right mix of products and services given their particular supply-and-demand
The Global Competitiveness Report 2012–2013 | 5
1.1: The Global Competitiveness Index 2012–2013
conditions, as well as to ensure that these goods can be most effectively traded in the economy. Healthy market competition, both domestic and foreign, is important in driving market efficiency and thus business productivity by ensuring that the most efficient firms, producing goods demanded by the market, are those that thrive. The best possible environment for the exchange of goods requires a minimum of impediments to business activity through government intervention. For example, competitiveness is hindered by distortionary or burdensome taxes and by restrictive and discriminatory rules on foreign direct investment (FDI)—limiting foreign ownership—as well as on international trade. The recent economic crisis has highlighted the degree of interdependence of economies worldwide and the degree to which growth depends on open markets.
Protectionist measures are counterproductive as they reduce aggregate economic activity.
Market efficiency also depends on demand conditions such as customer orientation and buyer sophistication. For cultural or historical reasons, customers may be more demanding in some countries than in others. This can create an important competitive advantage, as it forces companies to be more innovative and customer-oriented and thus imposes the discipline necessary for efficiency to be achieved in the market.
Seventh pillar: Labor market efficiency
The efficiency and flexibility of the labor market are critical for ensuring that workers are allocated to their most effective use in the economy and provided with incentives to give their best effort in their jobs. Labor markets must therefore have the flexibility to shift workers from one economic activity to another rapidly and at low cost, and to allow for wage fluctuations without much social disruption.13 The importance of well-functioning labor markets has been dramatically highlighted by last year’s events in Arab countries, where rigid labor markets were an important cause of high youth unemployment, sparking social unrest in Tunisia that then spread across the region. Youth unemployment is also high in a number of European countries, where important barriers to entry into the labor market remain in place.
Efficient labor markets must also ensure a clear relationship between worker incentives and their efforts to promote meritocracy at the workplace, and they must provide equity in the business environment between women and men. Taken together these factors have a positive effect on worker performance and the attractiveness of the country for talent, two aspects that are growing more important as talent shortages loom on the horizon.
6 | The Global Competitiveness Report 2012–2013
Eighth pillar: Financial market development
The recent economic crisis has highlighted the central role of a sound and well-functioning financial sector for economic activities. An efficient financial sector allocates the resources saved by a nation’s citizens, as well as those entering the economy from abroad, to their most productive uses. It channels resources to those entrepreneurial or investment projects with the highest expected rates of return rather than to the politically connected. A thorough and proper assessment of risk is therefore a key ingredient of a sound financial market.
Business investment is also critical to productivity.
Therefore economies require sophisticated financial markets that can make capital available for private-sector investment from such sources as loans from a sound banking sector, well-regulated securities exchanges, venture capital, and other financial products. In order to fulfill all those functions, the banking sector needs to be trustworthy and transparent, and—as has been made so clear recently—financial markets need appropriate regulation to protect investors and other actors in the economy at large.
Ninth pillar: Technological readiness
In today’s globalized world, technology is increasingly essential for firms to compete and prosper. The technological readiness pillar measures the agility with which an economy adopts existing technologies to enhance the productivity of its industries, with specific emphasis on its capacity to fully leverage information and communication technologies (ICT) in daily activities and production processes for increased efficiency and enabling innovation for competitiveness.14 ICT has evolved into the “general purpose technology” of our time,15 given the critical spillovers to the other economic sectors and their role as industry-wide enabling infrastructure. Therefore ICT access and usage are key enablers of countries’ overall technological readiness.
Whether the technology used has or has not been developed within national borders is irrelevant for its ability to enhance productivity. The central point is that the firms operating in the country need to have access to advanced products and blueprints and the ability to absorb and use them. Among the main sources of foreign technology, FDI often plays a key role, especially for countries at a lower stage of technological development. It is important to note that, in this context, the level of technology available to firms in a country needs to be distinguished from the country’s ability to conduct blue-sky research and develop new technologies for innovation that expand the frontiers of knowledge. That is why we separate technological readiness from innovation, captured in the 12th pillar, described below.
1.1: The Global Competitiveness Index 2012–2013
Tenth pillar: Market size
The size of the market affects productivity since large markets allow firms to exploit economies of scale.
Traditionally, the markets available to firms have been constrained by national borders. In the era of globalization, international markets can to a certain extent substitute for domestic markets, especially for small countries. Vast empirical evidence shows that trade openness is positively associated with growth.
Even if some recent research casts doubts on the robustness of this relationship, there is a general sense that trade has a positive effect on growth, especially for countries with small domestic markets.16 The case of the European Union illustrates the importance of the market size for competitiveness, as important efficiency gains were realized through closer integration. Although the reduction of trade barriers and the harmonization of standards within the European Union have contributed to raising exports within the region, many barriers to a true single market, in particular in services, remain in place and lead to important border effects. Therefore we continue to use the size of the national domestic and foreign market in the Index.
Thus exports can be thought of as a substitute for domestic demand in determining the size of the market for the firms of a country.17 By including both domestic and foreign markets in our measure of market size, we give credit to export-driven economies and geographic areas (such as the European Union) that are divided into many countries but have a single common market.
Eleventh pillar: Business sophistication
There is no doubt that sophisticated business practices are conducive to higher efficiency in the production of goods and services. Business sophistication concerns two elements that are intricately linked: the quality of a country’s overall business networks and the quality of individual firms’ operations and strategies. These factors are particularly important for countries at an advanced stage of development when, to a large extent, the more basic sources of productivity improvements have been exhausted. The quality of a country’s business networks and supporting industries, as measured by the quantity and quality of local suppliers and the extent of their interaction, is important for a variety of reasons.
When companies and suppliers from a particular sector are interconnected in geographically proximate groups, called clusters, efficiency is heightened, greater opportunities for innovation in processes and products are created, and barriers to entry for new firms are reduced. Individual firms’ advanced operations and strategies (branding, marketing, distribution, advanced production processes, and the production of unique and sophisticated products) spill over into the economy and lead to sophisticated and modern business processes across the country’s business sectors.
Twelfth pillar: Innovation
Innovation can emerge from new technological and nontechnological knowledge. Non-technological innovations are closely related to the know-how, skills, and working conditions that are embedded in organizations and are therefore largely covered by the eleventh pillar of the GCI. The final pillar of competitiveness focuses on technological innovation. Although substantial gains can be obtained by improving institutions, building infrastructure, reducing macroeconomic instability, or improving human capital, all these factors eventually seem to run into diminishing returns. The same is true for the efficiency of the labor, financial, and goods markets.
In the long run, standards of living can be largely enhanced by technological innovation. Technological breakthroughs have been at the basis of many of the productivity gains that our economies have historically experienced. These range from the industrial revolution in the 18th century and the invention of the steam engine and the generation of electricity to the more recent digital revolution. The latter is transforming not only the way things are being done, but also opening a wider range of new possibilities in terms of products and services.
Innovation is particularly important for economies as they approach the frontiers of knowledge and the possibility of generating more value by only integrating and adapting exogenous technologies tends to disappear.18
Although less-advanced countries can still improve their productivity by adopting existing technologies or making incremental improvements in other areas, for those that have reached the innovation stage of development this is no longer sufficient for increasing productivity. Firms in these countries must design and develop cutting-edge products and processes to maintain a competitive edge and move toward highervalue-added activities. This progression requires an environment that is conducive to innovative activity and supported by both the public and the private sectors. In particular, it means sufficient investment in research and development (R&D), especially by the private sector; the presence of high-quality scientific research institutions that can generate the basic knowledge needed to build the new technologies; extensive collaboration in research and technological developments between universities and industry; and the protection of intellectual property, in addition to high levels of competition and access to venture capital and financing that are analyzed in other pillars of the Index. In light of the recent sluggish recovery and rising fiscal pressures faced by advanced economies, it is important that public and private sectors resist pressures to cut back on the R&D spending that will be so critical for sustainable growth going into the future. The Global Competitiveness Report 2012–2013 | 7
1.1: The Global Competitiveness Index 2012–2013
Figure 1: The Global Competitiveness Index framework
GLOBAL COMPETITIVENESS INDEX
Basic requirements subindex Pillar 1. Institutions
Pillar 2. Infrastructure
Pillar 3. Macroeconomic environment
Pillar 4. Health and primary education
Efficiency enhancers subindex Pillar 5. Higher education and training Innovation and sophistication factors subindex
Pillar 11. Business sophistication
Pillar 12. Innovation
Pillar 6. Goods market efficiency
Pillar 7. Labor market efficiency
Pillar 8. Financial market development Pillar 9. Technological readiness
Pillar 10. Market size
Key for
Key for
Key for
factor-driven
efficiency-driven
innovation-driven
economies
economies
economies
Note: See the appendix for the detailed structure of the GCI.
The interrelation of the 12 pillars
While we report the results of the 12 pillars of competitiveness separately, it is important to keep in mind that they are not independent: they tend to reinforce each other, and a weakness in one area often has a negative impact in others. For example, a strong innovation capacity (pillar 12) will be very difficult to achieve without a healthy, well-educated and trained workforce (pillars 4 and 5) that is adept at absorbing new technologies (pillar 9), and without sufficient financing
(pillar 8) for R&D or an efficient goods market that makes it possible to take new innovations to market (pillar 6).
Although the pillars are aggregated into a single index, measures are reported for the 12 pillars separately because such details provide a sense of the specific areas in which a particular country needs to improve.
The appendix describes the exact composition of the GCI and technical details of its construction.
STAGES OF DEVELOPMENT AND THE WEIGHTED
INDEX
While all of the pillars described above will matter to a certain extent for all economies, it is clear that they will affect them in different ways: the best way for Cambodia to improve its competitiveness is not the same as the
8 | The Global Competitiveness Report 2012–2013
best way for France to do so. This is because Cambodia and France are in different stages of development: as countries move along the development path, wages tend to increase and, in order to sustain this higher income, labor productivity must improve.
In line with the economic theory of stages of development, the GCI assumes that economies in the first stage are mainly factor-driven and compete based on their factor endowments—primarily low-skilled labor and natural resources.19 Companies compete on the basis of price and sell basic products or commodities, with their low productivity reflected in low wages.
Maintaining competitiveness at this stage of development hinges primarily on well-functioning public and private institutions (pillar 1), a well-developed infrastructure
(pillar 2), a stable macroeconomic environment (pillar 3), and a healthy workforce that has received at least a basic education (pillar 4).
As a country becomes more competitive, productivity will increase and wages will rise with advancing development. Countries will then move into the efficiency-driven stage of development, when they must begin to develop more efficient production processes and increase product quality because wages have risen and they cannot increase prices. At
1.1: The Global Competitiveness Index 2012–2013
Table 1: Subindex weights and income thresholds for stages of development
S TAGES OF DEVELOPMENT
Stage 1:
Factor-driven
Transition from stage 1 to stage 2
Stage 2:
Efficiency-driven
Transition from stage 2 to stage 3
17,000
Weight for basic requirements subindex
60%
40–60%
40%
20–40%
20%
Weight for efficiency enhancers subindex
35%
35–50%
50%
50%
50%
5%
5–10%
10%
10–30%
30%
GDP per capita (US$) thresholds*
Weight for innovation and sophistication factors
Stage 3:
Innovation-driven
Note: See individual country/economy profiles for the exact applied weights.
* For economies with a high dependency on mineral resources, GDP per capita is not the sole criterion for the determination of the stage of development. See text for details.
this point, competitiveness is increasingly driven by higher education and training (pillar 5), efficient goods markets (pillar 6), well-functioning labor markets (pillar 7), developed financial markets (pillar 8), the ability to harness the benefits of existing technologies (pillar 9), and a large domestic or foreign market (pillar 10).
Finally, as countries move into the innovation-driven stage, wages will have risen by so much that they are able to sustain those higher wages and the associated standard of living only if their businesses are able to compete with new and/or unique products, services, models, and processes. At this stage, companies must compete by producing new and different goods through new technologies (pillar 12) and/or the most sophisticated production processes or business models
(pillar 11).
The GCI takes the stages of development into account by attributing higher relative weights to those pillars that are more relevant for an economy given its particular stage of development. That is, although all
12 pillars matter to a certain extent for all countries, the relative importance of each one depends on a country’s particular stage of development. To implement this concept, the pillars are organized into three subindexes, each critical to a particular stage of development.
The basic requirements subindex groups those pillars most critical for countries in the factor-driven stage. The efficiency enhancers subindex includes those pillars critical for countries in the efficiency-driven stage. And the innovation and sophistication factors subindex includes the pillars critical to countries in the innovation-driven stage. The three subindexes are shown in Figure 1.
The weights attributed to each subindex in every stage of development are shown in Table 1. To obtain the weights shown in the table, a maximum likelihood regression of GDP per capita was run against each subindex for past years, allowing for different coefficients for each stage of development.20 The rounding of these econometric estimates led to the choice of weights displayed in Table 1.
Implementation of stages of development
Two criteria are used to allocate countries into stages of development. The first is the level of GDP per capita at market exchange rates. This widely available measure is used as a proxy for wages, because internationally comparable data on wages are not available for all countries covered. The thresholds used are also shown in Table 1. A second criterion is used to adjust for countries that are wealthy, but where prosperity is based on the extraction of resources. This is measured by the share of exports of mineral goods in total exports (goods and services), and assumes that countries that export more than 70 percent of mineral products (measured using a five-year average) are to a large extent factor driven.21 Any countries falling in between two of the three stages are considered to be “in transition.” For these countries, the weights change smoothly as a country develops, reflecting the smooth transition from one stage of development to another. This allows us to place increasingly more weight on those areas that are becoming more important for the country’s competitiveness as the country develops, ensuring that the GCI can gradually “penalize” those countries that are not preparing for the next stage. The classification of countries into stages of development is shown in
Table 2.
DATA SOURCES
To measure these concepts, the GCI uses statistical data such as enrollment rates, government debt, budget deficit, and life expectancy, which are obtained from internationally recognized agencies, notably the United
Nations Educational, Scientific and Cultural Organization
(UNESCO), the IMF, and the World Health Organization
(WHO). The descriptions and data sources of all these statistical variables are presented in the Technical Notes and Sources at the end of this Report. Furthermore, the GCI uses data from the World Economic Forum’s annual Executive Opinion Survey (Survey) to capture concepts that require a more qualitative assessment or for which internationally comparable statistical data
The Global Competitiveness Report 2012–2013 | 9
1.1: The Global Competitiveness Index 2012–2013
Table 2: Countries/economies at each stage of development
Stage 1:
Factor-driven
(38 economies)
Transition from stage 1 to stage 2
(17 economies)
Stage 2:
Efficiency-driven
(33 economies)
Transition from stage 2 to stage 3
(21 economies)
Stage 3:
Innovation-driven
(35 economies)
Bangladesh
Benin
Burkina Faso
Burundi
Cambodia
Cameroon
Chad
Côte d’Ivoire
Ethiopia
Gambia, The
Ghana
Guinea
Haiti
India
Kenya
Kyrgyz Republic
Lesotho
Liberia
Madagascar
Malawi
Mali
Mauritania
Moldova
Mozambique
Nepal
Nicaragua
Nigeria
Pakistan
Rwanda
Senegal
Sierra Leone
Tajikistan
Tanzania
Uganda
Vietnam
Yemen
Zambia
Zimbabwe
Algeria
Azerbaijan
Bolivia
Botswana
Brunei Darussalam
Egypt
Gabon
Honduras
Iran, Islamic rep.
Kuwait
Libya
Mongolia
Philippines
Qatar
Saudi Arabia
Sri Lanka
Venezuela
Albania
Armenia
Bosnia and Herzegovina
Bulgaria
Cape Verde
China
Colombia
Costa Rica
Dominican Republic
Ecuador
El Salvador
Georgia
Guatemala
Guyana
Indonesia
Jamaica
Jordan
Macedonia, FYR
Mauritius
Montenegro
Morocco
Namibia
Panama
Paraguay
Peru
Romania
Serbia
South Africa
Suriname
Swaziland
Thailand
Timor-Leste
Ukraine
Argentina
Bahrain
Barbados
Brazil
Chile
Croatia
Estonia
Hungary
Kazakhstan
Latvia
Lebanon
Lithuania
Malaysia
Mexico
Oman
Poland
Russian Federation
Seychelles
Trinidad and Tobago
Turkey
Uruguay
Australia
Austria
Belgium
Canada
Cyprus
Czech Republic
Denmark
Finland
France
Germany
Greece
Hong Kong SAR
Iceland
Ireland
Israel
Italy
Japan
Korea, Rep.
Luxembourg
Malta
Netherlands
New Zealand
Norway
Portugal
Puerto Rico
Singapore
Slovak Republic
Slovenia
Spain
Sweden
Switzerland
Taiwan, China
United Arab Emirates
United Kingdom
United States
are not available for the entire set of economies. The
Survey process and the statistical treatment of data are described in detail in Chapter 1.3 of this Report.
ADJUSTMENTS TO THE GCI
A few minor adjustments have been made to the
GCI structure this year. Within the macroeconomic environment pillar (3rd), the interest rate spread has been removed from the Index because of limitations in the international comparability of these data.
Furthermore, mobile broadband was added to the technological readiness (9th) pillar in order to take into account the rapidly expanding access to the Internet via mobile devices. And a variable capturing the extent to which governments provide services to the business community, which has been collected through the
Executive Opinion Survey, was added to the institutions pillar (1st). For the patent indicator in the innovation pillar
10 | The Global Competitiveness Report 2012–2013
(12th), the source has been changed to include data based on the Patents Co-operations Treaty instead of the US Patent and Trademark Office (USPTO), which had been used until now. These data are collected and published jointly by the World Intellectual Property
Organization and the Organisation for Economic Cooperation and Development (OECD). They record patent applications globally, not just in the United States, therefore eliminating a possible geographical bias.22
Finally, the Rigidity of Employment Index was dropped from the labor market efficiency pillar (7th), as the World
Bank ceased to provide this indicator.23
COUNTRY COVERAGE
The coverage of this year has increased from 142 to 144 economies. The newly covered countries are Gabon,
Guinea, Liberia, Seychelles, and Sierra Leone. Libya was re-included after a year of absence as we were
1.1: The Global Competitiveness Index 2012–2013
not able to conduct the Survey because of civil unrest in 2011. Three previously covered countries had to be excluded from this year’s Report. Survey data could not be collected in Belize and Angola; in Syria, the security situation did not allow the Survey to be carried out. In the case of Tunisia we decided not to report the results this year because an important structural break in the data makes comparisons with past years difficult. We hope to re-include these countries in the future.
THE GLOBAL COMPETITIVENESS INDEX 2012–2013
RANKINGS
Tables 3 through 7 provide the detailed rankings of this year’s GCI. The following sections discuss the findings of the GCI 2012–2013 for the top performers globally, as well as for a number of selected economies in each of the five following regions: Europe and North
America, Asia and the Pacific, Latin America and the
Caribbean, the Middle East and North Africa, and subSaharan Africa. Box 1 presents a comparative study of the GCI results, highlighting the profound and persisting competitiveness divide across and within the different world regions.
Top 10
As in previous years, this year’s top 10 remain dominated by a number of European countries, with Switzerland,
Finland, Sweden, the Netherlands, Germany, and the
United Kingdom confirming their place among the most competitive economies. Along with the United
States, three Asian economies also figure in top 10, with Singapore remaining the second-most competitive economy in the world, and Hong Kong SAR and Japan placing 9th and 10th.
Switzerland retains its 1st place position again this year as a result of its continuing strong performance across the board. The country’s most notable strengths are related to innovation and labor market efficiency, where it tops the GCI rankings, as well as the sophistication of its business sector, which is ranked
2nd. Switzerland’s scientific research institutions are among the world’s best, and the strong collaboration between its academic and business sectors, combined with high company spending on R&D, ensures that much of this research is translated into marketable products and processes reinforced by strong intellectual property protection. This robust innovative capacity is captured by its high rate of patenting per capita, for which Switzerland ranks a remarkable 2nd worldwide.
Productivity is further enhanced by a business sector that offers excellent on-the-job-training opportunities, both citizens and private companies that are proactive at adapting the latest technologies, and labor markets that balance employee protection with the interests of employers. Moreover, public institutions in Switzerland are among the most effective and transparent in the
world (5th). Governance structures ensure a level playing field, enhancing business confidence; these include an independent judiciary, a strong rule of law, and a highly accountable public sector. Competitiveness is also buttressed by excellent infrastructure (5th), well-functioning goods markets (7th), and highly developed financial markets (9th). Finally, Switzerland’s macroeconomic environment is among the most stable in the world (8th) at a time when many neighboring economies continue to struggle in this area.
While Switzerland demonstrates many competitive strengths, maintaining its innovative capacity will require boosting university enrollment, which continues to lag behind that of many other high-innovation countries, although this has been increasing in recent years.
Singapore retains its place at 2nd position as a result of an outstanding performance across the entire Index. The country features in the top 3 in seven of the 12 categories of the Index and appears in the top 10 of three others. Its public and private institutions are rated as the best in the world for the fifth year in a row. It also ranks 1st for the efficiency of its goods and labor markets, and places 2nd in terms of financial market development. Singapore also has world-class infrastructure (2nd), with excellent roads, ports, and air transport facilities. In addition, the country’s competitiveness is reinforced by a strong focus on education, which has translated into a steady improvement in the higher education and training pillar
(2nd) in recent years, thus providing individuals with the skills needed for a rapidly changing global economy.
Finland moves up one place since last year to reach 3rd position on the back of small improvements in a number of areas. Similar to other countries in the region, the country boasts well-functioning and highly transparent public institutions (2nd), topping several indicators included in this category. Its private institutions, ranked 3rd overall, are also seen to be among the best run and most ethical in the world.
Finland occupies the top position both in the health and primary education pillar as well as the higher education and training pillar, the result of a strong focus on education over recent decades. This has provided the workforce with the skills needed to adapt rapidly to a changing environment and has laid the groundwork for high levels of technological adoption and innovation.
Finland is one of the most innovative countries in
Europe, ranking 2nd, behind only Switzerland, on the related pillar. Improving the country’s capacity to adopt the latest technologies (ranked 25th) could lead to important synergies that in turn could corroborate the country’s position as one of the world’s most innovative economies. Finland’s macroeconomic environment weakens slightly on the back of rising inflation (above 3 percent), but fares comparatively well when contrasted with other euro-area economies.
The Global Competitiveness Report 2012–2013 | 11
1.1: The Global Competitiveness Index 2012–2013
Box 1: Competitiveness from above: The GCI heat map
Figure 1: The GCI heat map
GCI score* n [5.39,5.72†] n [5.00,5.39[ n [4.60,5.00[ n [4.20,4.60[ n [3.80,4.20[ n [2.78††,3.80[ n Not covered
* The interval [x ,y [ is inclusive of x but exclusive of y. † Highest value; † † lowest value.
Figure 1 identifies the competitiveness “hotspots” and the regions or countries with weak performance according to the
Global Competitiveness Index (GCI). The 10 best-performing countries are shaded dark red. The remaining countries are colored in intermediate tones moving from orange, the second-best performing group, through yellow, light blue, medium blue, and dark blue; this last color identifies the leastcompetitive nations according to the GCI.
The map reveals that the hotspots remain concentrated in Europe, North America, and a handful of advanced economies in Asia and the Pacific. Despite decades of brisk economic growth in some developing regions (such as Latin
America and Africa), the map reveals that the profound competitiveness gap of these regions with more advanced economies persists. This competitiveness deficit in vast swaths of the developing world raises questions about the sustainability of growth patterns.
Sub-Saharan Africa, for example, continues to face the biggest competitiveness challenges of all regions (see Box
5). As shown on the map, a vast majority of the continent’s countries covered in this Report fall into the group of leastcompetitive economies (dark blue). Out of the region’s
32 countries included in the GCI, only Botswana, Gabon,
Namibia, the Seychelles (medium blue), Mauritius, Rwanda, and South Africa (light blue) are in the next higher categories.
With six of the ten best-performing countries, Northern and Western Europe is a competitiveness hotspot. The assessment is considerably bleaker when looking at
Southern and Eastern Europe. On the map, the patchwork of colors—ranging from dark red to medium blue—reveals the
12 | The Global Competitiveness Report 2012–2013
“competitiveness divide” within Europe. Indeed, the lack of competitiveness of several of its members is among the root causes of the current difficulties in the euro zone (see Box
2). The map also shows that within the European Union the traditional distinction made between the 15 original members and the 12 countries that joined after 2004 does not hold from a competitiveness point of view.
The map draws a mixed picture of Asia, too. Scattered across the region, the Asian Tigers and Japan can be considered competitiveness hotspots. Within this group of five advanced economies, Singapore, Hong Kong SAR, and
Japan enter the top 10, and Taiwan (China), and the Republic of Korea rank only a few notches behind. The developing nations of Southeast Asia are not yet competitiveness champions, but their group performance is quite remarkable.
Led by Malaysia, all these economies achieve a GCI score above 4.0, the theoretical average of the GCI, and none of them falls into the lowest, dark-blue category. This contrasts starkly with the situation in South Asia, where bestperforming India ranks a middling 59th and several countries appear in dark blue, including Pakistan and Bangladesh.
In the Middle East and North Africa, Israel and the six members of the Gulf Cooperation Council perform strongly.
But elsewhere in the region, the lack of competitiveness of the
Levantine and North African countries is worrisome. Finally, the map also reveals that the BRICS do not form a uniform group in terms of competitiveness, as seen on the map where
China is the only member appearing in a relatively strong yellow. 1.1: The Global Competitiveness Index 2012–2013
Table 3: The Global Competitiveness Index 2012–2013 rankings and 2011–2012 comparisons
GCI 2012–2013
Country/Economy
Switzerland
Singapore
Finland
Sweden
Netherlands
Germany
United States
United Kingdom
Hong Kong SAR
Japan
Qatar
Denmark
Taiwan, China
Canada
Norway
Austria
Belgium
Saudi Arabia
Korea, Rep.
Australia
France
Luxembourg
New Zealand
United Arab Emirates
Malaysia
Israel
Ireland
Brunei Darussalam
China
Iceland
Puerto Rico
Oman
Chile
Estonia
Bahrain
Spain
Kuwait
Thailand
Czech Republic
Panama
Poland
Italy
Turkey
Barbados
Lithuania
Azerbaijan
Malta
Brazil
Portugal
Indonesia
Kazakhstan
South Africa
Mexico
Mauritius
Latvia
Slovenia
Costa Rica
Cyprus
India
Hungary
Peru
Bulgaria
Rwanda
Jordan
Philippines
Iran, Islamic Rep.
Russian Federation
Sri Lanka
Colombia
Morocco
Slovak Republic
Montenegro
Rank/144
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
GCI 2012–2013
Rank among
Score GCI 2011–2012
(1–7)
sample
5.72
5.67
5.55
5.53
5.50
5.48
5.47
5.45
5.41
5.40
5.38
5.29
5.28
5.27
5.27
5.22
5.21
5.19
5.12
5.12
5.11
5.09
5.09
5.07
5.06
5.02
4.91
4.87
4.83
4.74
4.67
4.65
4.65
4.64
4.63
4.60
4.56
4.52
4.51
4.49
4.46
4.46
4.45
4.42
4.41
4.41
4.41
4.40
4.40
4.40
4.38
4.37
4.36
4.35
4.35
4.34
4.34
4.32
4.32
4.30
4.28
4.27
4.24
4.23
4.23
4.22
4.20
4.19
4.18
4.15
4.14
4.14
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
GCI 2011–2012 rank 1
2
4
3
7
6
5
10
11
9
14
8
13
12
16
19
15
17
24
20
18
23
25
27
21
22
29
28
26
30
35
32
31
33
37
36
34
39
38
49
41
43
59
42
44
55
51
53
45
46
72
50
58
54
64
57
61
47
56
48
67
74
70
71
75
62
66
52
68
73
69
60
Country/Economy
Ukraine
Uruguay
Vietnam
Seychelles
Georgia
Romania
Botswana
Macedonia, FYR
Croatia
Armenia
Guatemala
Trinidad and Tobago
Cambodia
Ecuador
Moldova
Bosnia and Herzegovina
Albania
Honduras
Lebanon
Namibia
Mongolia
Argentina
Serbia
Greece
Jamaica
Gambia, The
Gabon
Tajikistan
El Salvador
Zambia
Ghana
Bolivia
Dominican Republic
Kenya
Egypt
Nicaragua
Guyana
Algeria
Liberia
Cameroon
Libya
Suriname
Nigeria
Paraguay
Senegal
Bangladesh
Benin
Tanzania
Ethiopia
Cape Verde
Uganda
Pakistan
Nepal
Venezuela
Kyrgyz Republic
Mali
Malawi
Madagascar
Côte d’Ivoire
Zimbabwe
Burkina Faso
Mauritania
Swaziland
Timor-Leste
Lesotho
Mozambique
Chad
Yemen
Guinea
Haiti
Sierra Leone
Burundi
Rank/144
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
Rank among
Score GCI 2011–2012
(1–7)
sample
4.14
4.13
4.11
4.10
4.07
4.07
4.06
4.04
4.04
4.02
4.01
4.01
4.01
3.94
3.94
3.93
3.91
3.88
3.88
3.88
3.87
3.87
3.87
3.86
3.84
3.83
3.82
3.80
3.80
3.80
3.79
3.78
3.77
3.75
3.73
3.73
3.73
3.72
3.71
3.69
3.68
3.68
3.67
3.67
3.66
3.65
3.61
3.60
3.55
3.55
3.53
3.52
3.49
3.46
3.44
3.43
3.38
3.38
3.36
3.34
3.34
3.32
3.28
3.27
3.19
3.17
3.05
2.97
2.90
2.90
2.82
2.78
73
74
75 n/a 76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
n/a
98
99
100
101
102
103
104
105
106
107
108
n/a
109
n/a
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
n/a
137
n/a
138
GCI 2011–2012 rank 82
63
65 n/a 88
77
80
79
76
92
84
81
97
101
93
100
78
86
89
83
96
85
95
90
107
99
n/a
105
91
113
114
103
110
102
94
115
109
87
n/a
116
n/a
112
127
122
111
108
104
120
106
119
121
118
125
124
126
128
117
130
129
132
136
137
134
131
135
133
142
138
n/a
141
n/a
140
The Global Competitiveness Report 2012–2013 | 13
1.1: The Global Competitiveness Index 2012–2013
Table 4: The Global Competitiveness Index 2012–2013
SUBINDEXES
OV ERALL INDEX
Country/Economy
Switzerland
Singapore
Finland
Sweden
Netherlands
Germany
United States
United Kingdom
Hong Kong SAR
Japan
Qatar
Denmark
Taiwan, China
Canada
Norway
Austria
Belgium
Saudi Arabia
Korea, Rep.
Australia
France
Luxembourg
New Zealand
United Arab Emirates
Malaysia
Israel
Ireland
Brunei Darussalam
China
Iceland
Puerto Rico
Oman
Chile
Estonia
Bahrain
Spain
Kuwait
Thailand
Czech Republic
Panama
Poland
Italy
Turkey
Barbados
Lithuania
Azerbaijan
Malta
Brazil
Portugal
Indonesia
Kazakhstan
South Africa
Mexico
Mauritius
Latvia
Slovenia
Costa Rica
Cyprus
India
Hungary
Peru
Bulgaria
Rwanda
Jordan
Philippines
Iran, Islamic Rep.
Russian Federation
Sri Lanka
Colombia
Morocco
Slovak Republic
Montenegro
Basic requirements
Ef ficiency enhancers
Innovation and sophistication factors
Rank
Score
Rank
Score
Rank
Score
Rank
Score
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
5.72
5.67
5.55
5.53
5.50
5.48
5.47
5.45
5.41
5.40
5.38
5.29
5.28
5.27
5.27
5.22
5.21
5.19
5.12
5.12
5.11
5.09
5.09
5.07
5.06
5.02
4.91
4.87
4.83
4.74
4.67
4.65
4.65
4.64
4.63
4.60
4.56
4.52
4.51
4.49
4.46
4.46
4.45
4.42
4.41
4.41
4.41
4.40
4.40
4.40
4.38
4.37
4.36
4.35
4.35
4.34
4.34
4.32
4.32
4.30
4.28
4.27
4.24
4.23
4.23
4.22
4.20
4.19
4.18
4.15
4.14
4.14
2
1
4
6
10
11
33
24
3
29
7
16
17
14
9
20
22
13
18
12
23
8
19
5
27
37
35
21
31
30
48
15
28
26
25
36
32
45
44
50
61
51
57
38
49
56
34
73
40
58
47
84
63
52
54
39
67
42
85
55
69
65
70
66
80
59
53
72
77
68
62
74
6.22
6.34
6.03
6.01
5.92
5.86
5.12
5.51
6.14
5.30
5.96
5.68
5.67
5.71
5.95
5.63
5.52
5.74
5.66
5.75
5.52
5.96
5.65
6.03
5.38
5.10
5.11
5.56
5.25
5.27
4.86
5.69
5.35
5.47
5.47
5.11
5.21
4.89
4.89
4.83
4.66
4.81
4.75
5.09
4.84
4.76
5.12
4.49
4.96
4.74
4.86
4.28
4.64
4.80
4.79
5.05
4.61
4.94
4.26
4.78
4.57
4.63
4.56
4.61
4.35
4.69
4.79
4.50
4.40
4.60
4.64
4.49
5
1
9
8
7
10
2
4
3
11
22
15
12
6
16
19
17
26
20
13
18
24
14
21
23
27
25
68
30
36
33
45
32
31
35
29
75
47
34
50
28
41
42
49
46
67
40
38
44
58
56
37
53
62
48
55
60
43
39
52
57
59
94
70
61
90
54
77
63
79
51
74
5.48
5.65
5.30
5.32
5.35
5.27
5.63
5.50
5.54
5.27
4.93
5.15
5.24
5.41
5.15
5.01
5.09
4.84
5.00
5.20
5.04
4.87
5.16
4.94
4.89
4.79
4.85
4.05
4.64
4.54
4.61
4.40
4.63
4.63
4.58
4.67
3.98
4.38
4.59
4.36
4.69
4.44
4.42
4.37
4.38
4.05
4.46
4.52
4.40
4.20
4.24
4.53
4.31
4.14
4.37
4.25
4.18
4.41
4.48
4.32
4.23
4.18
3.77
4.03
4.17
3.81
4.26
3.96
4.13
3.94
4.33
3.99
1
11
3
5
6
4
7
9
22
2
15
12
14
21
16
10
13
29
17
28
18
19
27
25
23
8
20
62
34
24
26
44
45
33
53
31
86
55
32
48
61
30
50
38
47
57
46
39
37
40
104
42
49
63
68
36
35
51
43
58
94
97
60
52
64
77
108
41
66
84
74
69
5.79
5.27
5.62
5.56
5.47
5.57
5.42
5.32
4.73
5.67
5.02
5.24
5.08
4.74
5.00
5.30
5.21
4.47
4.96
4.56
4.96
4.89
4.60
4.64
4.70
5.33
4.87
3.64
4.05
4.69
4.64
3.91
3.87
4.06
3.74
4.14
3.36
3.72
4.13
3.83
3.66
4.24
3.79
3.97
3.83
3.68
3.85
3.97
4.01
3.96
3.25
3.94
3.79
3.63
3.57
4.02
4.04
3.77
3.94
3.68
3.31
3.30
3.66
3.74
3.60
3.46
3.16
3.96
3.58
3.38
3.50
3.57
(Cont’d.)
14 | The Global Competitiveness Report 2012–2013
1.1: The Global Competitiveness Index 2012–2013
Table 4: The Global Competitiveness Index 2012–2013 (cont’d.)
SUBINDEXES
OV ERALL INDEX
Country/Economy
Ukraine
Uruguay
Vietnam
Seychelles
Georgia
Romania
Botswana
Macedonia, FYR
Croatia
Armenia
Guatemala
Trinidad and Tobago
Cambodia
Ecuador
Moldova
Bosnia and Herzegovina
Albania
Honduras
Lebanon
Namibia
Mongolia
Argentina
Serbia
Greece
Jamaica
Gambia, The
Gabon
Tajikistan
El Salvador
Zambia
Ghana
Bolivia
Dominican Republic
Kenya
Egypt
Nicaragua
Guyana
Algeria
Liberia
Cameroon
Libya
Suriname
Nigeria
Paraguay
Senegal
Bangladesh
Benin
Tanzania
Ethiopia
Cape Verde
Uganda
Pakistan
Nepal
Venezuela
Kyrgyz Republic
Mali
Malawi
Madagascar
Côte d’Ivoire
Zimbabwe
Burkina Faso
Mauritania
Swaziland
Timor-Leste
Lesotho
Mozambique
Chad
Yemen
Guinea
Haiti
Sierra Leone
Burundi
Basic requirements
Ef ficiency enhancers
Innovation and sophistication factors
Rank
Score
Rank
Score
Rank
Score
Rank
Score
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
4.14
4.13
4.11
4.10
4.07
4.07
4.06
4.04
4.04
4.02
4.01
4.01
4.01
3.94
3.94
3.93
3.91
3.88
3.88
3.88
3.87
3.87
3.87
3.86
3.84
3.83
3.82
3.80
3.80
3.80
3.79
3.78
3.77
3.75
3.73
3.73
3.73
3.72
3.71
3.69
3.68
3.68
3.67
3.67
3.66
3.65
3.61
3.60
3.55
3.55
3.53
3.52
3.49
3.46
3.44
3.43
3.38
3.38
3.36
3.34
3.34
3.32
3.28
3.27
3.19
3.17
3.05
2.97
2.90
2.90
2.82
2.78
79
43
91
46
64
90
78
71
60
76
88
41
97
75
93
81
87
101
116
82
92
96
95
98
114
103
86
105
99
108
112
94
111
123
110
104
107
89
109
115
102
83
130
106
120
119
113
122
118
100
132
134
121
126
128
125
135
129
137
127
133
124
131
117
136
138
139
141
143
140
144
142
4.35
4.91
4.22
4.86
4.63
4.22
4.38
4.52
4.68
4.41
4.23
4.95
4.14
4.42
4.16
4.33
4.24
4.08
3.79
4.33
4.17
4.15
4.15
4.13
3.82
4.01
4.25
3.97
4.13
3.92
3.85
4.15
3.88
3.62
3.91
3.99
3.93
4.22
3.92
3.80
4.06
4.29
3.52
3.94
3.68
3.72
3.83
3.65
3.74
4.08
3.48
3.41
3.65
3.54
3.52
3.55
3.40
3.52
3.29
3.53
3.45
3.60
3.49
3.78
3.32
3.22
3.15
3.01
2.80
3.02
2.77
2.94
65
73
71
91
87
64
89
84
72
82
81
83
85
100
99
97
92
102
66
105
96
86
88
69
80
114
116
112
103
108
95
122
93
76
101
119
109
136
121
111
131
124
78
110
106
107
125
113
123
128
104
98
126
117
118
127
120
132
115
135
129
142
130
138
137
133
141
139
134
143
140
144
4.11
4.00
4.02
3.81
3.84
4.12
3.82
3.85
4.01
3.86
3.92
3.85
3.84
3.68
3.71
3.75
3.80
3.66
4.06
3.64
3.76
3.84
3.83
4.05
3.93
3.54
3.52
3.56
3.66
3.61
3.77
3.35
3.79
3.97
3.67
3.38
3.61
3.08
3.36
3.57
3.19
3.32
3.96
3.59
3.63
3.62
3.31
3.55
3.33
3.22
3.66
3.71
3.30
3.46
3.40
3.26
3.37
3.18
3.53
3.08
3.22
2.88
3.21
2.97
3.05
3.10
2.91
2.95
3.10
2.76
2.94
2.56
79
78
90
87
120
106
82
110
83
98
70
89
72
93
131
99
113
91
81
103
112
88
124
85
80
54
139
76
107
67
102
100
105
56
96
116
71
144
59
95
127
117
73
123
65
122
111
92
125
119
101
75
133
135
140
114
109
115
121
128
126
118
134
136
137
130
129
141
132
143
138
142
3.43
3.46
3.32
3.36
3.00
3.20
3.40
3.13
3.39
3.29
3.56
3.33
3.53
3.32
2.85
3.28
3.11
3.32
3.41
3.25
3.11
3.35
2.96
3.37
3.41
3.74
2.64
3.46
3.16
3.57
3.27
3.28
3.25
3.68
3.31
3.05
3.54
2.31
3.67
3.31
2.92
3.01
3.53
2.97
3.59
2.98
3.12
3.32
2.96
3.01
3.27
3.47
2.82
2.78
2.63
3.11
3.16
3.08
2.99
2.90
2.94
3.01
2.80
2.73
2.72
2.89
2.89
2.50
2.82
2.41
2.69
2.42
Note: Ranks out of 144 economies and scores measured on a 1-to-7 scale.
The Global Competitiveness Report 2012–2013 | 15
1.1: The Global Competitiveness Index 2012–2013
Table 5: The Global Competitiveness Index 2012–2013: Basic requirements
PILLARS
BASIC REQUIREMENTS
Country/Economy
Albania
Algeria
Argentina
Armenia
Australia
Austria
Azerbaijan
Bahrain
Bangladesh
Barbados
Belgium
Benin
Bolivia
Bosnia and Herzegovina
Botswana
Brazil
Brunei Darussalam
Bulgaria
Burkina Faso
Burundi
Cambodia
Cameroon
Canada
Cape Verde
Chad
Chile
China
Colombia
Costa Rica
Côte d’Ivoire
Croatia
Cyprus
Czech Republic
Denmark
Dominican Republic
Ecuador
Egypt
El Salvador
Estonia
Ethiopia
Finland
France
Gabon
Gambia, The
Georgia
Germany
Ghana
Greece
Guatemala
Guinea
Guyana
Haiti
Honduras
Hong Kong SAR
Hungary
Iceland
India
Indonesia
Iran, Islamic Rep.
Ireland
Israel
Italy
Jamaica
Japan
Jordan
Kazakhstan
Kenya
Korea, Rep.
Kuwait
Kyrgyz Republic
Latvia
Lebanon
1. Institutions
2. Infrastructure
3. Macroeconomic environment 4. Health and primary education
Rank
Score
Rank
Score
Rank
Score
Rank
Score
Rank
Score
87
89
96
76
12
20
56
25
119
38
22
113
94
81
78
73
21
65
133
142
97
115
14
100
139
28
31
77
67
137
60
42
44
16
111
75
110
99
26
118
4
23
86
103
64
11
112
98
88
143
107
140
101
3
55
30
85
58
59
35
37
51
114
29
66
47
123
18
32
128
54
116
4.24
4.22
4.15
4.41
5.75
5.63
4.76
5.47
3.72
5.09
5.52
3.83
4.15
4.33
4.38
4.49
5.56
4.63
3.45
2.94
4.14
3.80
5.71
4.08
3.15
5.35
5.25
4.40
4.61
3.29
4.68
4.94
4.89
5.68
3.88
4.42
3.91
4.13
5.47
3.74
6.03
5.52
4.25
4.01
4.63
5.86
3.85
4.13
4.23
2.80
3.93
3.02
4.08
6.14
4.78
5.27
4.26
4.74
4.69
5.11
5.10
4.81
3.82
5.30
4.61
4.86
3.62
5.66
5.21
3.52
4.79
3.79
84
141
138
71
18
25
63
21
127
24
27
99
119
85
33
79
31
108
83
142
73
107
11
57
140
28
50
109
53
129
98
40
82
14
126
131
96
134
30
74
3
32
67
35
61
16
75
111
124
128
100
143
118
10
80
23
70
72
68
19
34
97
87
22
42
66
106
62
51
137
59
125
3.65
2.66
2.85
3.90
5.27
5.04
3.98
5.13
3.20
5.06
5.00
3.51
3.31
3.64
4.82
3.78
4.86
3.39
3.66
2.59
3.84
3.40
5.52
4.07
2.73
4.97
4.22
3.38
4.13
3.16
3.52
4.59
3.67
5.40
3.21
3.16
3.56
3.02
4.94
3.83
6.03
4.83
3.94
4.67
4.00
5.31
3.82
3.37
3.25
3.18
3.50
2.49
3.32
5.53
3.70
5.09
3.91
3.86
3.93
5.22
4.75
3.56
3.62
5.13
4.50
3.96
3.43
3.98
4.20
2.92
4.01
3.22
91
100
86
80
18
15
71
29
134
22
21
122
108
94
87
70
57
76
136
141
104
125
13
114
140
45
48
93
74
102
44
39
38
16
105
90
83
72
41
119
23
4
117
82
53
3
110
43
75
142
109
144
101
1
50
20
84
78
69
25
36
28
85
11
60
67
103
9
52
121
64
127
3.48
3.16
3.58
3.71
5.70
5.80
3.94
5.19
2.22
5.58
5.68
2.56
2.95
3.44
3.58
4.00
4.20
3.79
2.18
1.87
3.08
2.51
5.84
2.80
1.89
4.62
4.46
3.44
3.80
3.10
4.65
4.80
4.81
5.74
3.02
3.51
3.61
3.93
4.72
2.65
5.58
6.28
2.71
3.61
4.35
6.36
2.87
4.70
3.79
1.86
2.91
1.54
3.12
6.72
4.39
5.69
3.60
3.75
4.03
5.34
4.89
5.19
3.59
5.92
4.17
4.05
3.09
5.92
4.38
2.59
4.11
2.46
98
23
94
83
26
33
18
29
100
134
66
76
49
97
81
62
1
31
85
137
91
59
51
121
45
14
11
34
65
130
60
117
42
32
105
37
138
103
20
114
24
68
9
129
88
30
108
144
77
142
109
86
80
15
44
123
99
25
57
131
64
102
141
124
112
16
133
10
4
132
46
135
4.27
5.71
4.33
4.50
5.57
5.35
6.05
5.50
4.24
3.32
4.66
4.57
5.02
4.31
4.52
4.73
7.00
5.42
4.48
3.15
4.39
4.79
4.90
3.80
5.12
6.15
6.22
5.34
4.68
3.48
4.75
3.86
5.19
5.40
4.17
5.30
3.12
4.18
6.01
3.92
5.70
4.64
6.25
3.58
4.40
5.48
4.07
2.42
4.56
2.63
4.02
4.44
4.53
6.07
5.15
3.73
4.25
5.68
4.83
3.44
4.72
4.23
2.89
3.67
3.94
6.07
3.39
6.25
6.58
3.41
5.06
3.32
79
93
59
80
13
20
107
38
103
16
2
111
97
48
114
88
31
49
139
127
102
118
7
71
144
74
35
85
57
140
60
9
53
29
106
67
94
90
27
116
1
21
128
126
61
22
112
41
95
138
99
134
96
26
51
6
101
70
46
12
40
25
104
10
56
92
115
11
72
105
45
32
5.56
5.37
5.82
5.53
6.46
6.32
5.08
6.07
5.20
6.41
6.75
4.68
5.32
5.93
4.60
5.43
6.18
5.92
3.48
4.16
5.25
4.49
6.58
5.66
2.85
5.64
6.11
5.45
5.82
3.40
5.81
6.50
5.87
6.19
5.13
5.73
5.35
5.38
6.21
4.56
6.82
6.31
4.11
4.17
5.79
6.30
4.65
6.04
5.34
3.52
5.29
3.62
5.34
6.24
5.89
6.58
5.27
5.69
5.97
6.46
6.04
6.27
5.19
6.50
5.84
5.37
4.58
6.49
5.66
5.18
5.99
6.18
(Cont’d.)
16 | The Global Competitiveness Report 2012–2013
1.1: The Global Competitiveness Index 2012–2013
Table 5: The Global Competitiveness Index 2012–2013: Basic requirements (cont’d.)
PILLARS
BASIC REQUIREMENTS
Country/Economy
Lesotho
Liberia
Libya
Lithuania
Luxembourg
Macedonia, FYR
Madagascar
Malawi
Malaysia
Mali
Malta
Mauritania
Mauritius
Mexico
Moldova
Mongolia
Montenegro
Morocco
Mozambique
Namibia
Nepal
Netherlands
New Zealand
Nicaragua
Nigeria
Norway
Oman
Pakistan
Panama
Paraguay
Peru
Philippines
Poland
Portugal
Puerto Rico
Qatar
Romania
Russian Federation
Rwanda
Saudi Arabia
Seychelles
Senegal
Serbia
Sierra Leone
Singapore
Slovak Republic
Slovenia
South Africa
Spain
Sri Lanka
Suriname
Swaziland
Sweden
Switzerland
Taiwan, China
Tajikistan
Tanzania
Thailand
Timor-Leste
Trinidad and Tobago
Turkey
Uganda
Ukraine
United Arab Emirates
United Kingdom
United States
Uruguay
Venezuela
Vietnam
Yemen
Zambia
Zimbabwe
1. Institutions
2. Infrastructure
3. Macroeconomic environment 4. Health and primary education
Rank
Score
Rank
Score
Rank
Score
Rank
Score
Rank
Score
136
109
102
49
8
71
129
135
27
125
34
124
52
63
93
92
74
68
138
82
121
10
19
104
130
9
15
134
50
106
69
80
61
40
48
7
90
53
70
13
46
120
95
144
1
62
39
84
36
72
83
131
6
2
17
105
122
45
117
41
57
132
79
5
24
33
43
126
91
141
108
127
3.32
3.92
4.06
4.84
5.96
4.52
3.52
3.40
5.38
3.55
5.12
3.60
4.80
4.64
4.16
4.17
4.49
4.60
3.22
4.33
3.65
5.92
5.65
3.99
3.52
5.95
5.69
3.41
4.83
3.94
4.57
4.35
4.66
4.96
4.86
5.96
4.22
4.79
4.56
5.74
4.86
3.68
4.15
2.77
6.34
4.64
5.05
4.28
5.11
4.50
4.29
3.49
6.01
6.22
5.67
3.97
3.65
4.89
3.78
4.95
4.75
3.48
4.35
6.03
5.51
5.12
4.91
3.54
4.22
3.01
3.92
3.53
121
45
81
60
9
78
136
76
29
120
37
122
39
92
110
113
44
54
112
52
123
7
2
114
117
8
17
115
69
135
105
94
55
46
38
4
116
133
20
15
47
90
130
95
1
104
58
43
48
49
93
88
6
5
26
65
86
77
103
91
64
102
132
12
13
41
36
144
89
139
56
101
3.30
4.31
3.69
4.01
5.60
3.80
2.94
3.82
4.94
3.31
4.61
3.29
4.59
3.59
3.38
3.34
4.38
4.12
3.35
4.19
3.26
5.72
6.06
3.34
3.33
5.66
5.29
3.34
3.92
3.00
3.44
3.57
4.11
4.28
4.61
5.77
3.33
3.09
5.20
5.35
4.25
3.60
3.16
3.56
6.07
3.44
4.05
4.42
4.25
4.24
3.59
3.61
5.73
5.75
5.00
3.96
3.62
3.82
3.45
3.59
3.98
3.49
3.13
5.50
5.41
4.59
4.63
2.36
3.61
2.77
4.09
3.50
126
115
88
40
12
81
137
135
32
107
34
113
54
68
92
112
66
61
129
59
143
7
30
106
130
27
33
116
37
123
89
98
73
24
58
31
97
47
96
26
42
124
77
138
2
56
35
63
10
62
79
99
19
5
17
118
132
46
131
55
51
133
65
8
6
14
49
120
95
139
111
128
2.50
2.77
3.56
4.74
5.84
3.65
2.13
2.19
5.09
2.96
4.91
2.82
4.32
4.03
3.46
2.83
4.06
4.14
2.36
4.18
1.81
6.18
5.18
2.97
2.28
5.19
5.04
2.73
4.82
2.54
3.51
3.19
3.89
5.50
4.18
5.12
3.22
4.52
3.22
5.23
4.71
2.51
3.78
2.09
6.50
4.23
4.91
4.13
5.92
4.13
3.74
3.17
5.69
6.22
5.72
2.66
2.27
4.62
2.27
4.30
4.38
2.27
4.10
6.12
6.22
5.81
4.40
2.64
3.34
2.01
2.85
2.40
113
82
73
75
12
47
95
136
35
74
71
89
87
40
93
52
118
70
125
84
56
41
61
101
39
3
5
139
53
43
21
36
72
116
48
2
58
22
78
6
79
92
115
143
17
54
50
69
104
127
96
128
13
8
28
120
107
27
38
19
55
119
90
7
110
111
63
126
106
140
67
122
3.93
4.51
4.60
4.57
6.18
5.04
4.33
3.30
5.34
4.59
4.60
4.40
4.41
5.21
4.35
4.89
3.85
4.62
3.66
4.50
4.85
5.20
4.75
4.24
5.25
6.60
6.56
3.06
4.88
5.19
5.95
5.33
4.60
3.87
5.04
6.66
4.83
5.80
4.56
6.55
4.55
4.37
3.91
2.47
6.06
4.87
4.94
4.63
4.17
3.66
4.32
3.60
6.16
6.38
5.51
3.82
4.12
5.55
5.29
6.05
4.86
3.83
4.40
6.41
4.01
3.97
4.72
3.66
4.16
2.90
4.65
3.77
136
130
121
39
28
77
110
124
33
141
19
133
54
68
86
76
73
81
137
120
109
5
4
89
142
18
52
117
69
108
91
98
43
30
75
23
83
65
100
58
47
125
66
143
3
42
24
132
36
44
82
135
14
8
15
87
113
78
131
55
63
123
62
37
17
34
50
84
64
122
129
119
3.54
4.10
4.40
6.05
6.20
5.59
4.68
4.30
6.16
3.36
6.34
3.88
5.85
5.71
5.44
5.60
5.65
5.53
3.52
4.44
4.69
6.60
6.63
5.43
3.20
6.34
5.88
4.52
5.70
5.03
5.38
5.31
6.03
6.19
5.61
6.29
5.51
5.75
5.27
5.82
5.95
4.23
5.73
2.95
6.73
6.03
6.29
3.93
6.09
5.99
5.52
3.57
6.46
6.54
6.45
5.43
4.60
5.56
4.09
5.85
5.78
4.35
5.78
6.08
6.39
6.11
5.90
5.49
5.77
4.39
4.11
4.47
Note: Ranks out of 144 economies and scores measured on a 1-to-7 scale.
The Global Competitiveness Report 2012–2013 | 17
1.1: The Global Competitiveness Index 2012–2013
Table 6: The Global Competitiveness Index 2012–2013: Efficiency enhancers
PILLARS
EFFICIENCY
ENHANCERS
Country/Economy
Albania
Algeria
Argentina
Armenia
Australia
Austria
Azerbaijan
Bahrain
Bangladesh
Barbados
Belgium
Benin
Bolivia
Bosnia and Herzegovina
Botswana
Brazil
Brunei Darussalam
Bulgaria
Burkina Faso
Burundi
Cambodia
Cameroon
Canada
Cape Verde
Chad
Chile
China
Colombia
Costa Rica
Côte d’Ivoire
Croatia
Cyprus
Czech Republic
Denmark
Dominican Republic
Ecuador
Egypt
El Salvador
Estonia
Ethiopia
Finland
France
Gabon
Gambia, The
Georgia
Germany
Ghana
Greece
Guatemala
Guinea
Guyana
Haiti
Honduras
Hong Kong SAR
Hungary
Iceland
India
Indonesia
Iran, Islamic Rep.
Ireland
Israel
Italy
Jamaica
Japan
Jordan
Kazakhstan
Kenya
Korea, Rep.
Kuwait
Kyrgyz Republic
Latvia
Lebanon
5. Higher education and training
6. Goods market efficiency 7. Labor market efficiency 8. Financial market development 9. Technological readiness Rank
Score
Rank
Score
Rank
Score
Rank
Score
Rank
Score
Rank
Score
92
136
86
82
13
19
67
35
107
49
17
125
122
97
89
38
68
59
129
144
85
111
6
128
141
32
30
63
60
115
72
43
34
15
93
100
101
103
31
123
9
18
116
114
87
10
95
69
81
134
109
143
102
3
52
36
39
58
90
25
27
41
80
11
70
56
76
20
75
118
48
66
3.80
3.08
3.84
3.86
5.20
5.01
4.05
4.58
3.62
4.37
5.09
3.31
3.35
3.75
3.82
4.52
4.05
4.18
3.22
2.56
3.84
3.57
5.41
3.22
2.91
4.63
4.64
4.13
4.18
3.53
4.01
4.41
4.59
5.15
3.79
3.68
3.67
3.66
4.63
3.33
5.30
5.04
3.52
3.54
3.84
5.27
3.77
4.05
3.92
3.10
3.61
2.76
3.66
5.54
4.32
4.54
4.48
4.20
3.81
4.85
4.79
4.44
3.93
5.27
4.03
4.24
3.97
5.00
3.98
3.40
4.37
4.06
76
108
53
70
11
18
89
34
126
19
4
120
92
72
95
66
57
63
137
143
111
115
15
99
140
46
62
67
41
123
56
32
38
14
97
91
109
105
25
134
1
27
122
94
93
5
107
43
104
136
87
144
106
22
49
13
86
73
78
20
28
45
75
21
55
58
100
17
82
98
42
48
4.11
3.38
4.59
4.22
5.64
5.48
3.91
4.93
2.88
5.38
5.81
3.07
3.83
4.18
3.74
4.27
4.40
4.31
2.50
1.98
3.32
3.25
5.57
3.65
2.34
4.72
4.32
4.27
4.78
2.99
4.47
4.98
4.87
5.59
3.69
3.84
3.32
3.45
5.17
2.67
6.18
5.14
3.05
3.77
3.82
5.80
3.40
4.74
3.52
2.60
3.97
1.90
3.43
5.26
4.67
5.60
3.97
4.17
4.10
5.30
5.07
4.73
4.12
5.28
4.49
4.37
3.59
5.52
4.01
3.66
4.78
4.70
58
143
140
72
24
22
60
16
95
64
15
132
138
109
78
104
73
83
118
139
50
89
13
105
141
30
59
99
62
122
114
33
41
19
101
129
125
74
31
120
18
46
126
94
82
21
76
108
66
127
84
142
92
2
67
45
75
63
98
9
43
65
80
20
44
71
93
29
90
123
47
36
4.33
2.99
3.18
4.22
4.87
4.91
4.31
5.10
4.10
4.29
5.12
3.66
3.40
3.92
4.20
3.94
4.22
4.17
3.80
3.28
4.42
4.15
5.12
3.93
3.08
4.74
4.31
3.98
4.30
3.78
3.85
4.68
4.53
5.03
3.97
3.70
3.76
4.21
4.73
3.79
5.05
4.47
3.73
4.10
4.18
4.92
4.20
3.92
4.29
3.71
4.17
3.03
4.10
5.44
4.28
4.47
4.21
4.29
4.00
5.24
4.51
4.29
4.19
4.98
4.50
4.24
4.10
4.75
4.14
3.78
4.42
4.57
68
144
140
30
42
32
26
21
117
29
50
67
132
99
60
69
13
49
64
112
28
58
4
126
95
34
41
88
52
71
106
44
75
8
107
135
142
121
10
87
15
66
63
31
35
53
97
133
90
56
85
83
134
3
79
12
82
120
141
16
40
127
77
20
101
19
39
73
98
72
27
105
4.40
2.79
3.29
4.72
4.60
4.69
4.80
4.89
3.91
4.75
4.54
4.40
3.58
4.08
4.46
4.39
5.07
4.54
4.42
3.97
4.78
4.48
5.45
3.72
4.12
4.68
4.60
4.17
4.51
4.38
4.00
4.57
4.32
5.22
4.00
3.49
3.06
3.86
5.11
4.18
5.00
4.41
4.43
4.72
4.67
4.51
4.08
3.56
4.16
4.49
4.23
4.24
3.52
5.65
4.27
5.10
4.24
3.87
3.18
5.00
4.61
3.72
4.32
4.89
4.02
4.98
4.62
4.35
4.08
4.36
4.78
4.00
120
142
131
78
8
34
98
18
95
33
31
112
126
119
53
46
56
80
117
144
64
105
11
121
137
28
54
67
101
103
92
38
57
30
96
110
102
81
39
129
4
27
106
69
93
32
59
132
41
135
86
141
51
1
72
97
21
70
123
108
17
111
55
36
65
115
24
71
76
118
52
66
3.38
2.39
3.18
3.97
5.35
4.65
3.73
4.99
3.74
4.66
4.68
3.55
3.33
3.41
4.39
4.45
4.27
3.97
3.43
2.31
4.11
3.64
5.28
3.37
3.01
4.73
4.31
4.10
3.67
3.65
3.79
4.56
4.25
4.69
3.74
3.58
3.67
3.95
4.51
3.24
5.50
4.73
3.62
4.07
3.79
4.66
4.21
3.13
4.48
3.07
3.87
2.55
4.43
5.89
4.05
3.74
4.90
4.07
3.35
3.60
5.03
3.57
4.30
4.63
4.11
3.49
4.74
4.06
4.00
3.42
4.40
4.10
77
133
67
92
19
17
61
39
125
30
22
124
127
68
106
48
64
52
137
144
100
126
20
90
143
44
88
80
46
99
50
37
31
3
78
82
91
102
25
140
10
14
86
109
76
15
108
43
87
142
94
138
97
4
49
8
96
85
111
12
29
40
73
16
69
55
101
18
74
130
38
93
3.69
2.59
3.85
3.40
5.61
5.70
4.04
4.72
2.74
5.14
5.57
2.75
2.73
3.84
3.17
4.43
3.95
4.30
2.52
2.22
3.28
2.73
5.60
3.43
2.23
4.48
3.50
3.62
4.45
3.32
4.36
4.85
5.06
6.17
3.68
3.59
3.43
3.26
5.29
2.48
5.92
5.72
3.53
3.13
3.71
5.71
3.13
4.54
3.52
2.45
3.39
2.49
3.34
6.16
4.43
5.99
3.36
3.56
3.08
5.82
5.23
4.71
3.80
5.70
3.82
4.20
3.27
5.70
3.77
2.63
4.73
3.39
10. Market size Rank Score
98
49
23
115
21
36
76
103
47
134
27
122
82
93
97
9
124
62
114
140
89
87
13
143
112
42
2
31
81
94
71
106
40
53
65
60
29
83
96
66
54
8
110
141
99
5
70
46
73
129
132
127
88
26
52
126
3
16
18
56
51
10
100
4
84
55
75
11
61
117
91
69
2.89
4.34
4.94
2.62
5.10
4.62
3.51
2.86
4.36
1.97
4.81
2.45
3.25
3.07
2.94
5.63
2.39
3.82
2.64
1.57
3.15
3.18
5.45
1.25
2.70
4.44
6.82
4.65
3.35
3.05
3.57
2.81
4.51
4.22
3.66
3.90
4.77
3.23
2.98
3.64
4.18
5.76
2.74
1.42
2.87
6.02
3.57
4.38
3.54
2.27
2.03
2.35
3.16
4.82
4.25
2.36
6.24
5.27
5.16
4.13
4.30
5.63
2.86
6.13
3.23
4.14
3.52
5.60
3.88
2.58
3.11
3.59
(Cont’d.)
18 | The Global Competitiveness Report 2012–2013
1.1: The Global Competitiveness Index 2012–2013
Table 6: The Global Competitiveness Index 2012–2013: Efficiency enhancers (cont’d.)
PILLARS
EFFICIENCY
ENHANCERS
Country/Economy
Lesotho
Liberia
Libya
Lithuania
Luxembourg
Macedonia, FYR
Madagascar
Malawi
Malaysia
Mali
Malta
Mauritania
Mauritius
Mexico
Moldova
Mongolia
Montenegro
Morocco
Mozambique
Namibia
Nepal
Netherlands
New Zealand
Nicaragua
Nigeria
Norway
Oman
Pakistan
Panama
Paraguay
Peru
Philippines
Poland
Portugal
Puerto Rico
Qatar
Romania
Russian Federation
Rwanda
Saudi Arabia
Seychelles
Senegal
Serbia
Sierra Leone
Singapore
Slovak Republic
Slovenia
South Africa
Spain
Sri Lanka
Suriname
Swaziland
Sweden
Switzerland
Taiwan, China
Tajikistan
Tanzania
Thailand
Timor-Leste
Trinidad and Tobago
Turkey
Uganda
Ukraine
United Arab Emirates
United Kingdom
United States
Uruguay
Venezuela
Vietnam
Yemen
Zambia
Zimbabwe
5. Higher education and training
6. Goods market efficiency 7. Labor market efficiency 8. Financial market development 9. Technological readiness Rank
Score
Rank
Score
Rank
Score
Rank
Score
Rank
Score
Rank
Score
137
121
131
46
24
84
132
120
23
127
40
142
62
53
99
96
74
79
133
105
126
7
14
119
78
16
45
98
50
110
57
61
28
44
33
22
64
54
94
26
91
106
88
140
1
51
55
37
29
77
124
130
8
5
12
112
113
47
138
83
42
104
65
21
4
2
73
117
71
139
108
135
3.05
3.36
3.19
4.38
4.87
3.85
3.18
3.37
4.89
3.26
4.46
2.88
4.14
4.31
3.71
3.76
3.99
3.94
3.10
3.64
3.30
5.35
5.16
3.38
3.96
5.15
4.40
3.71
4.36
3.59
4.23
4.17
4.69
4.40
4.61
4.93
4.12
4.26
3.77
4.84
3.81
3.63
3.83
2.94
5.65
4.33
4.25
4.53
4.67
3.96
3.32
3.21
5.32
5.48
5.24
3.56
3.55
4.38
2.97
3.85
4.42
3.66
4.11
4.94
5.50
5.63
4.00
3.46
4.02
2.95
3.61
3.08
135
114
103
26
44
81
133
129
39
130
35
142
65
77
88
83
51
101
138
119
128
6
10
110
113
12
61
124
69
112
80
64
36
30
24
33
59
52
117
40
31
116
85
141
2
54
23
84
29
79
102
125
7
3
9
90
132
60
131
71
74
127
47
37
16
8
50
68
96
139
121
118
2.65
3.30
3.56
5.15
4.74
4.04
2.67
2.81
4.83
2.77
4.93
2.23
4.29
4.11
3.96
3.99
4.63
3.58
2.39
3.14
2.84
5.79
5.66
3.32
3.31
5.61
4.33
2.99
4.22
3.32
4.05
4.30
4.92
4.98
5.19
4.94
4.36
4.59
3.21
4.79
4.98
3.23
3.97
2.30
5.93
4.50
5.20
3.98
5.02
4.06
3.57
2.95
5.75
5.90
5.68
3.86
2.71
4.35
2.75
4.20
4.15
2.86
4.70
4.90
5.57
5.72
4.67
4.24
3.69
2.35
3.07
3.14
102
40
137
56
4
68
115
112
11
111
34
135
27
79
100
85
48
69
124
87
121
6
3
119
88
28
25
97
35
81
53
86
51
61
26
10
113
134
39
14
70
77
136
116
1
54
49
32
55
57
128
107
12
7
8
96
110
37
130
106
38
103
117
5
17
23
52
144
91
131
42
133
3.97
4.54
3.45
4.36
5.32
4.28
3.84
3.86
5.16
3.87
4.62
3.58
4.80
4.20
3.98
4.17
4.42
4.27
3.77
4.16
3.78
5.29
5.35
3.79
4.16
4.79
4.86
4.02
4.59
4.19
4.37
4.17
4.39
4.31
4.86
5.24
3.86
3.62
4.54
5.12
4.27
4.20
3.57
3.84
5.60
4.37
4.42
4.68
4.37
4.33
3.70
3.92
5.14
5.26
5.26
4.04
3.89
4.56
3.69
3.92
4.55
3.95
3.82
5.31
5.09
4.88
4.38
2.78
4.13
3.68
4.53
3.63
116
61
137
65
37
94
54
43
24
118
92
131
70
102
81
33
93
122
128
74
125
17
9
109
55
18
36
130
89
115
45
103
57
123
38
14
104
84
11
59
48
80
100
114
2
86
91
113
108
129
96
119
25
1
22
46
47
76
78
110
124
23
62
7
5
6
136
143
51
138
111
139
3.92
4.45
3.46
4.41
4.65
4.13
4.50
4.58
4.82
3.89
4.14
3.60
4.38
4.01
4.26
4.69
4.14
3.84
3.72
4.33
3.75
4.99
5.19
3.98
4.50
4.98
4.66
3.65
4.17
3.92
4.56
4.01
4.48
3.80
4.62
5.01
4.01
4.23
5.10
4.47
4.54
4.27
4.04
3.92
5.80
4.20
4.15
3.94
3.98
3.66
4.10
3.87
4.81
5.90
4.84
4.55
4.55
4.32
4.29
3.97
3.79
4.83
4.44
5.24
5.42
5.37
3.49
2.88
4.51
3.44
3.97
3.40
122
74
140
87
12
79
138
75
6
113
15
136
35
61
104
127
40
63
134
48
91
20
5
116
68
7
26
73
23
83
45
58
37
99
29
14
77
130
49
22
94
84
100
125
2
47
128
3
82
42
107
89
10
9
19
124
85
43
139
60
44
62
114
25
13
16
90
133
88
143
50
109
3.36
4.03
2.68
3.86
5.21
3.97
2.88
4.00
5.44
3.53
5.11
3.04
4.65
4.15
3.65
3.33
4.49
4.12
3.09
4.44
3.81
4.96
5.48
3.48
4.07
5.42
4.74
4.04
4.88
3.89
4.46
4.25
4.59
3.71
4.69
5.12
3.98
3.19
4.44
4.88
3.79
3.89
3.68
3.34
5.85
4.45
3.29
5.72
3.90
4.46
3.60
3.82
5.29
5.30
4.98
3.35
3.87
4.46
2.68
4.17
4.46
4.14
3.52
4.74
5.16
5.07
3.81
3.11
3.85
2.37
4.43
3.60
136
132
110
33
2
71
135
134
51
119
21
123
63
72
65
70
56
75
121
104
129
9
23
116
112
13
54
118
36
107
83
79
42
28
41
27
59
57
113
35
66
95
58
141
5
45
34
62
26
89
105
128
1
6
24
114
122
84
131
60
53
117
81
32
7
11
47
103
98
139
115
120
2.53
2.62
3.11
5.00
6.21
3.81
2.54
2.54
4.31
2.90
5.59
2.75
3.98
3.80
3.91
3.82
4.15
3.71
2.80
3.23
2.63
5.98
5.47
2.95
3.08
5.78
4.26
2.90
4.87
3.15
3.57
3.63
4.66
5.27
4.70
5.28
4.09
4.13
3.04
4.91
3.88
3.37
4.10
2.46
6.10
4.46
4.96
4.01
5.29
3.45
3.19
2.69
6.29
6.02
5.44
2.97
2.77
3.56
2.62
4.06
4.29
2.93
3.60
5.05
6.00
5.84
4.44
3.25
3.33
2.48
2.96
2.83
10. Market size Rank Score
136
144
102
74
92
104
113
123
28
118
125
131
109
12
121
116
130
57
101
120
95
20
63
108
33
50
72
30
79
90
45
35
19
48
68
58
43
7
128
24
142
105
67
138
37
59
78
25
14
64
139
133
34
39
17
119
77
22
137
107
15
85
38
44
6
1
86
41
32
80
111
135
1.86
1.24
2.86
3.53
3.07
2.85
2.66
2.41
4.78
2.57
2.38
2.07
2.74
5.58
2.51
2.60
2.08
4.11
2.86
2.57
2.98
5.11
3.82
2.76
4.63
4.31
3.55
4.67
3.42
3.11
4.40
4.62
5.12
4.34
3.62
4.01
4.41
5.76
2.28
4.85
1.38
2.83
3.64
1.76
4.61
4.00
3.46
4.85
5.45
3.79
1.74
2.00
4.62
4.52
5.24
2.57
3.50
5.04
1.80
2.80
5.28
3.22
4.60
4.41
5.78
6.93
3.21
4.50
4.63
3.35
2.71
1.90
Note: Ranks out of 144 economies and scores measured on a 1-to-7 scale.
The Global Competitiveness Report 2012–2013 | 19
1.1: The Global Competitiveness Index 2012–2013
Table 7: The Global Competitiveness Index 2012–2013: Innovation and sophistication factors
INNOVATION AND
SOPHISTICATION
FACTORS
Country/Economy
Albania
Algeria
Argentina
Armenia
Australia
Austria
Azerbaijan
Bahrain
Bangladesh
Barbados
Belgium
Benin
Bolivia
Bosnia and Herzegovina
Botswana
Brazil
Brunei Darussalam
Bulgaria
Burkina Faso
Burundi
Cambodia
Cameroon
Canada
Cape Verde
Chad
Chile
China
Colombia
Costa Rica
Côte d’Ivoire
Croatia
Cyprus
Czech Republic
Denmark
Dominican Republic
Ecuador
Egypt
El Salvador
Estonia
Ethiopia
Finland
France
Gabon
Gambia, The
Georgia
Germany
Ghana
Greece
Guatemala
Guinea
Guyana
Haiti
Honduras
Hong Kong SAR
Hungary
Iceland
India
Indonesia
Iran, Islamic Rep.
Ireland
Israel
Italy
Jamaica
Japan
Jordan
Kazakhstan
Kenya
Korea, Rep.
Kuwait
Kyrgyz Republic
Latvia
Lebanon
PILLARS
11. Business sophistication Rank
Score
Rank
Score
Rank
Score
113
144
88
98
28
10
57
53
122
38
13
111
100
99
82
39
62
97
126
142
72
95
21
119
129
45
34
66
35
121
83
51
32
12
105
93
96
107
33
125
3
18
139
54
120
4
102
85
70
132
71
143
91
22
58
24
43
40
77
20
8
30
80
2
52
104
56
17
86
140
68
81
3.11
2.31
3.35
3.29
4.56
5.30
3.68
3.74
2.98
3.97
5.21
3.12
3.28
3.28
3.40
3.97
3.64
3.30
2.94
2.42
3.53
3.31
4.74
3.01
2.89
3.87
4.05
3.58
4.04
2.99
3.39
3.77
4.13
5.24
3.25
3.32
3.31
3.16
4.06
2.96
5.62
4.96
2.64
3.74
3.00
5.57
3.27
3.37
3.56
2.82
3.54
2.41
3.32
4.73
3.68
4.69
3.94
3.96
3.46
4.87
5.33
4.24
3.41
5.67
3.74
3.25
3.68
4.96
3.36
2.63
3.57
3.41
98
144
89
92
30
6
69
39
108
36
12
125
103
109
95
33
65
97
140
143
74
104
26
118
138
48
45
63
34
123
96
52
35
9
80
94
83
82
51
129
7
21
141
59
113
3
102
85
57
139
64
142
77
17
86
29
40
42
93
18
16
28
79
1
55
99
67
22
73
130
71
58
3.59
2.54
3.72
3.70
4.61
5.52
3.91
4.34
3.50
4.39
5.32
3.23
3.55
3.48
3.66
4.51
3.97
3.62
3.01
2.67
3.88
3.52
4.84
3.34
3.04
4.24
4.25
3.98
4.46
3.28
3.66
4.18
4.45
5.41
3.80
3.67
3.77
3.79
4.20
3.18
5.49
5.00
2.93
4.09
3.40
5.71
3.57
3.74
4.15
3.03
3.97
2.77
3.83
5.09
3.74
4.71
4.31
4.30
3.68
5.09
5.10
4.75
3.82
5.80
4.16
3.58
3.96
4.99
3.88
3.18
3.89
4.14
123
141
91
105
23
13
46
72
130
40
11
84
83
80
73
49
59
92
107
140
67
79
22
120
113
44
33
70
38
115
74
53
34
12
118
96
109
128
30
114
2
17
136
52
126
7
95
87
90
125
76
143
112
26
37
20
41
39
65
21
3
36
86
5
57
103
50
16
108
142
64
119
2.63
2.09
2.98
2.89
4.51
5.07
3.45
3.13
2.47
3.56
5.09
3.01
3.01
3.09
3.13
3.42
3.31
2.98
2.87
2.17
3.19
3.09
4.64
2.68
2.74
3.50
3.85
3.17
3.61
2.71
3.12
3.36
3.81
5.08
2.69
2.96
2.84
2.54
3.93
2.73
5.75
4.91
2.35
3.38
2.60
5.42
2.96
3.00
2.98
2.62
3.11
2.05
2.80
4.37
3.61
4.68
3.56
3.61
3.25
4.66
5.57
3.73
3.00
5.54
3.32
2.92
3.41
4.94
2.84
2.08
3.25
2.68
Note: Ranks out of 144 economies and scores measured on a 1-to-7 scale.
20 | The Global Competitiveness Report 2012–2013
INNOVATION AND
SOPHISTICATION
FACTORS
12.
Innovation
Country/Economy
Lesotho
Liberia
Libya
Lithuania
Luxembourg
Macedonia, FYR
Madagascar
Malawi
Malaysia
Mali
Malta
Mauritania
Mauritius
Mexico
Moldova
Mongolia
Montenegro
Morocco
Mozambique
Namibia
Nepal
Netherlands
New Zealand
Nicaragua
Nigeria
Norway
Oman
Pakistan
Panama
Paraguay
Peru
Philippines
Poland
Portugal
Puerto Rico
Qatar
Romania
Russian Federation
Rwanda
Saudi Arabia
Seychelles
Senegal
Serbia
Sierra Leone
Singapore
Slovak Republic
Slovenia
South Africa
Spain
Sri Lanka
Suriname
Swaziland
Sweden
Switzerland
Taiwan, China
Tajikistan
Tanzania
Thailand
Timor-Leste
Trinidad and Tobago
Turkey
Uganda
Ukraine
United Arab Emirates
United Kingdom
United States
Uruguay
Venezuela
Vietnam
Yemen
Zambia
Zimbabwe
PILLARS
11. Business sophistication 12.
Innovation
Rank
Score
Rank
Score
Rank
Score
137
59
127
47
19
110
115
109
23
114
46
118
63
49
131
112
69
84
130
103
133
6
27
116
73
16
44
75
48
123
94
64
61
37
26
15
106
108
60
29
87
65
124
138
11
74
36
42
31
41
117
134
5
1
14
76
92
55
136
89
50
101
79
25
9
7
78
135
90
141
67
128
2.72
3.67
2.92
3.83
4.89
3.13
3.08
3.16
4.70
3.11
3.85
3.01
3.63
3.79
2.85
3.11
3.57
3.38
2.89
3.25
2.82
5.47
4.60
3.05
3.53
5.00
3.91
3.47
3.83
2.97
3.31
3.60
3.66
4.01
4.64
5.02
3.20
3.16
3.66
4.47
3.36
3.59
2.96
2.69
5.27
3.50
4.02
3.94
4.14
3.96
3.01
2.80
5.56
5.79
5.08
3.46
3.32
3.72
2.73
3.33
3.79
3.27
3.43
4.64
5.32
5.42
3.46
2.78
3.32
2.50
3.57
2.90
135
62
116
56
23
111
122
115
20
126
43
117
41
44
120
121
76
81
131
101
127
4
27
114
66
19
37
78
50
107
68
49
60
54
24
11
110
119
70
25
87
72
132
136
14
61
53
38
32
31
112
124
5
2
13
90
106
46
137
84
47
105
91
15
8
10
88
133
100
134
75
128
3.11
3.99
3.35
4.16
4.96
3.44
3.28
3.38
5.02
3.22
4.27
3.35
4.30
4.26
3.30
3.30
3.83
3.80
3.14
3.57
3.21
5.63
4.78
3.39
3.96
5.05
4.38
3.82
4.21
3.51
3.94
4.23
4.06
4.17
4.92
5.33
3.47
3.31
3.91
4.91
3.74
3.89
3.11
3.10
5.14
4.02
4.18
4.34
4.51
4.60
3.41
3.26
5.56
5.79
5.18
3.71
3.51
4.25
3.05
3.76
4.25
3.52
3.70
5.10
5.48
5.34
3.73
3.11
3.57
3.11
3.84
3.21
138
54
129
43
18
110
106
99
25
88
48
121
98
56
135
100
60
97
122
101
133
9
24
116
78
15
47
77
45
132
117
94
63
31
27
19
102
85
51
29
93
62
111
139
8
89
32
42
35
58
124
137
4
1
14
66
75
68
134
104
55
82
71
28
10
6
69
131
81
144
61
127
2.33
3.34
2.50
3.51
4.82
2.83
2.88
2.94
4.38
2.99
3.43
2.68
2.95
3.33
2.40
2.93
3.31
2.95
2.63
2.93
2.42
5.31
4.43
2.71
3.10
4.96
3.44
3.11
3.46
2.43
2.69
2.97
3.25
3.86
4.35
4.71
2.92
3.01
3.40
4.03
2.98
3.29
2.81
2.27
5.39
2.98
3.85
3.55
3.77
3.32
2.62
2.33
5.56
5.78
4.99
3.22
3.12
3.19
2.41
2.90
3.33
3.02
3.16
4.18
5.17
5.50
3.18
2.44
3.07
1.89
3.30
2.59
1.1: The Global Competitiveness Index 2012–2013
Sweden, overtaken by Finland, falls one place to
4th position. Like Switzerland, the country has been placing significant emphasis on creating the conditions for innovation-led growth. The quality of its public institutions remains first-rate, with a very high degree of efficiency, trust, and transparency. Private institutions also receive excellent marks, with firms that demonstrate excellent ethical behavior. Nevertheless, we registered a slight but consistent deterioration in the country’s institutional framework over the past three years.
Additional strengths include goods and financial markets that are very efficient, although the labor market could be more flexible (ranking 92nd on the flexibility subpillar).
Combined with a strong focus on education over the years and a high level of technological readiness (1st),
Sweden has developed a very sophisticated business culture (5th) and is one of the world’s leading innovators
(4th). Last but not least, the country boasts a stable macroeconomic environment (13th), with a balanced budget and manageable public debt levels. These characteristics come together to make Sweden one of the most productive and competitive economies in the world. The Netherlands continues to progress in the rankings, moving up to 5th place this year. The improvement reflects a continued strengthening of its innovative capacity as well as the heightened efficiency and stability of its financial markets. Overall, Dutch businesses are highly sophisticated (4th) and innovative
(9th), and the country is rapidly and aggressively harnessing new technologies for productivity improvements (9th). Its excellent educational system
(ranked 5th for health and primary education and
6th for its higher education and training) and efficient markets—especially its goods market (6th)—are highly supportive of business activity. And although the country has registered fiscal deficits in recent years (5.0 percent of GDP in 2011), its macroeconomic environment is more stable than that of a number of other advanced economies. Last but not least, the quality of its infrastructure is among the best in the world, reflecting excellent facilities for maritime, air, and railroad transport, ranked 1st, 4th, and 9th, respectively.
Germany maintains its position at 6th place this year. The country is ranked an excellent 3rd for the quality of its infrastructure, boasting in particular firstrate facilities across all modes of transport. The goods market is quite efficient, characterized by intense local competition (8th) and low market dominance by large companies (2nd). Germany’s business sector is very sophisticated, especially when it comes to production processes and distribution channels, and German companies are among the most innovative in the world, spending heavily on R&D (4th) and displaying a high capacity for innovation (3rd)—traits that are complemented by the country’s well-developed ability
to absorb the latest technologies at the firm level (16th).
These attributes allow Germany to benefit greatly from its significant market size (5th), which is based on both its large domestic market and its strong exports. On a less positive note and despite some efforts, Germany’s labor market remains rigid (119th for the labor market flexibility subpillar), where a lack of flexibility in wage determination and the high cost of firing hinder job creation, particularly during business cycle downturns. In addition, improving the quality of the educational system—where the country continues to trail its top 10 peers at 28th place—could serve as an important basis for sustained innovation-led growth. In view of continued economic difficulties in the euro area, Germany’s performance in the macroeconomic pillar remains remarkably stable, with the country even registering a reduction in the fiscal deficit to –1 percent of GDP, but concerns about potential effects of the European sovereign debt crisis are reflected in the downgrading of the country’s credit rating. The United States continues the decline that began a few years ago, falling two more positions to take 7th place this year. Although many structural features continue to make its economy extremely productive, a number of escalating and unaddressed weaknesses have lowered the US ranking in recent years. US companies are highly sophisticated and innovative, supported by an excellent university system that collaborates admirably with the business sector in
R&D. Combined with flexible labor markets and the scale opportunities afforded by the sheer size of its domestic economy—the largest in the world by far—these qualities continue to make the United States very competitive.
On the other hand, some weaknesses in particular areas have deepened since past assessments. The business community continues to be critical toward public and private institutions (41st). In particular, its trust in politicians is not strong (54th), perhaps not surprising in light of recent political disputes that threaten to push the country back into recession through automatic spending cuts. Business leaders also remain concerned about the government’s ability to maintain arms-length relationships with the private sector (59th), and consider that the government spends its resources relatively wastefully (76th). A lack of macroeconomic stability continues to be the country’s greatest area of weakness
(111th, down from 90th last year). On a more positive note, measures of financial market development continue to indicate a recovery, improving from 31st two years ago to 16th this year in that pillar, thanks to the rapid intervention that forced the deleveraging of the banking system from its toxic assets following the financial crisis.
The United Kingdom (8th) continues to make up lost ground in the rankings this year, rising by two more places and now settling firmly back in the top 10. The country improves its performance in several areas,
The Global Competitiveness Report 2012–2013 | 21
1.1: The Global Competitiveness Index 2012–2013
benefitting from clear strengths such as the efficiency of its labor market (5th), in sharp contrast to the rigidity of those of many other European countries. The United
Kingdom continues to have sophisticated (8th) and innovative (10th) businesses that are highly adept at harnessing the latest technologies for productivity improvements and operating in a very large market (it is ranked 6th for market size). The financial market also continues its recovery, ranked 13th, up from 20th last year. All these characteristics are important for spurring productivity enhancements. On the other hand, the country’s macroeconomic environment (110th, down from 85th last year) represents the greatest drag on its competitiveness, with a fiscal deficit nearing 9 percent in
2011, an increase of 5 percentage points in public debt amounting to 82.5 percent of GDP in 2011 (127th) and a comparatively low national savings rate (12.9 percent of
GDP in 2011, 113th).
As the second-placed Asian economy behind
Singapore (2nd), Hong Kong SAR rises to 9th position while slightly improving its score. The territory’s consistently good performance is reflected in very good showing across most of the areas covered by the GCI. As in previous years, Hong Kong tops the infrastructure pillar, reflecting the outstanding quality of its facilities across all modes of transportation and its telephony and electricity infrastructure. Moreover, the economy’s financial markets are second to none, revealing high efficiency and trustworthiness and stability of the banking sector. The dynamism and efficiency of
Hong Kong’s goods market (2nd) and labor market (3rd) further contribute to the economy’s very good overall positioning. To maintain and enhance its competitiveness going forward, continued improvements in two important areas—higher education (22nd) and innovation (26th)— will be necessary. Although the quality of education in Hong Kong is good (12th), participation remains below levels found in other advanced economies
(53rd). Improving educational outcomes will also help boost Hong Kong’s innovative capacity, which remains constrained by the limited availability of scientists and engineers (36th), among other things.
Japan falls one place to rank 10th this year, with a performance similar to that of last year. The country continues to enjoy a major competitive edge in business sophistication and innovation, ranking 1st and 5th, respectively, in these two pillars. Company spending on
R&D remains high (2nd) and Japan benefits from the availability of many scientists and engineers buttressing a strong capacity for innovation. Indeed, in terms of innovation output, this pays off with the fifth-highest number of patents per capita. Further, companies operate at the highest end of the value chain, producing high-value-added goods and services. The country’s overall competitive performance, however, continues to be dragged down by severe macroeconomic
22 | The Global Competitiveness Report 2012–2013
weaknesses (124th), with the second-highest budget deficit in this year’s sample (143th). Repeated over recent years, this has led to the highest public debt levels in the entire sample (nearly 230 percent of GDP in 2011). In addition, we observe a downward assessment of labor market efficiency (from 13th two years ago to 20th place this year), with the business sector perceiving the alignment between pay and productivity, hiring and firing practices, and brain drain less favorably than in previous years.
Europe and North America
European economies have faced a number of challenges in the past few years. Although they had been recovering from the significant difficulties brought about by the global economic crisis, rising concerns about the sustainability of sovereign debt in Greece and a number of other European countries continue to raise questions about the viability of the euro. Most recently this has led to a double-dip recession in several countries in the region, rising inflation, and great concern about the effects of these difficulties on other parts of the world. Despite these challenges, several European countries continue to feature prominently among the most competitive economies in the world. As described above, six of them are among the top 10. In total, ten are among the top 20, as follows: Switzerland (1st), Finland
(3rd), Sweden (4th), the Netherlands (5th), Germany
(6th), the United Kingdom (8th), Denmark (12th), Norway
(15th), Austria (16th), and Belgium (17th). However,
Europe is also a region with significant disparities in competitiveness (Box 2),24 with several countries from the region significantly lower in the rankings (with Spain at 36th, Italy at 42nd, Portugal at 49th, and Greece at
96th). As in previous years, the two countries from North
America feature among the most competitive economies worldwide, with the United States occupying the 7th position and Canada the 14th.
Denmark loses four positions this year, placing 12th, with a weakening in the assessments of its institutions and financial markets. Similar to its Nordic neighbors, the country benefits from one of the best functioning and most transparent institutional frameworks in the world
(14th), although there has been some decline in this area since last year. Denmark also continues to receive a first-rate assessment for its higher education and training system (14th), which has provided the Danish workforce with the skills needed to adapt rapidly to a changing environment and has laid the ground for their high levels of technological adoption and innovation. A continued strong focus on education would help to reverse the downward trend (from 3rd place in 2010 to 14th this year) and to maintain the skill levels needed to provide the basis for sustained innovation-led growth. A marked difference from the other Nordic countries relates to labor market flexibility, where Denmark (8th) continues to
1.1: The Global Competitiveness Index 2012–2013
distinguish itself as having one of the most efficient labor markets internationally, with more flexibility in setting wages, firing, and therefore hiring, more workers than in the other Nordics and than most European countries more generally.
Canada falls two positions to 14th place in this year’s rankings. Although Canada continues to benefit from highly efficient markets (with its goods, labor, and financial markets ranked 13th, 4th, and 11th, respectively), well-functioning and transparent institutions
(11th), and excellent infrastructure (13th), it is being dragged down by a less favorable assessment of the quality of its research institutions and the government’s role in promoting innovation through procurement practices. In a similar fashion, although Canada has been successful in nurturing its human resources compared with other advanced economies (it is ranked
7th for health and primary education and 15th for higher education and training), the data suggest a slight downward trend of its performance in higher education
(ranking 8th place on higher education and training two years ago), driven by lower university enrollment rates and a decline in the extent to which staff is being trained at the workplace.
Norway is ranked 15th this year, up by one place and showing progress in a number of areas.
Specifically, the country features a notable improvement in its innovative capacity (up from 20th to 15th place), driven by improved R&D spending by business, a better collaboration between the business sector and academia, and increased government procurement of advanced technological products. However, looking forward, reversing the downward trend in the availability of scientists and engineers (from 18th two years ago to
42nd in 2011) will be critical to maintain the country’s high level of innovative activity. Similar to the other
Nordic countries, Norway is further characterized by well-functioning and transparent public institutions; private institutions also get admirable marks for ethics and accountability. Markets in the country are efficient, with labor and financial markets ranked 18th and 7th, respectively. Productivity is also boosted by a good uptake of new technologies, ranked 13th overall for technological readiness. Moreover, Norway’s macroeconomic environment is ranked an impressive
3rd out of all countries (up from 4th last year), driven by windfall oil revenues combined with prudent fiscal management. On the other hand, Norway’s competitiveness would be further enhanced by continuing to upgrade its infrastructure (27th), fostering greater goods market efficiency and competition (28th), and further improving its environment for research and development.
Austria is ranked 16th this year, up three places since last year, with small improvements across a number of areas. The country benefits from excellent
infrastructure (15th) and registers improvements in its innovation capacity (up three places from last year) on the back of resilient R&D spending and improvements in the business sophistication pillar (up one place for business sophistication). Education and training also gets strong marks, particularly for on-the-job training
(3rd). Austria’s competitiveness would be further enhanced by greater flexibility in the labor market
(the country is ranked 72nd in this subpillar), and by continuing to improve the already excellent educational system. Belgium is ranked 17th, down two ranks since last year. The country has outstanding health indicators and a primary education system that is among the best in the world (2nd). Belgium also boasts an exceptional higher education and training system (4th), with excellent math and science education, top-notch management schools, and a strong propensity for on-the-job training that contribute to an overall high capacity to innovate
(11th). Its goods market is characterized by high levels of competition and an environment that facilitates new business creation. Business operations are also distinguished by high levels of sophistication and professional management. On the other hand, there are some concerns about government inefficiency (55th) and its highly distortionary tax system (140th), and its macroeconomic environment is burdened by persistent deficit spending and high public debt.
France is ranked 21st, down three places from last year on the back of falling confidence in public and private institutions (down four places) and the financial sector (down 13 places in trustworthiness). On a positive note, the country’s infrastructure is among the best in the world (4th), with outstanding transport links, energy infrastructure, and communications. The health of the workforce and the quality and quantity of education are other strengths (ranked 21st for health and primary education and 27th for higher education and training).
These elements have provided the basis for a business sector that is aggressive in adopting new technologies for productivity enhancements (France is ranked 14th for technological readiness). In addition, the sophistication of the country’s business culture (21st in the business sophistication pillar) and its good position in innovation
(17th in the innovation pillar, particularly in certain science-based sectors), bolstered by a well-developed financial market (27th) and a large market more generally
(8th), are important attributes that help to boost the country’s growth potential. On the other hand, France’s competitiveness would be enhanced by injecting more flexibility into its labor market, which is ranked a low
111th both because of the strict rules on firing and hiring and the rather conflict-ridden labor-employer relations in the country. The tax regime in the country is also perceived as highly distortive to business decisions
(128th).
The Global Competitiveness Report 2012–2013 | 23
1.1: The Global Competitiveness Index 2012–2013
Box 2: Sovereign debt crisis, macroeconomic imbalances, and the lack of competitiveness in
Southern Europe
From the beginning of the worst financial and economic crisis that the Western world has experienced since the
Great Depression, Southern European economies, along with Ireland, have found themselves in the eye of the storm.
Excessive public spending in the case of Greece, failing banks in Ireland and more recently Spain following the bursting of a decade-long real estate bubble, and Italy’s and
Portugal’s general inability to grow and compete in a globalized environment have brought these economies to the very edge of sovereign bankruptcy for the first time since the end of World War II. As a result, these economies—except Italy— have been forced to request full or partial international bailouts because of their inability to obtain affordable financing in the international financial markets.
In parallel with these events, governments in other euro zone countries (such as Austria, Finland, and Germany) and non–euro zone countries (such as Sweden, Switzerland, and the United Kingdom) have benefited from increasingly low, and sometimes even negative, real interest rates. In some cases this is the result of the countries’ traditionally sound fiscal policies; it is sometimes also a consequence of the high uncertainty that is driving investors to seek “safe” locations.
Overall, the sovereign debt crisis reflects the lack of confidence on the part of the financial markets in the ability of Southern European economies to balance their public accounts by curbing public spending and escaping the vicious circle of high public debt; the need to support banking systems in difficulties (which can increase national debt); and diminishing fiscal revenues. The latter are linked to economic contraction caused by sharp falls in both public and private consumption and investment, lack of credit, and an inability to compete internationally as reflected by the persistent current account deficits (Figure 1).
At present, the vicious cycle seems to be leading these economies toward a downward spiral of worsening financial
and economic crisis. This trend is exacerbating social and political tensions, and there is little sign of improvement.
Although the origins of these crises are diverse, one shared feature at the heart of the current situation in all these economies is their persistent lack of competitiveness and, therefore, their inability to maintain high levels of prosperity.
Overall, low levels of productivity and competitiveness do not warrant the salaries that workers in Southern Europe enjoy and have led to unsustainable imbalances, followed by high and rising unemployment. The map and chart in Figures 2 and 3 reveal the dynamics of the competitiveness divide in the European Union (EU), with Southern, Central, and Eastern
European countries as the least competitive economies.
In order to escape this downward spiral and return
Southern Europe to a positive growth trajectory, a holistic set of competitiveness-enhancing measures that can bring confidence and strengthen the economic fundamentals of these economies will be required. These measures include
(1) regaining financial stability by recognizing and resolving the weaknesses of the banking system and enhancing the financial liquidity of households and enterprises; (2) regaining macroeconomic stability by ensuring fiscal discipline and engaging in structural reforms that can reduce public spending in the medium to longer term; and (3) introducing labor market reforms, fostering competition, and making more and better investments in growth-enhancing areas such as education, technology, and innovation. Some of these measures may have impacts only in the medium to longer run. However, all of them must be adopted sooner rather than later, as they are closely interrelated. An effective implementation will require strong political leadership so that a clear roadmap and efficient communication can be prepared to build public support for the reforms. Only then will these economies find a sustainable exit to the sovereign debt crisis.
Figure 1: Current account balance, percent GDP, 2001–11 (quarterly data)
15
10
Percent
5
0
–5
–10
–15
–20
2002Q1
2003Q1
2004Q1
Netherlands
Germany
2005Q1
2006Q1
Denmark
Italy
2007Q1
2008Q1
Spain
Portugal
2009Q1
2010Q1
2011Q1
Greece
Source: Eurostat.
(Cont’d.)
24 | The Global Competitiveness Report 2012–2013
1.1: The Global Competitiveness Index 2012–2013
Box 2: Sovereign debt crisis, macroeconomic imbalances, and the lack of competitiveness in
Southern Europe (cont’d.)
Figure 2: Competitiveness in the European Union: The GCI heat map
GCI score* n [5.39,5.55†] n [5.00,5.39[ n [4.60,5.00[ n [4.20,4.60[ n [3.86††,4.20[ n Non-EU countries
* The interval [x ,y [ is inclusive of x but exclusive of y. † Highest value; † † lowest value.
Figure 3: Dynamics of the competitiveness divide in Western and Southern Europe
5.5
GCI score (1–7)
5.0
4.5
EU-11
Southern Europe
4.0
3.5
2008–2009
2009–2010
2010–2011
2011–2012
2012–2013
GCI edition
Note: Southern Europe includes Greece, Italy, Portugal, and Spain; EU-11 includes the original 15 member states except Greece, Italy, Portugal, and Spain.
The Global Competitiveness Report 2012–2013 | 25
1.1: The Global Competitiveness Index 2012–2013
Ireland moves up by two positions to 27th place this year after falling in recent editions of the Report. The country continues to benefit from a number of strengths, including its excellent health and primary education (12th) and strong higher education and training (20th), along with its well-functioning goods and labor markets, ranked
9th and 16th, respectively. These attributes have fostered a sophisticated and innovative business culture (ranked
18th for business sophistication and 21st for innovation).
Yet the country’s macroeconomic environment continues to raise significant concern (131st), although matters seem to be moving in the right direction following the government’s massive bailout of the banking sector. Of related and continuing concern is also Ireland’s financial market (108th), although this seems to be tentatively recovering since the trauma faced in recent years.
Iceland maintains its place at 30th position this year. Despite difficulties in recent years, Iceland continues to benefit from a number of clear competitive strengths in moving to a more sustainable economic situation. These include the country’s top-notch educational system at all levels (6th and 13th in the health and primary education and higher education and training pillars, respectively) coupled with an innovative business sector (20th) that is highly adept at adopting new technologies for productivity enhancements (8th).
Business activity is further supported by an extremely flexible labor market (12th) and well-developed infrastructure (20th). On the other hand, a weakened macroeconomic environment (123rd) and financial markets (97th) remain areas of concern.
Despite its very delicate macroeconomic situation and the well-known difficulties of its banking system that restricts the access to financing for local firms, Spain remains stable at 36th place. The country continues to benefit from world-class transport infrastructure facilities
(10th) and a good use of ICT (24th). It also has one of the highest tertiary education enrollment rates (18th), which provides a large pool of skilled labor force that, if properly mobilized, could help the country’s muchneeded economic transition toward higher-value-added activities. Notwithstanding these strengths, Spain’s competitive edge is hampered by its macroeconomic imbalances. Its difficulties in curbing the public deficit
(135th), which continue to add to the already high public debt (112th), in addition to the severe difficulties of a segment of the banking system (109th), have resulted in a lack of confidence in the financial markets and the country’s ability to access affordable financing from the international markets. The bond spread against stronger economies has relentlessly continued to grow, hindering the capacity of the country, its banking system, and finally its business sector to access affordable sources of financing (122nd). In addition, Spain’s labor markets, while improving slightly, remain too rigid (123rd). The recently adopted structural reforms, both in the banking
26 | The Global Competitiveness Report 2012–2013
system and the labor market, should help in addressing these weaknesses once implemented. However, recent cuts in public research and innovation, coupled with the increasing difficulties of the private sector in obtaining funding for research and development activities, could continue to hold back the capacity of local firms to innovate (44th), which will be crucial to facilitate the economic transformation of the country.
Estonia and the Czech Republic remain the best performers within Eastern Europe, ranking 34th and
39th, respectively. As in previous years, the countries’ competitive strengths are based on a number of common features. They rely on excellent education and highly efficient and well-developed goods and financial markets, as well as their strong commitment to advancing technological readiness, particularly in the case of Estonia. In addition, Estonia’s 20th rank on macroeconomic stability reflects its relatively well managed public finances. The country’s margin ahead of the rest of the region also reflects its more flexible and efficient labor markets (10th), which continue to be rigid in other countries, including in the Czech Republic (75th).
Poland reaffirms its 41st position this year. The country displays a fairly even performance across all 12 pillars of competitiveness. Notable strengths include its large market size (19th) and high educational standards, in particular its high enrollment rates (it is ranked 20th on the quantity of education subpillar). The financial sector is well developed (37th), and confidence in this sector has been increasing for a number of years to rank 14th this year. Indeed, banks are assessed as more sound than they were only three years ago, although additional strengthening will be necessary given the country’s still mediocre 57th rank on this indicator. Further enhancing competitiveness will require a significant upgrading of transport infrastructure, which trails international standards by a considerable margin (ranked 103rd).
Although some progress has been made in this area in the run up to the European Football Championships in 2012, it is not sufficient to create the step change necessary to better connect the different parts of the country. The business sector remains very concerned about some aspects of the institutional framework, including the overall efficiency of government (116th) and government regulation (131st). As Poland transitions to the innovation-driven stage of development, it will have to focus more strongly on developing capacities in R&D and business sophistication. Stronger R&D orientation of companies, easier access to venture capital, and intensified collaboration between universities and the private sector would help the country to move toward a more future-oriented development path.
Italy moves up by one place to reach the 42nd position this year. The country continues to do well in some of the more complex areas measured by the GCI, particularly the sophistication of its businesses, where it
1.1: The Global Competitiveness Index 2012–2013
is ranked 28th, producing goods high on the value chain with one of the world’s best business clusters (2nd). Italy also benefits from its large market size—the 10th largest in the world—which allows for significant economies of scale. However, Italy’s overall competitiveness performance continues to be hampered by some critical structural weaknesses in its economy. Its labor market remains extremely rigid—it is ranked 127th for its labor market efficiency, hindering employment creation.
Italy’s financial markets are not sufficiently developed to provide needed finance for business development (111th).
Other institutional weaknesses include high levels of corruption and organized crime and a perceived lack of independence within the judicial system, which increase business costs and undermine investor confidence—Italy is ranked 97th overall for its institutional environment.
The efforts being undertaken by the present government to address such concerns, if successful, will be an important boost to the country’s competitiveness.
Turkey moves up by 16 places this year to attain the
43rd spot. The country’s economy grew by 8.4 percent in 2011 and benefits from considerable progress in a number of areas covered by the GCI. Macroeconomic stability has improved and the financial sector is assessed as more trustworthy and finance as more easily accessible for businesses. Improvements to the institutional framework and greater competition in local markets have also been registered; these will further strengthen the country’s competitive position. Turkey’s vibrant business sector derives important efficiency gains from its large domestic market (ranked 15th), which is characterized by intense local competition (16th). Turkey also benefits from its reasonably developed infrastructure
(51st), particularly roads and air transport, although ports and the electricity supply require additional upgrading.
In order to further enhance its competitiveness, Turkey must focus on building up its human resources base through better primary education and healthcare (63rd) and higher education and training (74th), increasing the efficiency of its labor market (124th), and reinforcing the efficiency and transparency of its public institutions
(67th).
Portugal falls by four places in the rankings to 49th position. As in the case of other Southern
European economies, Portugal continues to suffer from a deteriorating macroeconomic environment (116th)— despite the recent progress in curbing public deficits— and a worrisome state of the banking system (119th) that has shut down access to affordable financing, affecting the capacity of local firms to obtain loans (109th), equity
(97th), or venture capital (97th) for their investment projects. In addition, labor markets are considered too rigid (137th) and the level of local competition low
(82nd), mainly the result of a lack of liberalization in some services. Several of the structural reforms that Portugal has recently implemented are directed to addressing all
these weaknesses. Ensuring their proper implementation will be crucial to increasing Portugal’s competitive edge and leveraging its traditional strengths in terms of highquality infrastructure (11th) and the highly educated population (29th). However, as for Spain, cuts in research and innovation and a drop in corporate innovationrelated investments could continue to affect the capacity of firms to innovate (40th) and therefore the capacity of the country to transform its economy and move toward higher-value-added activities.
Following a protracted economic crisis, Ukraine bounces back to 73rd position in this year’s GCI. The country’s competitiveness benefits notably from a healthier macroeconomic environment than in previous years. The budget deficit was cut to 2.7 percent of
GDP in 2011, the debt-to-GDP ratio fell somewhat, and inflation was reduced, although it still remains fairly high at almost 8 percent. Overall, Ukraine maintains its competitive strengths; these result from its large market size (38th) and a solid educational system that provides easy access to all levels of education (ranked
47th on higher education and training and 54th on primary education). The good educational outcomes provide a basis for further developing the innovation capacity of the country (71st). Putting economic growth on a more stable footing in future will require Ukraine to address important challenges. Arguably, the country’s most important challenge is the needed overhaul of its institutional framework, which cannot be relied on because it suffers from red tape, lack of transparency, and favoritism. Ukraine could realize further efficiency gains from instilling more competition into the goods and services markets (117th) and continuing the reform of the financial and banking sector (114th).
Kazakhstan moves back up to 51st, a similar position to the one it held a few years ago. This improvement reflects progress in a number of areas, but most importantly in macroeconomic stability, where the country ranks 16th, and technological readiness, where it advances from 87th to 55th. Despite the progress achieved, important challenges related to health and primary education (92nd), business sophistication (99th), and innovation (103rd) remain.
The Russian Federation, at 67th place, drops one position since last year. A sharp improvement in the macroeconomic environment—up from 44th to
22nd position because of low government debt and a government budget that has moved into surplus—has not been enough to allow the country to compensate for the poorer assessment of its already weak public institutions (133rd) and the innovation capacity of the country (85th this year, down from 57th in the
2010–2011 edition of the GCI). The country suffers from inefficiencies in the goods (134th), labor (84th), and financial (130th) markets, where the situation is deteriorating for the second year in a row. The weak
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1.1: The Global Competitiveness Index 2012–2013
level of competition (136th)—caused by inefficient antimonopoly policies (124th) and high restrictions on trade and foreign ownership as well as the lack of trust in the financial system (134th)—contributes to this inefficient allocation of Russia’s vast resources, hampering higher levels of productivity in the economy. Moreover, as the country moves toward a more advanced stage of economic development, its lack of business sophistication (119th) and low rates of technological adoption (137th) will become increasingly important challenges for its sustained progress. On the other hand, its high level of education enrollment, especially at the tertiary level; its fairly good infrastructure; and its large domestic market (7th) represent areas that can be leveraged to improve Russia’s competitiveness.
This year Greece falls another six places in the rankings to 96th, remaining the lowest-ranked country of the European Union. In the context of the ongoing sovereign debt crisis, Greece continues to fall in the macroeconomic environment pillar, dropping to rock bottom 144th position this year. Similarly, Greece’s financial markets are assessed more poorly than in the past, down to 132nd from 110th last year, showing particularly low confidence on the part of investors.
The evaluation of public institutions (e.g., government efficiency, corruption, undue influence) continues to suffer and is ranked a low 111th overall. Another major area of concern is the country’s inefficient labor market
(133th), which continues to constrain Greece’s ability to emerge from the crisis, highlighting the importance of recent efforts to increase the retirement age and increase labor market flexibility. In working to overcome the present difficulties, Greece has a number of strengths on which it can build, including a reasonably well educated workforce that is adept at adopting new technologies for productivity enhancements. With the correct growth-enhancing reforms, there is every reason to believe that Greece will improve its competitiveness in the coming years.
Asia and the Pacific
As in previous years, the Asia and Pacific remains among the fastest-growing regions worldwide, and many of its economies have greatly improved their competitiveness over the past years. The excellent performance of some of the regional champions is reflected in the presence of six economies—Singapore; Hong Kong SAR; Japan;
Taiwan, China; the Republic of Korea; and Australia— within the top 20. However, significant and growing differences persist in terms of the competitiveness performance within the region, with countries such as
Bangladesh (118th), Pakistan (124th), and Nepal (125th) lagging further and further behind.
Taiwan, China, maintains its 13th position for the third year in a row. Its competitiveness profile is essentially unchanged and consistently strong. Notable
28 | The Global Competitiveness Report 2012–2013
strengths include its highly efficient markets for goods, where the economy ranks 8th; its solid educational performance (9th); and its sophisticated business sector
(13th), which is inclined to innovate (14th). Strengthening competitiveness will require continued improvements to the economy’s institutional framework as well as stabilizing its macroeconomic environment, which would require fiscal consolidation to reduce the budget deficit.
Reversing the negative trend of recent years, the
Republic of Korea (19th) advances five positions and re-enters the top 20. Despite this clear improvement, the assessment remains uneven across the 12 pillars of the Index. The country boasts outstanding infrastructure
(9th) and a sound macroeconomic environment (10th), with a government budget surplus above 2 percent of
GDP and low level of public indebtedness. Furthermore, primary education (11th) and higher education (17th) are universal and of high quality. These factors, combined with the country’s high degree of technological readiness (18th), partly explain the country’s remarkable capacity for innovation (16th). However, three concerns persist—namely, the quality of its institutions (62nd), its labor market efficiency (73rd), and its financial market development (71th), even though Korea posts improvements in all three areas.
After losing four positions to faster-improving economies last year, Australia retains its rank of
20th and score of 5.1, just behind Korea. Among the country’s most notable advantages is its efficient and well-developed financial system (8th), supported by a banking sector that counts as among the most stable and sound in the world, ranked 5th. The country earns very good marks in education, placing 15th in primary education and 11th in higher education and training.
Australia’s macroeconomic situation is satisfactory in the current context (26th). Despite repeated budget deficits, its public debt amounts to a low 23 percent of GDP, the third lowest ratio among the advanced economies, behind only Estonia and Luxembourg. The main area of concern for Australia is the rigidity of its labor market
(42nd). Indeed, the business community cites the labor regulations as being the most problematic factor for doing business, ahead of red tape. In addition, although the situation has improved since last year, transport infrastructure continues to suffer bottlenecks owing to the boom in commodity exports.
Following improvements in last year’s Report,
Malaysia maintains its score but drops four places as other economies move ahead. The most notable advantages are found in Malaysia’s efficient and competitive market for goods and services (11th) and its remarkably supportive financial sector (6th), as well as its business-friendly institutional framework. In a region where many economies suffer from the lack of transparency and the presence of red tape, Malaysia stands out as particularly successful at tackling those
1.1: The Global Competitiveness Index 2012–2013
two issues. Yet, despite the progress achieved, much remains to be done to put the country on a more solid growth path. Its low level of technological readiness
(51st) is surprising, especially given its achievements in other areas of innovation and business sophistication and the country’s focus on promoting the use of ICT.
Lack of progress in this area will significantly undermine
Malaysia’s efforts to become a knowledge-based economy by the end of the decade.
China (29th) loses some ground in this year’s edition of the Report. After five years of incremental but steady progression, it has now returned to its
2009 level. The country continues to lead the BRICS economies by a wide margin,25 ahead of second-placed
Brazil (48th) by almost 20 ranks. Although China’s decline is small—its overall score barely changes—it affects the rankings of every pillar of the GCI except market size. The deterioration is more pronounced in those areas that have become critical for China’s competitiveness: financial market development (54th, down 6), technological readiness (88th, down 11), and market efficiency (59th, down 14). In this latter pillar, insufficient domestic and foreign competition is of particular concern, as the various barriers to entry appear to be more prevalent and more important than in previous years. On a more positive note, China’s macroeconomic situation remains very favorable (11th), despite a prolonged episode of high inflation. China runs a moderate budget deficit; boasts a low, albeit increasing, government debt-to-GDP ratio of 26 percent; and its gross savings rate remains above 50 percent of GDP. The rating of its sovereign debt is significantly better than that of the other BRICS and indeed of many advanced economies. Moreover, China receives relatively high marks in health and basic education (35th) and enrollment figures for higher education are also on the rise, even though the quality of education—in particular the quality of management schools (68th)—and the disconnect between educational content and business needs (57th) in the country remain important issues.
After having fallen for six years in a row, Thailand
(38th) halts the negative trend and improves by one place in this year’s GCI. Yet the competitiveness challenges the country is facing remain considerable.
Political and policy instability, excessive red tape, pervasive corruption, security concerns, and uncertainty around property rights protection seriously undermine the quality of the institutional framework on which businesses rely heavily. The country loses an additional
10 places in this category to rank a low 77th. Poor public health (71st) and basic education standards (89th), two other critical building blocks of competitiveness, require urgent attention. Turning to more sophisticated areas, which are just as important given Thailand’s stage of development, technological adoption is generally poor
(84th). Less than a quarter of the population accesses
the Internet on a regular basis, and only a small fraction has access to broadband. On a more positive note, the macroeconomic environment continues to improve— albeit marginally (27th, up one spot)—as the budget deficit was reduced to less than 2 percent of GDP and the debt-to-GDP ratio dropped to 42 percent in 2011.
Indonesia drops four places in this year’s edition, but maintains its score and remains in the top 50 of the
GCI. The country remains one of the best performers within the developing Asia region, behind Malaysia,
China, and Thailand yet ahead of the Philippines,
Vietnam, and all South Asian nations. The country’s performance varies considerably across the different pillars. Some of the biggest shortcomings are found in the “basic” areas of competitiveness. The institutional framework (72nd) is undermined by concerns about corruption and bribery, unethical behavior within the private sector, and the cost to business of crime and violence. Yet bureaucracy is less burdensome and public spending less wasteful than in most countries in the region, and the situation keeps improving. And infrastructure remains largely underdeveloped (78th).
Furthermore, the public health situation is a cause of even more concern (103rd). By contrast, Indonesia provides almost universal basic education of satisfactory quality (51st) and the macroeconomic environment is stable, judging by the country’s 25th rank on the related pillar. This macroeconomic stability is buoyed by its solid performance on fundamental indicators: the budget deficit is kept well below 2 percent of GDP, the public debt-to-GDP ratio amounts to only 25 percent, and the savings rate remains high. Inflation was reduced to around 5 percent in recent years after frequent episodes of double-digit inflation in the past decade. These positive developments are reflected in the improving, although still low, country credit rating.
Because the country has entered the efficiencydriven stage of development, its competitiveness increasingly depends on more complex elements, which should be addressed on a priority basis. In this context, addressing the many rigidities (134th) and inefficiencies of the labor market (70th) would allow for a smoother transition of the labor force to more productive sectors of the economy. Additional productivity gains could be reaped by boosting technological readiness (85th), which remains low, with the country exhibiting only a slow and limited adoption of ICT.
India ranks 59th overall, down three places from last year. Since reaching its peak at 49th in 2009, India has lost 10 places. Once ahead of Brazil and South Africa,
India now trails them by some 10 places and lags behind
China by a margin of 30 positions. India continues to be penalized for its disappointing performance in the areas considered to be the basic factors underpinning competitiveness. The country’s supply of transport, ICT, and energy infrastructure remains largely insufficient
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1.1: The Global Competitiveness Index 2012–2013
and ill-adapted to the needs of the economy (84th).
Indeed, the Indian business community repeatedly cites infrastructure as the single biggest hindrance to doing business, well ahead of corruption and bureaucracy.
It must be noted, however, that the situation has been slowly improving since 2006. The picture is even bleaker in the health and basic education pillar (101st). Despite improvements across the board over the past few years, poor public health and education standards remain a prime cause of India’s low productivity. Turning to the country’s institutions, discontent within the business community remains high about the lack of reforms and the perceived inability of the government to push them through. Indeed, public trust in politicians (106th) has been weakening for the past three years. Once ranked a satisfactory 37th in this dimension, India now ranks
70th. Meanwhile, the macroeconomic environment (99th) continues to be characterized by large and repeated public deficits and the highest debt-to-GDP ratio among the BRICS. On a more positive note, inflation returned to single-digit territory in 2011.
Despite these considerable challenges, India does possess a number of strengths in the more advanced and complex drivers of competitiveness. This “reversed” pattern of development is characteristic of India. It can rely on a fairly well developed and sophisticated financial market (21st) that can channel financial resources to good use, and it boasts reasonably sophisticated (40th) and innovative (41th) businesses.
Ranked 65th, the Philippines is one of the countries showing the most improvement in this year’s edition.
Indeed, it has advanced 22 places since reaching its lowest mark in 2009. The Philippines makes important strides this year in improving competitiveness—albeit often from a very low base—especially with respect to its public institutions (94th, up 23 places). Trust in politicians has made considerable progress (95th, up
33), although significant room for improvement remains.
The perception is that corruption (108th, up 11) and red tape (108, up 18) are finally being addressed decisively, even though they remain pervasive. The macroeconomic environment also exhibits marked improvement (36th up 18) and represents one of the strongest aspects of the Philippine’s performance, along with its market size
(35th). In addition, the financial sector has become more efficient and increasingly supportive of business activity
(58th, up 13). Despite these very positive trends, many weaknesses remain to be addressed. The country’s infrastructure is still in a dire state, particularly with respect to sea (120th) and air transport (112th), with little or no progress achieved to date. Furthermore, various market inefficiencies and rigidities continue, most notably in the labor market (103rd).
Vietnam ranks 75th this year and switches positions with the Philippines. Over the last two editions, Vietnam has lost 16 places and is now the second-lowest
30 | The Global Competitiveness Report 2012–2013
ranked among eight members of the Association of
Southeast Asian Nations (ASEAN) covered by the
Report. The country loses ground in 9 of the 12 pillars of the GCI. It ranks below 50th in all of the pillars, and dangerously close to the 100th position on a majority of them. As a sign of its fragility and extreme volatility,
Vietnam plunges 41 places in the macroeconomic environment pillar to 106th after it had recorded a 20place gain in the previous edition. Inflation approached
20 percent in 2011, twice the level of 2010, and the country’s sovereign debt rating worsened. In an effort to stem inflation, the State Bank of Vietnam tightened its monetary policy, thus making access to credit more difficult. Infrastructure (95th), strained by rapid economic growth, remains a major challenge for the country despite some improvement in recent years, with particular concerns about the quality of roads (120th) and ports (113th). Public institutions are characterized by rampant corruption and inefficiencies of all kinds.
Respect of property rights (113th) and protection of intellectual property (123rd) are all insufficient according to the business community. Private institutions suffer from poor ethics and particularly weak accountability
(132nd). Among Vietnam’s few competitive strengths are its fairly efficient labor market (51st), its large market size (32nd), and a satisfactory performance in the public health and basic education pillar (64th). The challenges going forward are therefore numerous and significant and will require decisive policy action in order to put the country’s growth performance on a more stable footing.
Latin America and the Caribbean
Latin America and the Caribbean has continued to grow steadily in the past year at an average rate of 4.5 percent. Strong external demand for local commodities, especially from China and other Asian economies, coupled with good macroeconomic management have allowed the countries in the region to put their short- and medium-term growth outlooks on a “glide path to steady growth.”26 With expected growth rates of 3.4 percent and 4.2 percent for 2012 and 2013, respectively, the region is expected to continue to outperform the rest of the world.
Despite this rather optimistic outlook, the region may face the interrelated potential headwinds of a less robust recovery in the United States, a deceleration in the economic growth of China and other Asian emerging economies, and the sovereign debt crisis in Southern
Europe that is affecting the economic growth forecast in all of Europe. Against this backdrop, boosting national competitiveness by raising productivity is the best way to ensure economic growth over the longer term and increase the region’s resilience to economic shocks.
Over the past year, although several countries have once again made good progress in raising competitiveness, the region as a whole continued to
1.1: The Global Competitiveness Index 2012–2013
face important competitiveness challenges. These pertain in particular to a weak institutional set-up with high insecurity, poor infrastructure, inefficient allocation of production resources caused by insufficient levels of competition, and a low capacity to generate new knowledge to strengthen R&D innovation in the region.
Addressing these weaknesses will allow countries in
Latin America and the Caribbean to be better connected not only among themselves but also to the rest of the world, and to boost productivity levels (Box 3).
Despite a slight drop of two positions, Chile, at
33rd place, shows a rather stable performance and remains the most competitive economy in Latin America.
A very solid macroeconomic framework (14th) with very low levels of public debt (10th) and a government budget in surplus (21st), coupled with well-functioning and transparent public institutions (28th) and fairly well developed transport infrastructures (40th), provide Chile with a solid foundation on which to build and maintain its competitiveness leadership in the region. Moreover, the country’s traditional liberalization policies and its openness to trade have resulted in flexible and efficient markets that ensure a good allocation of resources in the goods (30th), labor (34th), and financial (28th) markets.
Notwithstanding these important strengths, Chile also presents a number of challenges in terms of improving the quality of its educational system (91st), which has created a heated public debate in the country. It also needs to increase the use of ICT (57th) and strengthen its national research and innovation system (44th). Further competitiveness gains will be contingent on successfully addressing these weaknesses. As the economy steadily moves toward a higher stage of development, many economic activities will require higher levels of skills and innovation in order to increase their competitiveness potential. Panama, at 40th place and nine ranks up since last year, continues its steady progress and consolidates its position as the most competitive economy in Central
America. Panama leverages its traditional strengths with its very good transport infrastructure (33rd), especially for ports (4th); its macroeconomic stability (53rd), despite the worrying inflation rate of nearly 6 percent; its efficient financial markets (9th); and its relatively high levels of competition (31st) and openness to FDI (9th). The country has also made progress in addressing some of the most pressing weaknesses that have traditionally hindered its competitiveness potential. More precisely, Panama seems to be improving the quality of its educational system compared with last year, although it still remains a very important challenge (112th). Corporate R&D investments (34th) appear now to contribute more to improving the country’s innovative capacity (94th), which remains one of the biggest challenges to diversifying the national economy. However, little progress is observed in Panama’s institutional set-up, where public trust
Box 3: Connecting the Americas through better transport, energy, and ICT infrastructure
At the Sixth Summit of the Americas, held in Colombia in
April 2012, many Latin American leaders agreed on the need to better connect the Americas—while also keeping the region open to the world—as a way to increase productivity and competitiveness. Amid the five mandates that came out of the Summit, two emphasized the regional commitment to improve the road, rail, and electric networks on the continent, as well as information and communication technologies (ICT), where Latin America and the Caribbean still lag behind.
Transport, energy, and ICT infrastructure is crucial for boosting competitiveness. Good transport infrastructure decreases the costs of moving raw materials and intermediate components to production sites and from there to consumption markets; integrates national and regional markets, thus enhancing the efficiency in the allocation of resources; and reduces the time and cost for people to travel and interact, thus enhancing the flow of ideas and tacit knowledge that is crucial for innovation. Energy networks that provide reliable and affordable electricity are also essential because disruptions in the energy supply can impose large costs on companies, especially large manufacturing electricityintensive businesses, which need to stop and restart their operations after a power interruption. ICT networks have also become more and more essential for competitiveness, not only as a way to reduce transaction costs in running operations and interacting with suppliers, clients, and the administration, but also—and more importantly—as a key enabler of innovation when ICT interacts with other economic activities.
Figure 1: Transport, electricity, and ICT infrastructures in Latin America and the Caribbean and the OECD, 2012
Transport Infrastructure
7
6
5
4
3
2
ICT use
Electricity supply
Latin America and the Caribbean
OECD
(Cont’d.)
The Global Competitiveness Report 2012–2013 | 31
1.1: The Global Competitiveness Index 2012–2013
Box 3: Connecting the Americas through better transport, energy, and ICT infrastructure (cont’d.) divide of the region compared with other areas in the world, notably developed economies (Table 1) but also many
Asian economies.1 The severe lag in the region is clearly reflected in the available Internet bandwidth capacity, which is only slightly above 20 percent of the OECD average. This affects the capacity of the already-low number of Internet users to access fast broadband connections, either through fixed or mobile devices. Addressing these weaknesses by improving national infrastructure and intra-national transport, energy, and ICT connectivity will be crucial moving forward.
Improved infrastructure in all three areas will help increase national and regional productivity by deepening national and regional markets, reducing transaction costs, and creating more favorable conditions for innovation. Engaging in these resource-intensive projects will require closer collaboration between the public and private sectors to leverage each other’s capacities and resources, and between national governments to enhance “connecting the Americas.”
Latin America and the Caribbean has traditionally lagged behind in building a dense network of transport and electricity infrastructure (Figure 1). Partly because of its complex geography and partly because of insufficient public investment and private-sector mobilization, transport and energy infrastructure has not been sufficiently developed in many countries. This remains one of the key challenges that hamper the capacity of local firms to reduce production and distribution costs. During the 1990s and the macroeconomic stabilization process that took place then, government budget cuts were felt particularly severely in infrastructure investment, which was drastically reduced. This affected the quality of all transport infrastructure, which trails sharply behind that of more advanced economies. Despite the region’s rapid economic growth of the past decade, improvements in transport infrastructure have remained insufficient. This is particularly evident in the poor development of railroad networks, almost nonexistent in many Latin American countries, and road networks. Despite the improvements that have taken place around the biggest cities, the rapid urbanization and the traditional poor connectivity of rural areas still pose a severe challenge for competitiveness.
The region also lags behind in ICT use, which shows no sign of improvement. This situation is widening the digital
Note
1
For a more detailed analysis, consult The Global Information
Technology Report 2012, available at www.weforum.org/gitr.
Table 1: Transport, electricity, and ICT infrastructures: Latin America and the Caribbean compared with
OECD countries
Indicator
Latin America and the Caribbean
OECD
Gap
3.30
4.96
1.66
Quality of overall infrastructure
3.86
5.53
1.67
Quality of roads
3.58
5.19
1.61
Quality of railroad infrastructure
1.90
4.47
2.57
Quality of port infrastructure
3.93
5.21
1.27
Quality of air transport infrastructure
4.44
5.58
1.14
397.33
2,373.87
1,976.53
4. 24
6.13
1.89
4.24
6.13
1.89
Transport infrastructure
Available airline seat kms/week, millions*
Electricity supply
Quality and reliability of electricity supply
ICT use
Individuals using Internet, %*
Broadband Internet subscriptions/100 pop.*
Int’l Internet bandwidth, kb/s per user*
Mobile broadband Internet subscriptions/100 pop.*
Mobile telephone subscriptions/100 pop.*
Fixed telephone lines/100 pop.*
2 .72
5. 29
2 .57
35.15
75.02
39.87
6.00
26.51
20.51
17.08
83.03
65.95
40.60
5.35
45.96
112.49
118.16
5.68
17.02
41.46
24.45
Note: The scores range from 1 to 7 for those variables that are collected from the Executive Opinion Survey. Those variables marked with an asterisk are collected from other sources and the values reflect the units indicated in variable. For more information on the definition and sources of these variables, please refer to Part 2.2 of this publication.
32 | The Global Competitiveness Report 2012–2013
1.1: The Global Competitiveness Index 2012–2013
in politicians (101st) is low, security (96th) remains a general concern, and judicial independence is deemed one of the lowest in the region (132nd). Strengthening the functioning of the institutions and persisting with improvements to its education, research, and innovation systems will be crucial for Panama to continue raising its competitiveness performance.
The continued deterioration of the macroeconomic framework has led Barbados to fall two notches in the rankings, to 44th place. With one of the lowest national savings rates (136th) and one of the highest government debt levels (139th), the macroeconomic conditions in the country (134th) are strangling the access of businesses to financing through local equity markets (92nd), loans
(79th), or venture capital (94th). As a result, the business community continues to face important challenges in engaging in new investment projects. Notwithstanding these serious weaknesses, which sharply affect economic activity, the country still benefits from wellfunctioning institutions (24th) and good infrastructure
(22nd). Moreover, a very high quality educational system
(11th), a high use of ICT (32nd), and a fairly sophisticated business community (36th) help foster innovation in a service-oriented economy despite the low R&D investment (72nd) and technological innovation capacity
(91st).
Entering the top 50, Brazil goes up five positions to attain 48th place on the back of a relative improvement in its macroeconomic condition—despite its still-high inflation rate of nearly 7 percent—and the rise in the use of ICT (54th). Overall, Brazil’s fairly sophisticated business community (33rd) enjoys the benefits of one of the world’s largest internal markets (7th), which allows for important economies of scale and continues to have fairly easy access to financing (40th) for its investment projects. Notwithstanding these strengths, the country also faces important challenges. Trust in politicians remains low (121st), as does government efficiency
(111th) because of excessive government regulation
(144th) and wasteful spending (135th). The quality of transport infrastructure (79th) remains an unaddressed long-standing challenge and the quality of education
(116th) does not seem to match the increasing need for a skilled labor force. Moreover, despite increasing efforts to facilitate entrepreneurship, especially for small companies, the procedures and time to start a business remain among the highest in the sample (130th and
139th, respectively) and taxation is perceived to be too high and to have distortionary effects (144th).
Mexico, at 53rd place, moves up five positions and consolidates last year’s positive trend, with small improvements in seven of the 12 pillars. Overall, the country boasts several competitiveness strengths, including its large and deep internal market (11th), a sound macroeconomic framework (40th), fairly good transport infrastructure (41st), and fairly sophisticated
businesses (44th). Notwithstanding these strengths,
Mexico still faces persistent structural challenges that will need to be addressed in order to continue improving the competitive edge of the economy. The functioning of public institutions is still poorly assessed (100th) because of the high costs associated with the lack of security
(137th) and the low trust of the business community in politicians (97th). The functioning of the labor market is considered inefficient (102nd) because of rigidities in hiring and firing practices (113th) and the relatively low female participation (121st). The lack of effective competition (100th), especially in some key strategic sectors, also hinders an efficient allocation of resources that spills over into most sectors of the economy.
Finally, Mexico’s innovative potential is hampered by the low quality of education (100th) especially in math and science (124th), the low use of ICT (81st), and the low uptake by businesses of new technology to spur productivity improvements and innovation (75th).
Costa Rica bounces back four positions to 57th place. An improvement in the macroeconomic conditions of the country thanks to a lower budget deficit and decreasing government debt, coupled with an increase in ICT use, have allowed Costa Rica to obtain this better result. The country leverages its well-functioning public institutions (55th) despite the high costs associated with crime (85th) endemic in the region, the perception of high wastefulness of government spending (105th), and falling trust in politicians (64th). Moreover, Costa Rica has one of the highest innovation potentials in the region thanks to a high-quality educational system (21st), an acceptable use of ICT (58th), and an above-average capacity to innovate and use available technology (39th).
Notwithstanding these strengths, the country still faces significant challenges that it must address to improve its competitive edge. The quality of transport infrastructure is poor (116th), procedures to start a business are lengthy (130th), and available financing for businesses— especially through local equity markets—is scarce
(122nd), affecting the conditions for entrepreneurship.
Continuing its rise of the past several years, Peru climbs six positions in the rankings to reach 61st place. Further improvements to the already-good macroeconomic situation of the country (where it ranks
21st)—despite a rise in inflation—have buttressed this upward trend, while the situation in most of the other pillars has remained stable or slightly deteriorated.
Overall Peru continues to enjoy the benefits of its liberalization policies that have supported the high levels of efficiency in the goods (53rd), labor (45th), and financial markets (45th). However, the country still faces important challenges for strengthening the functioning of its public institutions (118th), where government efficiency
(100th) caused by excessive red tape (128th) and weak judicial independence are questioned. Moreover, the quality of its transport infrastructure (97th) needs to
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1.1: The Global Competitiveness Index 2012–2013
be improved. Furthermore, as the economy moves to higher levels of development and explores ways to diversify away from its large mining sector, its low quality of education (132nd), poor use of ICT (89th), and low
R&D and technological capacity (118th) work against developing the country’s overall capacity to innovate and move toward higher-value-added activities.
Despite the slight decline of one position, Colombia shows a relatively stable picture at 69th place. An improvement in macroeconomic conditions (34th) thanks to the reduction of the government deficit and debt values has compensated for slight drops in those pillars that have traditionally represented competitiveness challenges: weak public institutions (122nd), the poor quality of its transport infrastructure (114th), the poor quality of education in the country (77th), and its low research and innovation capacity (70th). As the economy continues to improve steadily, with a growth rate of 4.5 percent, unaddressed challenges in these areas that hinder the competitive edge of national businesses seem to become more evident, despite recent policy efforts to address them. In order to further improve competitiveness, Colombia should address these weaknesses and further leverage its strengths in terms of the already-mentioned macroeconomic stability, its large and increasing domestic market (27th), and its relatively efficient financial market (55th).
Uruguay sustains one of the region’s sharpest drops, falling 11 places in the rankings to 74th position.
Despite important gains in reducing the procedures and time needed to start a business (29th and 25th, respectively) and slight increases in ICT use (46th) and market size (86th), Uruguay drops systematically in all the remaining eight pillars that drive competitiveness.
Worrying inflationary pressures above 8 percent coupled with relatively high government debt (101th) have deteriorated the macroeconomic conditions (63rd) of the country and cast some doubt about the sustainability of recent growth rates. Although Uruguay still benefits from one of the best functioning institutional set-ups in the region (36th), there are rising concerns about excessive red tape (89th) and wasteful government spending
(95th), as well as about the business cost of crime and violence (88th). Labor markets are considered very rigid (139th), with some of the world’s most restrictive hiring and firing practices (138th) and a lack of flexibility in wage determination (144th) that does not match pay to productivity (143rd). As Uruguay’s economy moves toward higher levels of development, some doubts arise about the ability of the traditionally praised educational system to generate the skills that businesses require
(107th), the overall availability of scientist and engineers
(117th), and the innovation capacity of the country more broadly (69th). Improving the macroeconomic management of the country while addressing its labor market conditions, along with enhancing its innovation
34 | The Global Competitiveness Report 2012–2013
capacity by improving the quality of its educational system and the technological capacity of indigenous firms, will be crucial to shift the declining trend.
In the bottom half of the rankings, at 83rd place,
Guatemala goes up by one place this year. The country boasts some relative competitiveness strengths in terms of flexible labor regulations for hiring and firing staff (54th) and wage determination (43rd), efficient financial market development (41st), and the intensity of local competition
(46th). However, its competitiveness is hampered by a weak public institutional set-up (130th) and hindered by the very high costs of crime and violence (144th) and low trust of the business community in politicians (122nd).
Guatemala’s very low level of innovation capacity is the result of a low-quality educational system (130th), scarce use of ICT (99th), and low R&D-related innovation investments (90th). The weak quality of its transport infrastructure (93rd) also negatively affects its national competitiveness. Falling 10 places, Argentina drops to 94th position this year. The continued deterioration of the country’s macroeconomic conditions (94th) coupled with a very negative assessment of the institutional set-up (138th) and the inefficient functioning of the goods (140th), labor (140th), and financial markets (131st) are the main reasons for this poor evaluation. It appears that the country fails to leverage the important competitiveness potential provided by its large domestic market (21st) that allows for important economies of scale, its relatively high levels of ICT use (56th), and its high number of university enrollment rates (20th) that should provide local firms with a skilled labor force. Argentina’s weak government efficiency (142nd) and high levels of undue influence (140th), along with one of the lowest ratings in terms of trust in politicians (143rd), result in a poor evaluation of its institutional functioning. Structural reforms to improve the functioning of the goods markets by increasing domestic competition (143rd) and reducing the barriers to entrepreneurship, increase the flexibility of the labor markets (142nd), and ease access to financing by deepening the financial market could result in important efficiency gains that could boost Argentina’s productivity. Venezuela, at 126th place, falls two positions in the rankings. As it did last year, the country continues to rank last in terms of the functioning of public institutions (144th), with a very low trust of the business community in politicians or in judicial independence.
This, coupled with weak macroeconomic management
(126th) resulting in inflation rates above 20 percent and a budget deficit above 5 percent of national GDP, as well as poor transport infrastructure (135th), hampers the capacity of the country to count on a solid foundation for enhancing competitiveness. In addition, weaknesses in the functioning of the goods market do not allow for an efficient allocation of resources. Low domestic
1.1: The Global Competitiveness Index 2012–2013
competition (144th), excessive red tape when starting a business (141st), and high trade tariffs (125th) as well as rules and regulations that deter FDI (144th) limit the efficiency of good markets. Rigidities in the labor market
(144th) and weak financial development (133rd) also affect the development of business opportunities. Finally, although tertiary education enrollment is one of the highest in the world (11th), the quality of the educational system is assessed as poor (122nd). This and the low
R&D spending (127th) contribute to the low innovation capacity of the country (134th).
The Middle East and North Africa
The Middle East and North Africa region continues to be affected by political turbulence that has impacted individual countries’ competitiveness. Countries that embarked on partial reforms such as Jordan and
Morocco move up in the rankings, while economies that were more significantly affected by unrest and political transformations tend to drop or stagnate in terms of national competitiveness. Addressing the unemployment challenge will remain the key economic priority of the region as a whole for the foreseeable future. Box 4 discusses how unemployment in the region interacts with competitiveness.
Qatar reaffirms once again its position as the most competitive economy in the region by moving up three places to 11th position, sustained by improvements in its macroeconomic environment, the efficiency of its markets for goods and services, and its institutional framework. Its strong performance in terms of competitiveness rests on solid foundations made up of a high-quality institutional framework, a stable macroeconomic environment (2nd), and an efficient goods market (10th). Low levels of corruption and undue influence on government decisions, high efficiency of government institutions, and high levels of security are the cornerstones of the country’s very solid institutional framework, which provides a good foundation for heightening efficiency. Going forward, as noted in previous editions of this Report, reducing the country’s vulnerability to commodity price fluctuations will require diversification into other sectors of the economy and reinforcing some areas of competitiveness. Qatar’s efforts to strengthen its financial sector appear to be paying off, as the trustworthiness and confidence in the country’s financial markets improved from 80th to
44th this year. However, the legal rights of borrowers and lenders remain underprotected (99th). Given its high wage level, diversification into other sectors will require the country to raise productivity by continuing to promote a greater use of the latest technologies
(27th) and by fostering more openness to foreign competition—currently ranked at 42nd, reflecting barriers to international trade and investment.
Saudi Arabia maintains the second-best place in the region and falls by one position from 17th to 18th position overall. The country has seen a number of improvements to its competitiveness in recent years that have resulted in a solid institutional framework, efficient markets, and sophisticated businesses. Higher macroeconomic stability (6th) and more prevalent use of ICT for productivity improvements contribute to maintaining Saudi Arabia’s strong position in the
GCI. Its macroeconomic environment benefits from rising energy prices, which buoyed the budget balance into an even higher surplus in 2011. As much as the recent developments are commendable, the country faces important challenges going forward. Health and education do not reach the standards of other countries at similar income levels. Although some progress is visible in health outcomes, improvements are being made from a low level. As a result, the country continues to occupy low ranks in the health and primary education pillar (58th), and room for improvement remains on the higher education and training pillar (40th) as well. Boosting these areas, in addition to fostering a more efficient labor market (59th), will be of great significance to Saudi Arabia given its growing number of young people who will enter the labor market over the next several years. More efficient use of talent will increase in importance as global talent shortages loom on the horizon and the country attempts to diversify its economy, which will require a more skilled and educated workforce. Last but not least, although some progress has been recorded over the past years, the use of the latest technologies can be enhanced further
(35th), especially as this is an area where Saudi Arabia continues to lag behind other Gulf economies.
The United Arab Emirates gains three places in the GCI to take the 24th position. The improvement reflects a better institutional framework as well as greater macroeconomic stability. Higher oil prices buoyed the budget surplus and allowed the country to reduce public debt and raise the savings rate. Overall, the country’s competitiveness reflects the high quality of its infrastructure, where it ranks a very good 8th, as well as its highly efficient goods markets (5th). Strong macroeconomic stability (7th) and some positive aspects of the country’s institutions—such as an improving public trust in politicians (3rd) and high government efficiency
(7th)—round up the list of competitive advantages.
Going forward, putting the country on a more stable development path will require further investment to boost health and educational outcomes. Raising the bar with respect to education will require not only measures to improve the quality of teaching and the relevance of curricula, but also incentivizing the population to attend schools at the primary and secondary levels.
Israel falls by four places to 26th in this year’s
GCI, reversing its upward trend of previous years. The
The Global Competitiveness Report 2012–2013 | 35
1.1: The Global Competitiveness Index 2012–2013
Box 4: The employment challenge in the Arab world the untapped potential of domestic and export markets, higher productivity can be expected to also translate into increased employment over the longer term, in addition to leading to wage increases and rising standards of living.
Despite their diversity in terms of national competitiveness, economies of the Arab world share one common challenge: the need to create gainful and sustainable employment for their rising populations. Over the past several decades most countries in the Arab world have relied on the government and state enterprises for employment creation. Although this was an expedient way to create jobs in the shorter term, over the longer term rapid population growth has made it impossible for the public sector to provide a sufficient number of jobs, particularly for the young people entering the labor market. Nor has the private sector been able to fill the gap in most of the countries, as it has remained stifled by a business environment that did not encourage private-sector growth.
As a result, unemployment has risen in many countries in the Middle East over recent decades. Currently, the regional unemployment rate of 10.3 percent is the highest among all the regions, with women and youth most severely affected.1
For example, according to the International Monetary Fund
(IMF), Middle East and North African oil importers need to create 18.5 million full-time jobs over the next decade.
Countries in the region will have to grow significantly above historical levels in order to meet their job creation targets.
While the Middle East and North Africa region is the secondfastest growing region after sub-Saharan Africa according to
IMF estimates, this growth is primarily based on the rise in energy prices. The energy sector is highly capital intensive and is not sufficient to create jobs in the region. In this context, what measures can the region explore to create jobs, in particular for young people?
• Boosting private-sector growth. The Arab region is in need of economic growth based on a vibrant and growing private sector if it is to attain durably higher levels of gainful, sustainable employment. The Global Competitiveness
Index (GCI) sheds light on some of the major stumbling blocks to energizing the private sector, as more competitive economies are those that have in place those factors, policies, and institutions that enable higher productivity.
The latter in turn tends to translate into higher growth that is necessary for higher employment. In the region, given
country’s main strengths remain its world-class capacity for innovation (3rd), which rests on highly innovative businesses that benefit from the presence of the world’s best research institutions geared toward the needs of the business sector. Israel’s excellent innovation capacity, which is supported by the government’s public procurement policies, is reflected in the country’s high number of patents (4th). Its favorable financial environment, particularly evident in the ease of access to venture capital (3rd), has contributed to making Israel an innovation powerhouse. Challenges to maintaining and improving national competitiveness relate to the need for the continued upgrading of institutions (34th) and a renewed focus on raising the bar in terms of the quality of education. If not addressed, poor educational quality—particularly in math and science
(89th)—could undermine the country’s innovation-driven
36 | The Global Competitiveness Report 2012–2013
• Economic diversification. In oil- and gas-exporting countries, where growth has been high over the past years because of high energy prices, creating jobs will require countries to continue efforts to diversify their economies. Given the high wage levels present throughout these economies, appropriate productivity levels can be achieved only through expanding into high-value-added, knowledge-based sectors.
• Addressing the skills mismatch. Much progress has been made in terms of promoting education in the Arab world over the past several decades. However, as more recent data show, university degrees do not increase the chances of finding a job in many Arab countries. This situation points to a misalignment of the skills taught in educational institutions and the needs of the region’s employers.
Indeed, when asked whether their country’s educational systems are supportive of a competitive economy, business leaders in the region said that private-sector training schemes could provide solutions in this context. Training does not appear to be a priority for local businesses, however. • Promoting meritocracy. In many countries, the public sector is the employer of choice and many of the hiring decisions are based on personal networks rather than formal qualifications. In the GCI, meritocracy is captured through two variables: the degree to which employers rely on professional managers when filling positions as opposed to friends and relatives, and the relationship between pay and productivity. On both indicators at least half of the 14
Middle East countries assessed in this Report rank in the bottom half of the rankings.
Note
1
See ILO 2012.
competitiveness strategy over the longer term. As in previous years, the security situation remains fragile and imposes a high cost on business (65th). Room for improvement also remains with respect to the macroeconomic environment (64th), where increased budgetary discipline with a view to reducing debt levels
(121st) would help the country maintain stability and support economic growth going into the future.
Jordan improves by seven positions to 64th rank.
The country was considerably affected by the global financial and economic crisis in recent years. GDP growth slowed down to 2.3 percent annually in 2010 and has not returned to pre-crisis levels since (GDP growth was 8.2 percent in 2007). These growth rates are not sufficient to create the employment necessary to absorb the about 60,000 new entrants into the Jordanian labor market every year.27 Boosting growth over the
1.1: The Global Competitiveness Index 2012–2013
longer term to levels that would result in sustainable job creation will require Jordan’s policymakers to address a number of challenges. Stabilizing the macroeconomic environment should remain on the agenda and should be accompanied by growth-enhancing structural reforms. According to the GCI, there is significant room for improvements in terms of labor market efficiency and the full potential of ICT for productivity improvements has not yet been exploited, as reflected in the 90th rank on ICT use. Jordan could also benefit from more openness to international trade and investment, which would trigger efficiency gains in the domestic economy as well as transfer of knowledge and technology. Tariff barriers remain high in international comparison (104th) and regulatory barriers to FDI remain in place (70th). And although financing appears to be more easily available than in many other countries (i.e., 45th on ease of access to loans) and efforts to further stabilize the banking sector should be continued (90th).
Egypt drops by 13 positions to reach 107th place in this year’s GCI. This assessment was arguably influenced by the uncertainty caused by the political transition the country has experienced since the events of the Arab Spring. According to the business community, government efficiency has deteriorated by 22 positions to 106th and the security situation, which was particularly affected by the events, has dropped 40 ranks to 128th. At the same time, the country has improved in individual areas captured by the institutions pillar, such as less favoritism being displayed by government officials (up by 31 ranks) and stronger corporate ethics (up by 17), suggesting the potential for further positive developments in the future.
Many economic policy challenges lie ahead for the new government to put the country on a sustainable and equitable growth path. For Egypt to more fully benefit from the considerable potential that lies in its large market size and proximity to key global markets, the country will have to raise its productive potential across the domestic economy. According to the GCI, three areas are of particular importance. First, the macroeconomic environment has deteriorated over recent years to reach 138th position mainly because of widening fiscal deficit, rising public indebtedness, and persisting inflationary pressures. A credible fiscal consolidation plan will be necessary in order to maintain macroeconomic stability in the country. This may prove difficult in times of rising energy prices, as energy subsidies account for a considerable share of public expenditure. However, better targeting of subsidies could allow for fiscal consolidation while protecting the most vulnerable. Second, measures to intensify domestic competition would result in efficiency gains and contribute to energizing the economy by allowing for new entrants. And third, making labor markets flexible
(135th) and more efficient (141st) would allow the country to increase employment in the medium term.
Sub-Saharan Africa
Sub-Saharan Africa has grown impressively over the last 15 years: registering growth rates of over 5 percent in the past two years, the region continues to exceed the global average and to exhibit a favorable economic outlook. Indeed, the region has bounced back rapidly from the global economic crisis, when GDP growth dropped to 2.8 percent in 2009. These developments highlight its simultaneous resilience and vulnerability to global economic developments, with regional variations.
Although growth in sub-Saharan middle-income countries seems to have followed the global slowdown more closely (e.g., South Africa), lower-income and oil-exporting countries in the region have been largely unaffected. These regional variations are reflected in this year’s rankings. While some African economies improve with respect to national competitiveness this year,
South Africa and Mauritius, the two African countries in the top half of the rankings, remain stable. However, other countries that were previously striding ahead are registering significant declines (Box 5). More generally, sub-Saharan Africa as a whole lags behind the rest of the world in competitiveness, requiring efforts across many areas to place the region on a firmly sustainable growth and development path going forward.
South Africa is ranked 52nd this year, remaining the highest-ranked country in sub-Saharan Africa and the third-placed among the BRICS economies. The country benefits from the large size of its economy, particularly by regional standards (it ranks 25th in the market size pillar). It also does well on measures of the quality of its institutions and on factor allocation, such as intellectual property protection (20th), property rights (26th), the accountability of its private institutions (2nd), and its goods market efficiency (32rd). Particularly impressive is the country’s financial market development (3rd), indicating high confidence in South Africa’s financial markets at a time when trust is returning only slowly in many other parts of the world. South Africa also does reasonably well in more complex areas such as business sophistication (38th) and innovation (42nd), benefitting from good scientific research institutions (34th) and strong collaboration between universities and the business sector in innovation (30th).
These combined attributes make South Africa the most competitive economy in the region. However, in order to further enhance its competitiveness, the country will need to address some weaknesses.
South Africa ranks 113th in labor market efficiency
(a drop of 18 places from last year), with rigid hiring and firing practices (143rd), a lack of flexibility in wage determination by companies (140th), and significant tensions in labor-employer relations (144th). Efforts
The Global Competitiveness Report 2012–2013 | 37
1.1: The Global Competitiveness Index 2012–2013
Box 5: Is sub-Saharan Africa’s competitiveness improving?
Sub-Saharan Africa has grown impressively over the past
15 years. Indeed, growth rates of over 5 percent in the past two years have made it one of the fastest-growing regions in the world, far exceeding the global average. The region has also bounced back rapidly from the global economic crisis, when GDP regional growth dropped to 2.8 percent in 2009.
These developments highlight both Africa’s resilience as well as its vulnerability to global economic developments, with the region characterized by wide regional disparities. Although growth in sub-Saharan African middle-income countries (e.g.,
South Africa) seems to have declined largely in step with the global slowdown, lower-income countries in the region have been largely unaffected. In this context, a pertinent question is whether sub-Saharan Africa will be able to maintain these impressive growth rates going forward. In other words, have
African countries been making the types of investments and policies that will make them competitive and thus place their economies on sustainable growth paths?
Against this backdrop, the GCI provides a useful diagnostic tool to determine how African countries are faring in putting into place the fundamentals that will keep them growing quickly. Indeed, these fundamentals can place them on the higher growth trajectories needed to ensure rapid increases in living standards, as has been seen in other developing regions—most notably much of emerging Asia.
Figure 1 shows the trends in average GCI scores based on the constant sample of African economies that have been included since the GCI was introduced in 2005. Their performance is benchmarked against that of the Organisation for Economic Co-operation and Development (OECD) average, providing a sense of how Africa’s competitiveness has compared over the period with that of the world’s most advanced economies. Further, recognizing the region’s diversity, the figure breaks down the overall score into three relevant groups, following the International Monetary Fund’s classification of sub-Saharan economies into oil exporters, middle-income economies, and low-income countries.1
The OECD and sub-Saharan economies continue to gradually converge, averaging 4.9 (on a 1-to-7 scale) and 3.7, respectively, up from 3.4 for sub-Saharan Africa eight years ago. The data also reveal that sub-Saharan middle-income countries were catching up with the OECD average prior to the 2008–09 financial crisis, but these countries have since registered a decline in their competitiveness performances on average. The region’s average score has been dragged down by South Africa in particular, which—because of its strong links to international trade and finance—has been affected by the global crisis more than other countries in the region.
Likewise, low-income economies register a slight decline in their average competitiveness score this year, following seven years of small but continuous improvements in their
GCI scores. Finally, oil exporters have seen an improvement in their competitiveness of 0.23 points since 2005, bouncing back from a global crisis–linked decline two years ago brought about by the period’s drop in oil prices. The average competitiveness of the oil exporters remains low overall, which—along with their significant exposure to commodity prices—demonstrates a need to continue to improve their competitiveness by diversifying their economies to make them less vulnerable to such shocks in the future.
To gain a better understanding of the drivers of the region’s competitiveness and future trends, Figure 2 presents the evolution of scores in basic requirements and the respective disaggregates for 2005–12. It also presents the average regional performance in efficiency enhancers.
The reason for focusing on these two areas is that the GCI classifies all sub-Saharan economies in the factor-driven and efficiency-driven stages of development, and these two subindexes capture those elements most critical for improving competitiveness in these stages. The graph shows that gains in competitiveness stem from improvements in institutional quality, most noticeably in health and primary education, reflecting improved health conditions and gradually higher primary enrollment rates. Macroeconomic stability also improved in the pre-crisis years, although double-digit inflation in Eastern Africa on the back of increased food prices and higher fiscal deficits/government debt in other parts of the region have led to a deterioration of macroeconomic stability since 2008. The figure also shows that the region has registered a persistent and worrisome infrastructure deficit: despite gradual improvements in the run-up to the financial crisis, the quality and quantity of infrastructure has largely stagnated at low levels since then, in part due to a decline in investment following the financial crisis. The infrastructure deficit is particularly striking given gradual improvements across the various efficiency enhancers (e.g., market efficiency, technological readiness) in the past years.
Removing this bottleneck would boost intra-regional trade and help the region to further diversify external trade, thereby making it more resilient to external shocks (e.g., decline in demand from the euro area, oil price shocks).
Looking forward, reducing the competitiveness divide between sub-Saharan economies and advanced economies will be the single most determining factor that can launch the region onto a firmly sustainable growth and development path. This will require effort across many areas.
To complement the time-trend analysis, Figure 3 gives an overview of the 33 sub-Saharan economies covered in this year’s GCI (compared with 17 countries in the constant sample). The broader sample allows classification into oil exporters, middle-income countries, non-fragile low-income countries, and fragile countries.2 The data suggest that oilexporting economies trail the performance of even fragile economies in all areas in the basic requirements pillar except for macroeconomic stability, which is bolstered by oil revenues. They exhibit the largest infrastructure deficit in the region, their institutional quality is similar to that of fragile economies, and they perform considerably worse than other countries in the region in educating their young population and providing good conditions for a healthy workforce. This is also reflected in this year’s rankings where first-time entrant
Gabon leads the African oil exporters at 99th place, followed by Cameroon (112th), Nigeria (115th), and Chad at 139th place. Thus, despite a favorable growth outlook according to the International Monetary Fund, their economies remain vulnerable to oil price shocks and they need to improve their competitiveness and encourage greater diversification if they are to place their economies on more sustainable growth paths. (Cont’d.)
38 | The Global Competitiveness Report 2012–2013
1.1: The Global Competitiveness Index 2012–2013
Box 5: Is sub-Saharan Africa’s competitiveness improving? (cont’d.)
Figure 1: Trends in GCI scores, 2005–12
5.0
GCI score (1–7)
4.5
4.0
3.5
3.0
2005–2006
2006–2007
2007–2008
2008–2009
2009–2010
2010–2011
2011–2012
2012–2013
GCI edition
OECD
Sub-Saharan Africa*
Middle-income countries
Low-income countries
Oil exporters
Note: The constant sample includes the following economies: Oil exporters: Cameroon, Chad, and Nigeria; middle-income countries: Botswana, Mauritius, Namibia, and South Africa; low-income countries: Benin, Ethiopia, Gambia, Kenya, Madagascar, Mali, Mozambique, Tanzania, Uganda, and Zimbabwe.
* 2005 constant sample.
Figure 2: Trends in factor-driven and efficiency-driven scores, 2005–12
4.5
GCI score (1–7)
4.0
3.5
3.0
2.5
2005–2006
2006–2007
2007–2008
2008–2009
2009–2010
2010–2011
2011–2012
2012–2013
GCI edition
Macroeconomic environment
Institutions
Health and primary education
Efficiency enhancers
Basic requirements
Infrastructure
(Cont’d.)
The Global Competitiveness Report 2012–2013 | 39
1.1: The Global Competitiveness Index 2012–2013
Box 5: Is sub-Saharan Africa’s competitiveness improving? (cont’d.)
Figure 3: Performance of sub-Saharan Africa and subregions in the GCI 2012–2013
7
6
Score (1–7)
5
4
3
2
OECD
Oil exporters
Middle-income countries
Fragile countries
12. Innovation
11. Business sophistication
10. Market size
9. Technological readiness
8. Financial market development
7. Labor market efficiency
6. Goods market efficiency
5. Higher education and training
4. Health and primary education
3. Macroeconomic environment
2. Infrastructure
1. Institutions
1
Non-fragile low-income countries Note: The constant sample includes the following economies: Oil exporters: Cameroon, Chad, Gabon, and Nigeria; middle-income countries: Botswana, Cape Verde, Ghana,
Lesotho, Mauritius, Namibia, Senegal, Seychelles, South Africa, Swaziland, and Zambia; non-fragile low-income economies: Benin, Burkina Faso, Ethiopia, Gambia,
Kenya, Madagascar, Malawi, Mali, Mozambique, Rwanda, Sierra Leone, Tanzania, and Uganda; fragile economies: Burundi, Côte d’Ivoire, Guinea, Liberia, and Zimbabwe.
The blue bars reflect the dispersion in performance across sub-Saharan countries in the 12 dimensions analyzed in the GCR, the end points presenting the highest and lowest score in the sample, respectively.
Figure 4: The most problematic factors for doing business: Sub-Saharan African average
Access to financing
Corruption
Inadequate supply of infrastructure
Inefficient government bureaucracy
Tax rates
Inadequately educated workforce
Poor work ethic in national labor force
Inflation
Policy instability
Tax regulations
Restrictive labor regulations
Foreign currency regulations
Crime and theft
Government instability/coups
Poor public health
0
5
10
15
20
Percent of responses
(Cont’d.)
40 | The Global Competitiveness Report 2012–2013
1.1: The Global Competitiveness Index 2012–2013
Box 5: Is sub-Saharan Africa’s competitiveness improving? (cont’d.)
Middle-income economies, all currently in the efficiencydriven stage of development, outperform their regional peers in all areas except for labor market efficiency, market size, and innovative capacity. South Africa and Mauritius lead the regional rankings this year, placing 52nd and 54th, respectively, followed by the Seychelles at 76th place. Finally, non-fragile low-income economies enter the pillar rankings as expected, with Rwanda leading at 63rd, and Sierra Leone closing the regional rankings at 143rd place.
These outcomes are further corroborated by the perspective of Africa’s business leaders. Figure 4 presents the most problematic factors for doing business in the region, and reveals that access to financing, corruption, and an inadequate supply of infrastructure are seen to be significant hindrances to doing business in Africa. These are issues that must be tackled in order to encourage the wealth and job creation that are still so needed in the region.
As to whether or not the region will be able to continue on a sustainable growth path will depend on critical improvement across all pillars, with a focus on the infrastructure deficit. Overall, the results provide cause
must also be made to increase the university enrollment rate in order to better develop its innovation potential.
Combined efforts in these areas will be critical in view of the country’s high unemployment rate of almost
25 percent in the second quarter of 2012. In addition,
South Africa’s infrastructure, although good by regional standards, requires upgrading (63rd). The poor security situation remains another important obstacle to doing business in South Africa. The high business costs of crime and violence (134th) and the sense that the police are unable to provide sufficient protection from crime (90th) do not contribute to an environment that fosters competitiveness. Another major concern remains the health of the workforce, which is ranked
132nd out of 144 economies—the result of high rates of communicable diseases and poor health indicators more generally. Mauritius comes in at 54th this year, the secondhighest ranked country in the region after South
Africa. The country benefits from relatively strong and transparent public institutions (40th), with clear property rights, strong judicial independence, and an efficient government. Private institutions are rated as highly accountable (13th), with effective auditing and accounting standards and strong investor protection. The country’s infrastructure is well developed by regional standards, particularly its ports, air transport, and fixed telephony.
Its health standards are also impressive compared with those of other sub-Saharan African countries. Further, its goods markets are efficient (27th). However, efforts are still required in education. Enrollment rates remain low
for cautious optimism. Africa’s competitiveness has been improving in recent years in specific areas. However, looking forward, to better enable national economies to ensure solid future economic performance, African economies must continue to make efforts to develop economic environments that are based on productivity enhancements. This means keeping a clear focus on strengthening the institutional, physical, and human capital prerequisites for a strong and competitive private-sector led development. Only in this way will Africa be able to sustain and even accelerate its progress in the positive direction that it has taken over the past decade. Notes
1
Originally, sub-Saharan economies were grouped into oil exporters, middle-income countries, non-fragile low-income countries, and fragile countries. As Zimbabwe is the only country classified as fragile in the constant sample, we merge fragile and non-fragile low-income countries into a single group of low-income countries for purpose of this trend exercise. See IMF 2012a.
2
See IMF 2012a.
at all levels, and the country’s educational system gets only mediocre marks for quality. Beyond its educational weaknesses, its labor markets could be made more efficient—it has stringent hiring and firing practices
(78th) and wages that are not flexibly determined (108th), reducing the incentive for job creation in the country.
Rwanda moves up by seven places this year to
63rd position, continuing to place third in the subSaharan African region. As do the other comparatively successful African countries, Rwanda benefits from strong and relatively well-functioning institutions, with very low levels of corruption (an outcome that is certainly related to the government’s non-tolerance policy), and a good security environment. Its labor markets are efficient, its financial markets are relatively well developed, and Rwanda is characterized by a capacity for innovation that is quite good for a country at its stage of development. The greatest challenges facing Rwanda in improving its competitiveness are the state of the country’s infrastructure, its low secondary and university enrollment rates, and the poor health of its workforce.
The Seychelles enters the Index for the first time this year at 76th position overall, 4th in the region.
The country benefits from strong and well-functioning institutions by regional standards (47th), with strong public trust in politicians (38th) and a government that is seen as efficient (28th). Infrastructure is also relatively well developed (42nd), and the country has impressive educational outcomes in terms of enrollment rates, although the quality of education—particularly in math and science—is perceived to be rather poor by the
The Global Competitiveness Report 2012–2013 | 41
1.1: The Global Competitiveness Index 2012–2013
business community. Moving forward, the country will need to improve the efficiency of its markets, particularly its goods and financial markets (ranked 70th and 94th, respectively). Further, because the Seychelles is now approaching the innovation-driven stage of development, a more innovative business culture will be critical for ensuring continued productivity enhancements into the future. Botswana moves up one place to 79th, one of the top five economies in the region. Among the country’s strengths are its relatively reliable and transparent institutions (33rd), with efficient government spending, strong public trust in politicians, and low levels of corruption. Although improving since last year,
Botswana’s macroeconomic environment remains of some concern and is ranked 81st this year. However,
Botswana’s primary weaknesses continue to be related to its human resources base. Education enrollment rates at all levels remain low by international standards, and the quality of the educational system receives mediocre marks. Yet it is clear that by far the biggest obstacle facing Botswana in its efforts to improve its competitiveness remains its health situation. The rates of disease in the country remain very high, and health outcomes are poor despite improvements in fighting malaria and reducing infant mortality.
Namibia continues its downward trend and falls nine places this year to 92nd place, with weakening across most areas measured by the Index. The country continues to benefit from a relatively well functioning institutional environment (52nd), with wellprotected property rights, an independent judiciary, and reasonably strong public trust in politicians. The country’s transport infrastructure is also good by regional standards (59th). Financial markets are developed by international standards (47th) and buttressed by solid confidence in financial institutions (23rd), although their overall assessment has weakened for three years in a row. With regard to weaknesses, as in much of the region, Namibia’s health and education indicators are worrisome. The country is ranked a low 120th on the health subpillar, with high infant mortality and low life expectancy—the result, in large part, of the high rates of communicable diseases. On the educational side, enrollment rates remain low and the quality of the educational system remains poor, ranked 127th.
In addition, Namibia could do more to harness new technologies to improve its productivity levels; it currently shows low penetration rates of new technologies such as mobile phones and the Internet.
Ghana is ranked 103rd this year, moving up by an impressive 11 places since last year on the back of improvements in the basic requirements of its macroeconomic stability and health and educational outcomes. Traditionally displaying strong public institutions and governance indicators, especially in
42 | The Global Competitiveness Report 2012–2013
regional comparison, along with increased government regulation and sizeable deteriorations in all indicators have dragged down the country’s score in the institutions pillar to 75th place (from 61st last year). Education levels also continue to lag behind international standards at all levels, labor markets are still characterized by inefficiencies, and the country is not harnessing new technologies for productivity enhancements (ICT adoption rates are very low). On a more positive note, some aspects of its infrastructure are good by regional standards, particularly the state of its ports. Financial markets are also relatively well developed (59th).
Kenya is ranked 106th this year, showing a relatively steady performance. The country’s strengths continue to be found in the more complex areas measured by the
GCI. Kenya’s innovative capacity is ranked an impressive
50th, with high company spending on R&D and good scientific research institutions that collaborate well with the business sector in research activities. Supporting this innovative potential is an educational system that— although educating a relatively small proportion of the population compared with most other countries—gets relatively good marks for quality (37th) as well as for on-the-job training (62nd). The economy is also supported by financial markets that are well developed by international standards (24th) and a relatively efficient labor market (39th). On the other hand, Kenya’s overall competitiveness is held back by a number of factors.
Health is an area of serious concern (115th), with a high prevalence of communicable diseases contributing to the low life expectancy of less than 57 years and reducing the productivity of the workforce. The security situation in Kenya is also worrisome (125th).
Liberia enters the rankings for the first time at 111th place. The country’s institutions receive an impressive assessment (45th), with strong public trust in politicians
(25th) and high marks for the efficiency of government
(30th). Goods markets are also efficient (40th), with few procedures and low cost to start a business in the country, and a taxation regime that is not overly distortive to economic decision making. In order to enhance Liberia’s competitiveness, the country must focus on building physical infrastructure and enhancing human resources by improving the health and education levels of the country’s workforce, as well as encouraging the adoption of the latest technologies for productivity enhancements. After some deterioration in the rankings over recent years, Nigeria has moved up to 115th place this year thanks to improved macroeconomic conditions (reflecting a positive government balance and a drop in inflation, although it remains in the double digits) and a financial sector that is recovering from its 2009 crisis. The country has a number of strengths on which to build, including its relatively large market (33rd), which provides its companies with opportunities for economies of scale.
1.1: The Global Competitiveness Index 2012–2013
Nigeria’s businesses are also sophisticated by regional standards (66th), with some cluster development, companies that tend to hire professional managers, and a willingness to delegate decision-making authority within the organization. Likewise, the country registers improvements in its labor market based on more efficient use of talent. On the other hand, despite a slight improvement since last year, the institutional environment does not support a competitive economy because of concerns about the protection of property rights, ethics and corruption, undue influence, and government inefficiencies. The security situation in the country continues to be dire and has worsened since last year
(134th). Additionally, Nigeria receives poor assessments for its infrastructure (130th) as well as its health and primary education levels (142nd). Furthermore, the country is not harnessing the latest technologies for productivity enhancements, as demonstrated by its low rates of ICT penetration.
Tanzania is ranked 120th this year. Tanzania benefits from public institutions characterized by a relative evenhandedness in the government’s dealings with the private sector (56th) and government regulation that is not seen as overly burdensome (58th). In addition, some aspects of the labor market lend themselves to efficiency, such as a high female participation in the labor force (5th) and reasonable redundancy costs.
On the other hand, infrastructure in the country is underdeveloped (132nd), with low-quality roads and ports and an unreliable electricity supply. And although primary education enrollment is commendably high, providing universal access, enrollment rates at the secondary and university levels are among the lowest in the world (both at 137th place). In addition, the quality of the educational system needs upgrading. A related area of concern is the low level of technological readiness in
Tanzania (122nd), with very low uptake of ICT such as the Internet and mobile telephony. In addition, the basic health of its workforce is also a serious concern; the country is ranked 113th in this area, with poor health indicators and high levels of diseases.
Zimbabwe remains stable at 132nd position.
Public institutions continue to receive a weak assessment, particularly related to corruption, security, and government favoritism, although overall the assessment of this pillar is better than it was just a few years ago. On the other hand, some major concerns linger with regard to the protection of property rights
(137th), where Zimbabwe is among the lowest-ranked countries, reducing the incentive for businesses to invest. And despite efforts to improve its macroeconomic environment—including the dollarization of its economy in early 2009, which brought down inflation and interest rates—the situation continues to be bad enough to place Zimbabwe among the lowest-ranked countries in this pillar (122nd), demonstrating the extent of efforts
still needed to ensure its macroeconomic stability.
Weaknesses in other areas include health (133rd in the health subpillar), low education enrollment rates, and official markets that continue to function with difficulty
(particularly with regard to goods and labor markets, ranked 133rd and 139th, respectively).
Mozambique ranks 138th this year and needs improvements across many areas to lift the economy onto a sustainable growth and development path, particularly in view of its natural resource potential. The country’s public institutions receive a weak assessment on the back of low public trust in politicians, significant red tape faced by companies in their business dealings, and the perceived wastefulness of government spending. Indeed, recurring government deficits are leading to a rising public debt burden. Macroeconomic stability is further undermined by double-digit inflation, although recent efforts seem to be bearing some fruit in containing price rises. Looking ahead, important reform efforts will be needed to improve the country’s long-term competitiveness, including critical investments across all modes of infrastructure (rank 129th), establishing a regulatory framework that encourages competition to foster economic diversification, and developing a sound financial market (134th). Also critical, in view of the country’s rapidly growing population and high unemployment, are investing in the healthcare system and primary education (137th) as well as higher education and training (138th).
CONCLUSIONS
This chapter has discussed the results of the Global
Competitiveness Index, covering 144 economies from all of the world’s regions. The GCI aims to capture the complexity of the phenomenon of national competitiveness, which can be improved only through an array of reforms in different areas that affect the longerterm productivity of a country, which is the key factor affecting economic growth performance of economies.
Recent events related to the financial and economic crisis and the continued uncertain ramifications within the global economy highlight the importance of measures to increase competitiveness in order to put economic growth of countries on a more stable and more sustainable footing.
Since its introduction in 2005, the GCI has been used by an increasing number of countries and institutions to benchmark national competitiveness.
The clear and intuitive structure of the GCI framework is useful for prioritizing policy reforms because it allows each country to identify the strengths and weaknesses of its national competitiveness environment and pinpoint those factors most constraining its economic development. More specifically, the GCI provides a platform for dialogue among government, business, and civil society that can serve as a catalyst for
The Global Competitiveness Report 2012–2013 | 43
1.1: The Global Competitiveness Index 2012–2013
productivity-improving reforms, with the aim of boosting the living standards of the world’s citizens.
Over the years, the GCI has proved to be a very useful tool for advancing competitiveness across countries. More recently, in order to better place the discussion on competitiveness in a societal and environmental context, the World Economic Forum has begun exploring the complex relationship between competitiveness and sustainability as measured by its social and environmental dimensions. The work carried out to date on these important aspects of human and economic development is described in Chapter 1.2.
NOTES
1 The first version of the Global Competitiveness Index was published in 2004. See Sala-i-Martín and Artadi 2004.
2 Schumpeter 1942; Solow 1956; and Swan 1956.
3 See, for example, Sala-i-Martín et al. 2004 for an extensive list of potential robust determinants of economic growth.
4 See Easterly and Levine 1997; Acemoglu et al. 2001, 2002; Rodrik et al. 2002; and Sala-i-Martín and Subramanian 2003.
5 See de Soto 2000.
6 See de Soto and Abbot 1990.
7 See Shleifer and Vishny 1997; Zingales 1998.
8 See Kaufmann and Vishwanath 2001.
9 See Aschauer 1989; Canning et al. 1994; Gramlich 1994; and
Easterly 2002.
10 See Fischer 1993.
11 See Sachs 2001.
20 Some restrictions were imposed on the coefficients estimated. For example, the three coefficients for each stage had to add up to one, and all the weights had to be non-negative.
21 In order to capture the resource intensity of the economy, we use as a proxy the exports of mineral products as a share of overall exports according to the sector classification developed by the
International Trade Centre in their Trade Performance Index.
In addition to crude oil and gas, this category also contains all metal ores and other minerals as well as petroleum products, liquefied gas, coal, and precious stones. The data used cover the years 2006 through 2010 or most recent year available. Further information on these data can be found at http://www.intracen. org/menus/countries.htm. All countries that export more than 70 percent of mineral products are considered to be to some extent factor driven. The stage of development for these countries is adjusted downward smoothly depending on the exact primary export share. The higher the minerals export share, the stronger the adjustment and the closer the country will move to stage 1. For example, a country that exports 95 percent of mineral exports and that, based on the income criteria, would be in stage 3 will be in transition between stages 1 and 2. The income and primary exports criteria are weighted identically. Stages of development are dictated solely by income for countries that export less than 70 percent minerals.
Countries that export only primary products would automatically fall into the factor-driven stage (stage 1).
22 OECD 2012.
23 Further minor adjustments to the data are that the redundancy cost in the labor market efficiency pillar (7th) is now calculated based on a different tenure of the employee than in previous years and that the Internet bandwidth is now indicated per user instead of per capita.
24 See World Economic Forum 2012a.
25 The BRICS countries are Brazil, Russia, India, China, and South
Africa.
26 IMF 2012b.
27 IMF 2012c.
12 See Schultz 1961; Lucas 1988; Becker 1993; and Kremer 1993.
13 See Almeida and Carneiro 2009; Amin 2009; and Kaplan 2009 for country studies demonstrating the importance of flexible labor markets for higher employment rates and, therefore, economic performance. 14 See Aghion and Howitt 1992 and Barro and Sala-i-Martín 2003 for a technical exposition of technology-based growth theories.
15 A general purpose technology (GPT), according to Trajtenberg
(2005), is one that, in any given period, gives a particular contribution to an overall economy’s growth thanks to its ability to transform the methods of production in a wide array of industries.
Examples of GPTs have been the invention of the steam engine and the electric dynamo.
16 See Sachs and Warner 1995; Frenkel and Romer 1999; Rodrik and Rodriguez 1999; Alesina et al. 2005; and Feyrer 2009.
17 This is particularly important in a world in which economic borders are not as clearly delineated as political ones. In other words, when Belgium sells goods to the Netherlands, the national accounts register the transaction as an export (so the Netherlands is a foreign market for Belgium), but when California sells the same kind of output to Nevada, the national accounts register the transaction as domestic (so Nevada is a domestic market for
California).
18 See Romer 1990; Grossman and Helpman 1991; and Aghion and
Howitt 1992.
19 Probably the most famous theory of stages of development was developed by the American historian W. W. Rostow in the 1960s
(see Rostow 1960). Here we adapt Michael Porter’s theory of stages (see Porter 1990). Please see Chapter 1.1 of The Global
Competitiveness Report 2007–2008 for a complete description of how we have adapted Michael Porter’s theory for the present application. 44 | The Global Competitiveness Report 2012–2013
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The Global Competitiveness Report 2012–2013 | 45
1.1: The Global Competitiveness Index 2012–2013
Appendix:
Computation and structure of the Global Competitiveness Index 2012–2013
This appendix presents the structure of the Global
Competitiveness Index 2012–2013 (GCI). The numbering of the variables matches the numbering of the data tables. The number preceding the period indicates to which pillar the variable belongs (e.g., variable 1.11 belongs to the 1st pillar and variable 9.04 belongs to the
9th pillar).
The computation of the GCI is based on successive aggregations of scores from the indicator level (i.e., the most disaggregated level) all the way up to the overall
GCI score. Unless mentioned otherwise, we use an arithmetic mean to aggregate individual variables within a category.a For the higher aggregation levels, we use the percentage shown next to each category. This percentage represents the category’s weight within its immediate parent category. Reported percentages are rounded to the nearest integer, but exact figures are used in the calculation of the GCI. For example, the score a country achieves in the 9th pillar accounts for 17 percent of this country’s score in the efficiency enhancers subindex, irrespective of the country’s stage of development. Similarly, the score achieved on the subpillar transport infrastructure accounts for 50 percent of the score of the infrastructure pillar.
Unlike the case for the lower levels of aggregation, the weight put on each of the three subindexes (basic requirements, efficiency enhancers, and innovation and sophistication factors) is not fixed. Instead, it depends on each country’s stage of development, as discussed in the chapter.b For instance, in the case of Burundi—a country in the first stage of development—the score in the basic requirements subindex accounts for 60 percent of its overall GCI score, while it represents just
20 percent of the overall GCI score of Sweden, a country in the third stage of development. For countries in transition between stages, the weighting applied to each subindex is reported in the corresponding profile at the end of this volume. For instance, in the case of Algeria, currently in transition from stage 1 to stage 2, the weight on each subindex is 59.1 percent, 35.7 percent, and
5.2 percent, respectively, as reported in the country/ economy profile on page 88.
Variables that are not derived from the Executive
Opinion Survey (Survey) are identified by an asterisk
(*) in the following pages. The Technical Notes and
46 | The Global Competitiveness Report 2012–2013
Sources section at the end of the Report provides detailed information about these indicators. To make the aggregation possible, these variables are transformed onto a 1-to-7 scale in order to align them with the
Survey results. We apply a min-max transformation, which preserves the order of, and the relative distance between, country scores.c
Indicators that are followed by the designation “1/2” enter the GCI in two different pillars. In order to avoid double counting, we assign a half-weight to each instance.d Weight (%) within immediate parent category
BASIC REQUIREMENTS
1st pillar: Institutions ...............................................25%
A. Public institutions .................................................... 75%
1. Property rights ....................................................................... 20%
1.01 Property rights
1.02 Intellectual property protection 1/2
2. Ethics and corruption ............................................................. 20%
1.03 Diversion of public funds
1.04 Public trust in politicians
1.05 Irregular payments and bribes
3. Undue influence.....................................................................20%
1.06 Judicial independence
1.07 Favoritism in decisions of government officials
4. Government efficiency............................................................ 20%
1.08 Wastefulness of government spending
1.09 Burden of government regulation
1.10 Efficiency of legal framework in settling disputes
1.11 Efficiency of legal framework in challenging regulations
1.12 Transparency of government policymaking
1.13 Provision of government services for improved business performance 5. Security................................................................................. 20%
1.14 Business costs of terrorism
1.15 Business costs of crime and violence
1.16 Organized crime
1.17 Reliability of police services
B. Private institutions ................................................... 25%
1. Corporate ethics .................................................................... 50%
1.18 Ethical behavior of firms
2. Accountability ........................................................................ 50%
1.19 Strength of auditing and reporting standards
1.20 Efficacy of corporate boards
1.21 Protection of minority shareholders’ interests
1.22 Strength of investor protection*
1.1: The Global Competitiveness Index 2012–2013
2nd pillar: Infrastructure ..........................................25%
6th pillar: Goods market efficiency .........................17%
A. Transport infrastructure ........................................... 50%
2.01 Quality of overall infrastructure
2.02 Quality of roads
2.03 Quality of railroad infrastructure e
2.04 Quality of port infrastructure
2.05 Quality of air transport infrastructure
2.06 Available airline seat kilometers*
A. Competition .............................................................. 67%
B. Electricity and telephony infrastructure ................. 50%
2.07 Quality of electricity supply
2.08 Mobile telephone subscriptions1/2
2.09 Fixed telephone lines1/2
3rd pillar: Macroeconomic environment .................25%
3.01
3.02
3.03
3.04
3.05
Government budget balance*
Gross national savings*
Inflation* f
Government debt*
Country credit rating*
4th pillar: Health and primary education.................25%
A. Health ....................................................................... 50%
4.01 Business impact of malaria g
4.02 Malaria incidence* g
4.03 Business impact of tuberculosis g
4.04 Tuberculosis incidence* g
4.05 Business impact of HIV/AIDS g
4.06 HIV prevalence* g
4.07 Infant mortality*
4.08 Life expectancy*
1. Domestic competition ...................................................... variable h
6.01 Intensity of local competition
6.02 Extent of market dominance
6.03 Effectiveness of anti-monopoly policy
6.04 Extent and effect of taxation1/2
6.05 Total tax rate*
6.06 Number of procedures required to start a business* i
6.07 Time required to start a business* i
6.08 Agricultural policy costs
2. Foreign competition ......................................................... variable h
6.09 Prevalence of trade barriers
6.10 Trade tariffs*
6.11 Prevalence of foreign ownership
6.12 Business impact of rules on FDI
6.13 Burden of customs procedures
6.14 Imports as a percentage of GDP* j
B. Quality of demand conditions ................................. 33%
6.15 Degree of customer orientation
6.16 Buyer sophistication
7th pillar: Labor market efficiency ..........................17%
A. Flexibility .................................................................. 50%
7.01 Cooperation in labor-employer relations
7.02 Flexibility of wage determination
7.03 Hiring and firing practices
7.04 Redundancy costs*
6.04 Extent and effect of taxation 1/2
EFFICIENCY ENHANCERS
B. Efficient
7.05
7.06
7.07
7.08
5th pillar: Higher education and training.................17%
8th pillar: Financial market development ................17%
A. Quantity of education .............................................. 33%
5.01 Secondary education enrollment rate*
5.02 Tertiary education enrollment rate*
A. Efficiency .................................................................. 50%
8.01 Availability of financial services
8.02 Affordability of financial services
8.03 Financing through local equity market
8.04 Ease of access to loans
8.05 Venture capital availability
B. Primary education ................................................... 50%
4.09 Quality of primary education
4.10 Primary education enrollment rate*
B. Quality of education ................................................ 33%
5.03 Quality of the educational system
5.04 Quality of math and science education
5.05 Quality of management schools
5.06 Internet access in schools
C. On-the-job training .................................................. 33%
5.07 Local availability of specialized research and training services
5.08 Extent of staff training
use of talent............................................... 50%
Pay and productivity
Reliance on professional management 1/2
Brain drain
Female participation in labor force*
B. Trustworthiness and confidence ............................. 50%
8.06 Soundness of banks
8.07 Regulation of securities exchanges
8.08 Legal rights index*
9th pillar: Technological readiness ..........................17%
A. Technological adoption ........................................... 50%
9.01 Availability of latest technologies
9.02 Firm-level technology absorption
9.03 FDI and technology transfer
B. ICT use ..................................................................... 50%
9.04 Internet users*
9.05 Broadband Internet subscriptions*
9.06 Internet bandwidth*
9.07 Mobile broadband subscriptions*
2.08 Mobile telephone subscriptions* 1/2
2.09 Fixed telephone lines1/2
The Global Competitiveness Report 2012–2013 | 47
1.1: The Global Competitiveness Index 2012–2013
10th pillar: Market size............................................17%
covered by the GCI. In some instances, adjustments were made to account for extreme outliers. For those indicators for which a higher value indicates a worse outcome (e.g., disease incidence, government debt), the transformation formula takes the following form, thus ensuring that 1 and 7 still corresponds to the worst and best possible outcomes, respectively:
A. Domestic market size .............................................. 75%
10.01 Domestic market size index* k
B. Foreign market size ................................................. 25%
10.02 Foreign market size index* l
–6 x
INNOVATION AND SOPHISTICATION FACTORS
11th pillar: Business sophistication ........................50%
11.01
11.02
11.03
11.04
11.05
11.06
11.07
11.08
11.09
7.06
Local supplier quantity
Local supplier quality
State of cluster development
Nature of competitive advantage
Value chain breadth
Control of international distribution
Production process sophistication
Extent of marketing
Willingness to delegate authority
Reliance on professional management 1/2
(sum of scores on full-weight variables) 1
(count of full-weight variables) 1
f
NOTES a Formally, for a category i composed of K indicators, we have: indicatork k=1
categoryi
K
b As described in the chapter, the weights are as specified below.
Refer to Table 2 of the chapter for country classification according to stage of development:
Stage of development
Factor-driven Transition stage (1) from stage 1 to stage 2
Efficiencydriven stage (2)
)
+7
3 (sum of scores on half-weight variables)
3 (count of half-weight variables)
e “n/appl.” is used for economies where the railroad network totals less than 50 kilometers.
Capacity for innovation
Quality of scientific research institutions
Company spending on R&D
University-industry collaboration in R&D
Government procurement of advanced technology products
Availability of scientists and engineers
PCT patent applications
Intellectual property protection 1/2
K
sample maximum – sample minimum
d For those categories that contain one or several half-weight variables, country scores are computed as follows:
12th pillar: R&D Innovation ......................................50%
12.01
12.02
12.03
12.04
12.05
12.06
12.07
1.02
(
country score – sample minimum
Transition from stage 2 to stage 3
Innovationdriven stage (3)
GDP per capita (US$) thresholds*
In order to capture the idea that both high inflation and deflation are detrimental, inflation enters the model in a U-shaped manner as follows: for values of inflation between 0.5 and 2.9 percent, a country receives the highest possible score of 7. Outside this range, scores decrease linearly as they move away from these values. g The impact of malaria, tuberculosis, and HIV/AIDS on competitiveness depends not only on their respective incidence rates but also on how costly they are for business. Therefore, in order to estimate the impact of each of the three diseases, we combine its incidence rate with the Survey question on its perceived cost to businesses. To combine these data we first take the ratio of each country’s disease incidence rate relative to the highest incidence rate in the whole sample. The inverse of this ratio is then multiplied by each country’s score on the related
Survey question. This product is then normalized to a 1-to-7 scale. Note that countries with zero reported incidence receive a
7, regardless of their scores on the related Survey question. In the case of malaria, countries receive a 7 if they have been classified as non-endemic by the World Health Organization (WHO). h The competition subpillar is the weighted average of two components: domestic competition and foreign competition. In both components, the included variables provide an indication of the extent to which competition is distorted. The relative importance of these distortions depends on the relative size of domestic versus foreign competition. This interaction between the domestic market and the foreign market is captured by the way we determine the weights of the two components.
Domestic competition is the sum of consumption (C), investment
(I), government spending (G), and exports (X), while foreign competition is equal to imports (M). Thus we assign a weight of
(C + I + G + X)/(C + I + G + X + M) to domestic competition and a weight of M/(C + I + G + X + M) to foreign competition.
2,000–2,999 3,000–8,999 9,000–17,000
>17,000
i
Variables 6.06 and 6.07 combine to form one single variable.
j
+15% to +20%
⇗ GCI score changes by +5% to +15%
⇒ GCI score remains stable between +5% and –5%
⇘ GCI score changes by –5% to –15%
⇓ GCI score changes by < –15% to –20%
The Global Competitiveness Report 2012–2013 | 59
1.2: Assessing the Sustainable Competitiveness of Nations
high inequality score of 39.5. On the environmental side,
Japan attains a more mixed performance, doing well in terms of environmental policies (good commitment on regulation and standards), yet it continues to face high emissions. The United States shows middling results in both social and environmental sustainability, which results in a slightly lower score in the sustainabilityadjusted GCI than in the GCI itself. The country’s social sustainability score is affected by increasing inequality and youth unemployment. However, it is the score in the environmental sustainability–adjusted GCI that is a concern for the country’s sustainable prosperity. For example, the United States is among the countries that have ratified the fewest environmental treaties in the sample. Mexico is an economy with somewhat weak sustainable competitiveness in both dimensions. On the social side, Mexico’s performance is affected by high inequality and a large informal economy. Environmentally,
Mexico is penalized for its high and increasing levels of emissions, relatively intense use of water for agriculture, and a perception that the natural environment is highly degraded. Several other Latin American countries see a number of weaknesses in both pillars, with Argentina and the Dominican Republic encountering more concerns on the environmental side and Peru, Colombia, and
Paraguay with more concerns in the social sustainability area. Costa Rica, on the other hand, stands out for its positive environmental performance. Attaining a better result in the environmental sustainability–adjusted GCI than in the underlying GCI, the country could be a reference for the rest of Latin America. First of all, Costa
Rica has low air pollution with levels of particulate matter
(PM2.5) and CO2 among the lowest of the countries studied. The country is actively avoiding deforestation through one of the world’s most extensive programs of rainforest conservation. One area of concern remains overfishing, which would be important to address given the importance of the fishing industry in the country.
Brazil performs slightly better in the overall environmental sustainability–adjusted GCI than in the social sustainability–adjusted GCI. However, Brazil’s overall relatively good performance masks a number of environmental concerns—such as the deforestation of the Amazon—with the country displaying one of the highest rates of deforestation in the world. And although
Brazil demonstrates an overall reasonable performance in the social sustainability area, the country’s very high inequality remains an area of concern.
In general, outside of Brazil, the other three
BRICs (Russia, India, and China) all reveal significant weaknesses in both dimensions of sustainable competitiveness. 60 | The Global Competitiveness Report 2012–2013
The Russian Federation does particularly poorly in terms of environmental sustainability, with some of the poorest ratings globally for three indicators: the strength of environmental regulations, the number of international environmental treaties ratified by the country, and the quality of the natural environment.
India is the worst performer among the BRICs, with concerns in both areas of sustainability. On the social sustainability–adjusted GCI, India is not providing access to some basic services to many of its citizens (only 34 percent of the population has access to sanitation, for example). The employment of much of the population is also vulnerable, which—combined with weak official social safety nets—makes the country vulnerable to economic shocks. In addition, although no official data are reported for youth unemployment, numerous studies indicate that the percentage is very high. In terms of its environmentally sustainable competitiveness, India also has some areas of concern such as its high agricultural water intensity and significant air pollution.
China’s competitiveness performance is notably weakened once the sustainability measures are taken into account, especially in terms of environmental sustainability. Although some political actions toward environmental improvement (such as afforestation) have been taken, the country continues to suffer from high emission levels (high levels of CO2 and particulate matter) and the agricultural sector places a great deal of pressure on the environment (China’s water intensity is very high). Social sustainability is only partially measured for China, as the country does not report data related to youth unemployment or vulnerable employment.
However, the available indicators show a somewhat negative picture, with rising inequality and general access to basic services such as improved sanitation remaining low.
Among other economies analyzed in this section,
Turkey—one of the countries that improved most in the GCI rankings this year—does not sustain its good performance once sustainability matters are taken into account. High inequality, vulnerable employment, and a large informal sector place pressure on the country’s social sustainability. Similarly, high pollution and intensive water use for agriculture, as well as a lack of protected land area and a low commitment to international environmental agreements remain areas of concern for
Turkey’s environmentally sustainable competitiveness.
In contrast, New Zealand, with its strongly articulated political commitment to environmental stewardship, receives a positive assessment for its environmentally sustainable competitiveness. It also performs better than neighboring Australia. The main differences between the two countries lie in the lower level of air pollution in New Zealand and the country’s efforts to set aside protected land areas. Both countries receive strong assessments for their social sustainability.
1.2: Assessing the Sustainable Competitiveness of Nations
Box 5: Plea for better sustainability data
Data availability and quality are critical issues for both research and policymaking, and all projects concerned with assessing environmental or social conditions are limited by one or both of these concerns. These limitations make it difficult to track developments over time or to compare data across countries.
For example, datasets capturing some of the relevant areas of social sustainability—such as the International Labour
Organization (ILO)’s Decent Work initiative (covering indicators such as injuries at work, excessive hours, and numbers of the working poor)—cover a limited number of countries. And some other indicators are not specific enough. For instance, including the indicator “CO2 emissions to energy use” in the sustainability-adjusted GCI may give an idea of how efficiently economies are using fuels with respect to the associated emissions, but it also incorporates other factors (such as the industrial structure, the economic specialization, and the technology used in the country) that make it hard to isolate single elements and compare countries.
The available data concerned with the quality and use of water comprise another prominent example of data inadequacy. Although water has possibly one of the biggest environmental impacts on human life, researchers lack a globally agreed methodology for defining and measuring water scarcity and pollution, while data on water withdrawal— despite great efforts to maintain the Food and Agriculture
Organization (FAO) Aquastat database—are not updated regularly. It is, however, precisely the timeliness of data updates for many of these indicators that is critical for policymakers. For some indicators it is indeed crucial. Youth unemployment, for instance, is changing relatively quickly in many economies, especially after an economic crisis. Yet several datasets on youth unemployment predate the crisis for some specific countries; using out-of-date figures could be
CONCLUSIONS AND NEXT STEPS
Sustainable competitiveness is a nascent area of research and our initial work has shown that much of the data for measuring key concepts are not yet available. We therefore recognize that properly capturing the concept of sustainable competitiveness will require a multi-year effort. As more comprehensive and better data are needed to fully assess sustainable competitiveness, as noted above, there are a number of concepts we have not yet been able to capture (see
Boxes 4 and 5).
However, by combining social and environmental indicators with the GCI we have been able to introduce the concept and carry out a preliminary analysis of national and regional social sustainability.
The main and very important finding is that there is no necessary trade-off between being competitive and being sustainable (by our definitions). On the contrary, many countries at the top of the competitiveness rankings are also the best performers in many areas of sustainability. misleading for policymakers, who need to have statistics that accurately reflect the actual current situation in order to gain a sense of the effectiveness of their reform efforts.
Data on social and environmental performances are particularly complex and intricate, and the challenges and the investments needed to produce sound indicators should not be underestimated. For instance, coming back to the point of the assessment of water pollution, it would be necessary to identify and agree on the list of substances and their relative levels that would define a water course as
“polluted.” Moreover, developing an aggregation methodology to turn local measurement into national statistics would be an important milestone. Such a methodology would help in understanding and monitoring issues that need to be managed to put economies on a more sustainable development path, and would provide statistical evidence to drive the agendas of policymakers.
In order to contribute to such data production and collection, the World Economic Forum has formed a Global
Agenda Council on Measuring Sustainability. The Council aims to design and nurture one or more global public good initiatives to meet the needs of policymakers who must have access to high-quality, verifiable, and readily available contextually specific knowledge and information if they are to formulate responsible policies. Nonetheless, a wider international effort is required to overcome the challenge of measuring sustainability. This challenge can be met by pooling resources to produce and collect the data and by defining global measurement standards. The Global Agenda
Council on Measuring Sustainability aims to participate in this effort by bringing scientists together while focusing the attention of policymakers on the need to develop new sustainability indicators.
While creating value and being productive remain at the basis of economic development, the purpose of this work is to explore how social and environmental elements relate to economic progress and prosperity because the three areas are clearly interlinked. It is highly likely that sustained human progress and prosperity will depend on balancing economic progress with social inclusion and good and effective environmental stewardship. The work presented in this chapter is the result of an ongoing process. We will update and refine our thinking over time, integrating feedback and the latest research on an ongoing basis. As we have already done over the past year, we will continue to carry out workshops and roundtables over the coming year in order to further refine the concept. We will also continue to seek better and more complete datasets in collaboration with the newly created World Economic Forum Global Agenda
Council on Measuring Sustainability.
The Advisory Board on Sustainability and
Competitiveness will continue to deliberate and to work with the Forum to integrate feedback collected into this
The Global Competitiveness Report 2012–2013 | 61
1.2: Assessing the Sustainable Competitiveness of Nations
work. The goal is to present an even more complete measurement of the concept in time for the next Global
Competitiveness Report.
Additionally, because—given its specific economic and political characteristics—the theme of sustainability requires a multi-stakeholder approach, the World
Economic Forum will continue to serve the international community by providing a neutral platform on which to move ahead in this area. Work on sustainable competitiveness is one important component of this platform, and the Forum offers a space for conceptual discussion as well as assessment and analysis.
NOTES
1 See, for example, Atkinson 2003.
Aghion P., P. Howitt, and F. Murtin. 2009. “The Relationship Between
Health and Growth: When Lucas Meets Nelson-Phelps.”
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Alesina, A. and D. Rodrik 1994, “Distributive Politics and Economic
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Atkinson, A. B. 2003. “Income Inequality in OECD Countries: Data and
Explanations.” CESifo Working Paper Series 881, CESifo Group,
Munich.
Baldini M. and S. Toso. 2009. Diseguaglianza, povertà e politiche pubbliche.Il Mulino.
Berg, A. and J. Ostry. 2011. “Inequality and Unsustainable Growth: Two
Sides of the Same Coin?” IMF Staff Discussion Note. Washington
DC: International Monetary Fund. Available at http://www.imf.org/ external/pubs/ft/sdn/2011/sdn1108.pdf. Bertola, G. 1993. “Factors Shares and Savings in Endogenous Growth.”
American Economic Review 83 (5):1194–98.
2 See, for example, Nordhaus 1994, 2000, 2002; Bovenberg and
Smulders 1996; Aghion et al. 1998; and Acemoglu 2002, 2007,
2009.
Bovenberg, A. L. and J. A. Smulders. 1996. “Transitional Impacts of
Environmental Policy in an Endogenous Growth Model.” Open
Access publications from Tilburg University, urn:nbn:nl:ui:12-73103,
Tilburg University.
3 See, for example, Perotti 1993: Bertola 1993: Alesina and Rodrik
1994: Persson and Tabellini 1994: and Green et al. 2006.
Coman, K. 2011. “Some Unsettled Problems of Irrigation (1911).”
American Economic Review 101 (1): 36–48.
4 See the World Economic Forum 2012a for an assessment of how
Europe is faring in meeting these goals.
Cowen, T., ed. 1992. Public Goods and Market Failures. New
Brunswick, NJ: Transaction Publishers.
5 For more information on this index, see www.oecdbetterlifeindex. org/. Dealkin, S. 2009. “The Evidence-Based Case for Labour Regulation.”
Paper prepared for the Regulating Decent Work Conference, ILO,
Geneva, July 8.
6 See http://hdr.undp.org/en/.
8 See http://www.footprintnetwork.org/en/index.php/GFN/page/ methodology/ for information about information about the Global
Footprint Network.
Driscoll, T., K. Steenland, D. Imel Nelson, and J. Leigh. 2004.
Occupational Airborne Particulates: Assessing the Environmental
Burden of Disease at National and Local Levels. Environmental
Burden of Disease Series, No. 7. Geneva: World Health
Organization.
9 Information about the Global Adaptation Index is available at http://index.gain.org/. Elkington, J. 1997. Cannibals with Forks: The Triple Bottom Line of 21st
Century Business. Oxford, United Kingdom: John Wiley & Sons.
7 For more information on the EPI, see http://www.epi.yale.edu/.
10 The World Bank’s Worldwide Governance Indicators Framework is available at http://info.worldbank.org/governance/wgi/index.asp.
Esteban, J. and D. Ray. 2006. “Inequality, Lobbying and Resource
Allocation.” The American Economic Review 96 (1): 257–79.
11 Information about the Decent Work initiative is available at http:// www.ilo.org/integration/themes/mdw/lang--en/index.htm. Esty, D. C., M. Levy, T. Srebotnjak, and A. de Sherbinin. 2005. 2005
Environmental Sustainability Index: Benchmarking National
Environmental Stewardship. New Haven: Yale Center for
Environmental Law & Policy.
12 See, for example, Marshal et al. 1997.
13 Smith 2012.
14 World Economic Forum. 2012b.
15 UN-HABITAT 2010.
16 Countries from the GCI sample were excluded if they were missing a maximum of two indicators considering both sustainability pillars. 17 See Acemoglu et al. 2012, for example.
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1.2: Assessing the Sustainable Competitiveness of Nations
Appendix A:
Calculation of the sustainability-adjusted GCI
As described in the text, the two areas of sustainability— social and environmental—are treated as independent adjustments to each country’s performance in the
Global Competitiveness Index (GCI). The adjustment is calculated according to the following steps.
AGGREGATION
In the first step, the individual indicators in each area are normalized on a 1-to-7 scale and aggregated by averaging the normalized scores, such that a social sustainability score and an environmental sustainability score are calculated for each country.
In the second step, these scores are normalized again on a 0.8-to-1.2 scale,a which is based on the distribution of each of the two sustainability components.
The purpose of this methodology is to reward the countries attaining a relatively good performance on the two sustainability components while penalizing those that register a poor performance. Applying this methodology corresponds to transforming actual averages into coefficients ranging from 0.8 to 1.2. For example, the worst performer on the social sustainability pillar obtains a score of 0.8 and the best performer a 1.2.
The same calculation is conducted for the environmental sustainability pillar.
Normalizing on a 0.8-to-1.2 scale and using the actual sample maximum and minimum are corroborated by the statistical distribution of the data, so as to ensure that the final data are not skewed. In the absence of empirical evidence, the selection of the impact limits
(0.8–1.2) relies on the best judgment of the authors and is based on the assumption that countries can experience either an opportunity if they manage their resources well or a weakness if they do not.
The selection of this methodology is not intended to be scientific, but it represents a normative approach aimed at stimulating discussions on policy priorities and possibly stimulating scientific research in this field.
In the third step, the GCI score of each country is multiplied twice: once by its social sustainability coefficient and once by its environmental sustainability coefficient, to obtain two separate sustainabilityadjusted GCI scores. Finally, an average of the two scores provides an overall measure of the sustainability adjustment. 64 | The Global Competitiveness Report 2012–2013
STRUCTURE OF THE SUSTAINABILITY PILLARS
The computation of the sustainability components is based on an arithmetic mean aggregation of scores from the indicator level.b
Variables that are not derived from the Executive
Opinion Survey (Survey) are identified by an asterisk (*) in the following pages. To make the aggregation possible, these variables are transformed into a 1-to-7 scale in order to align them with the Survey results. We apply a min-max transformation, which preserves the order of, and the relative distance between, country scores.c
Indicators marked with a “(log)” subscript are transformed applying the logarithm (base 10) to the raw score. Social sustainability pillar
S01
Income Gini index*
S02
Youth unemployment*
S03.01 Access to sanitation* d(log)
S03.02 Access to improved drinking water* d
S03.03 Access to healthcared
S04
Social safety net protection
S05
Extent of informal economy
S06
Social mobility
S07
Vulnerable employment*
Environmental sustainability pillar
S08.01 Stringency of environmental regulation e
S08.02 Enforcement of environmental regulation e
S09
Terrestrial biome protection*
S10
No. of ratified international environmental treaties*
S11
Agricultural water intensity*
S12
CO2 intensity*(log)
S13
Fish stocks overexploited*(log)
S14.01 Forest cover change* f
S14.02 Forest loss* f(log)
S15
Particulate matter (2.5) concentration*(log)
S16
Quality of the natural environment
NOTES a Formally we have
0.4 x
(
country score – sample minimum sample maximum – sample minimum
)
+ 0.8
The sample minimum and sample maximum are, respectively, the lowest and highest country scores in the sample of economies covered by the sustainability-adjusted GCI in each pillar.
1.2: Assessing the Sustainable Competitiveness of Nations
b Formally, for a category i composed of K indicators, we have:
K
indicatork
k=1
categoryi
K
c Formally, we have:
6x
(
country score – sample minimum sample maximum – sample minimum
)
+1
The sample minimum and sample maximum are, respectively, the lowest and highest country scores in the sample of economies covered by the sustainability-adjusted GCI. In some instances, adjustments were made to account for extreme outliers. For those indicators for which a higher value indicates a worse outcome
(e.g., CO2 emission, income Gini index), the transformation formula takes the following form, thus ensuring that 1 and 7 still corresponds to the worst and best possible outcomes, best possible outcomes, respectively:
–6 x
(
country score – sample minimum sample maximum – sample minimum
)
+7
d Variables S03.01, S03.02, and S03.03 are combined to form one single variable. e Variables S08.01 and S08.02 are combined to form one single variable. f
Variables S14.01 and S14.02 are combined to form one single variable. The Global Competitiveness Report 2012–2013 | 65
1.2: Assessing the Sustainable Competitiveness of Nations
Appendix B:
Technical notes and sources for sustainability indicators
The data in this Report represent the best available estimates from various national authorities, international agencies, and private sources at the time the Report was prepared. It is possible that some data will have been revised or updated by the sources after publication.
Throughout the Report, “n/a” denotes that the value is not available or that the available data are unreasonably outdated or do not come from a reliable source.
For each indicator, the title appears on the first line, preceded by its number to allow for quick reference. The numbering is the same as the one used in Appendix A.
Below is a description of each indicator or, in the case of Executive Opinion Survey data, the full question and associated answers. If necessary, additional information is provided underneath.
S01 Income Gini index
Measure of income inequality [0 = perfect equality; 100 = perfect inequality] | 2010 or most recent year available
This indicator measures the extent to which the distribution of income among individuals or households within an economy deviates from a perfectly equal distribution. A Lorenz curve plots the cumulative percentage of total income received against the cumulative percentage of recipients, starting with the poorest individual. The Gini index measures the area between the Lorenz curve and a hypothetical line of absolute equality, expressed as a percentage of the maximum area under the line. Thus a Gini index of 0 represents perfect equality, while a value of 100 implies perfect inequality.
Source: The World Bank, World Development Indicators Online
(retrieved June 1, 2012); CIA World Factbook (retrieved June 6,
2012); national sources
S02 Youth unemployment
Youth unemployment measured as the ratio of total unemployed youth to total labor force aged 15–24 | 2010 or most recent year available.
Youth unemployment refers to the share of the labor force aged
15–24 without work but available for and seeking employment.
Source: International Labour Organization, Key Indicators of the
Labour Markets Net (retrieved June 5, 2012)
S03.01 Access to sanitation
Percent of total population with access to improved sanitation facilities | 2010 or most recent year available.
Percent of the population with at least adequate access to excreta disposal facilities that can effectively prevent human, animal, and insect contact with excreta. Improved facilities range from simple but protected pit latrines to flush toilets with a sewerage connection. To be effective, facilities must be correctly constructed and properly maintained. A logarithm transformation is applied to the ratio of these statistics in order to spread the data distribution.
Source: World Health Organization, World Health Statistics 2012 online database (retrieved June 5, 2012)
66 | The Global Competitiveness Report 2012–2013
S03.02 Access to improved drinking water
Percent of total population with access to improved drinking water | 2010 or most recent year available
Percent of the population with reasonable access to an adequate amount of water from an improved source, such as a household connection, public standpipe, borehole, protected well or spring, or rainwater collection. Unimproved sources include vendors, tanker trucks, and unprotected wells and springs. Reasonable access is defined as the availability of at least 20 liters per person per day from a source within 1 kilometer of the dwelling.
Source: World Health Organization, World Health Statistics 2012 online database (retrieved June 5, 2012)
S03.03 Access to healthcare
How accessible is healthcare in your country? [1 = limited— only the privileged have access; 7 = universal—all citizens have access to healthcare] | 2011–12 weighted average
Source: World Economic Forum, Executive Opinion Survey, 2011 and 2012 editions
S04 Social safety net protection
In your country, does a formal social safety net provide protection from economic insecurity due to job loss or disability? [1 = not at all; 7 = fully] | 2011–12 weighted average
Source: World Economic Forum, Executive Opinion Survey, 2011 and 2012 editions
S05 Extent of informal economy
How much economic activity in your country would you estimate to be undeclared or unregistered? [1 = most economic activity is undeclared or unregistered; 7 = most economic activity is declared or registered] | 2011–12 weighted average
Source: World Economic Forum, Executive Opinion Survey, 2011 and 2012 editions
S06 Social mobility
To what extent do individuals in your country have the opportunity to improve their economic situation through their personal efforts regardless of the socioeconomic status of their parents? [1 = little opportunity exists to improve one’s economic situation; 7 = significant opportunity exists to improve one’s economic situation]
Source: World Economic Forum, Executive Opinion Survey, 2012 edition 1.2: Assessing the Sustainable Competitiveness of Nations
S07 Vulnerable employment
Proportion of own-account and contributing family workers in total employment | 2010 or most recent year available
Vulnerable employment refers to the proportion of unpaid contributing family workers and own-account workers in total employment. Own-account workers are those workers who, working on their own account or with one or more partners, hold the type of job defined as a self-employed job and have not engaged on a continuous basis any employees to work for them during the reference period. A contributing family worker is a person who holds a job in a market-oriented establishment operated by a related person living in the same household and who cannot be regarded as a partner because the degree of his or her commitment to the operation of the establishment, in terms of the working time or other factors to be determined by national circumstances, is not at a level comparable with that of the head of the establishment.
Source: The World Bank, World Development Indicators Online
(retrieved June 1, 2012)
S08.01 Stringency of environmental regulation
How would you assess the stringency of your country’s environmental regulations? [1 = very lax; 7 = among the world’s most stringent] | 2011–12 weighted average
Source: World Economic Forum, Executive Opinion Survey, 2011 and 2012 editions
S08.02 Enforcement of environmental regulation
How would you assess the enforcement of environmental regulations in your country? [1 = very lax; 7 = among the world’s most rigorous] | 2011–12 weighted average
Source: World Economic Forum, Executive Opinion Survey, 2011 and 2012 editions
S09 Terrestrial biome protection
Degree to which a country achieves the target of protecting 17 percent of each terrestrial biome within its borders | 2010 or most recent year available
This indicator is calculated by Columbia University’s Center for
International Earth Science Information Network (CIESIN) by overlaying the protected area mask on terrestrial biome data developed by the World Wildlife Fund (WWF)’s Terrestrial Ecoregions of the World for each country. A biome is defined as a major regional or global biotic community, such as a grassland or desert, characterized chiefly by the dominant forms of plant life and the prevailing climate. Scores are capped at 17 percent per biome such that higher levels of protection of some biomes cannot be used to offset lower levels of protection of other biomes, hence the maximum level of protection a country can achieve is 17 percent. CIESIN uses time series of the World
Database on Protected Areas (WDPA) developed by the United
Nations Environment Programme (UNEP) World Conservation
Monitoring Centre (WCMC) in 2011, which provides a spatial time series of protected area coverage from 1990 to 2010. The WCMC considers all nationally designated protected areas whose location and extent is known. Boundaries were defined by polygons where available; where they were not available, protected-area centroids were buffered to create a circle in accordance with the protected area size. The WCMC removed all overlaps between different protected areas by dissolving the boundaries to create a protected areas mask.
Source: Yale University and Columbia University, Environmental
Performance Index (EPI) 2012 edition, based on WWF World
Wildlife Fund USA and UNEP WCMC data
S10 No. of ratified international environmental treaties
Total number of ratified environmental treaties | 2010
This indicator provides the total number of environmental treaties ratified by a country. It measures the total number of international treaties from a set of 25 for which a state is a participant. A state becomes a “participant” by Ratification, Formal confirmation,
Accession, Acceptance, Definitive signature, Approval, Simplified procedure, Consent to be bound, Succession, and Provisional application (which are here grouped under the term ratification, for reasons of convenience). The treaties included are: the
International Convention for the Regulation of Whaling, 1948
Washington; the International Convention for the Prevention of Pollution of the Sea by Oil, 1954 London, as amended in
1962 and 1969; the Convention on Wetlands of International
Importance especially as Waterfowl Habitat, 1971 Ramsar; the
Convention Concerning the Protection of the World Cultural and
Natural Heritage, 1972 Paris; the Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter,
1972 London, Mexico City, Moscow, Washington; the Convention on International Trade in Endangered Species of Wild Fauna and Flora, 1973 Washington; the International Convention for the Prevention of Pollution from Ships (MARPOL) as modified by the Protocol of 1978, 1978 London; the Convention on the Conservation of Migratory Species of Wild Animals, 1979
Bonn; the United Nations Convention on the Law of the Sea,
1982 Montego Bay; the Convention on the Protection of the
Ozone Layer, 1985 Vienna; the Protocol on Substances that
Deplete the Ozone Layer, 1987 Montreal; the Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, 1989 Basel; the International Convention on Oil Pollution Preparedness, Response and Co-operation,
1990 London; the United Nations Framework Convention on
Climate Change, 1992 New York; the Convention on Biological
Diversity, 1992 Rio de Janeiro; the International Convention to
Combat Desertification in Those Countries Experiencing Serious
Drought and/or Desertification, particularly Africa, 1994 Paris; the
Agreement relating to the Implementation of Part XI of the United
Nations Convention on the Law of the Sea of 10 December
1982, 1994 New York; the Agreement relating to the Provisions of the United Nations Convention on the Law of the Sea relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, 1995 New York; the Kyoto
Protocol to the United Nations Framework Convention on the
Climate Change, Kyoto 1997; the Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous
Chemicals and Pesticides in International Trade, 1998 Rotterdam; the Cartagena Protocol of Biosafety to the Convention on
Biological Diversity, 2000 Montreal; the Protocol on Preparedness,
Response and Cooperation to Pollution Incidents by Hazardous and Noxious Substances, 2000 London; the Stockholm
Convention on Persistent Organic Pollutants, 2001 Stockholm; the International Treaty on Plant Genetic Resources for Food and
Agriculture, 2001 Rome; and the International Tropical Timber
Agreement 206, 1994 Geneva.
Source: The International Union for Conservation of Nature (IUCN)
Environmental Law Centre ELIS Treaty Database
S11 Agricultural water intensity
Agricultural water withdrawal as a percent of total renewable water resources | 2006 or most recent year available
Agricultural water withdrawal as a percent of total renewable water resources is calculated as: 100 × agricultural water withdrawal / total renewable water resources. In turn, total renewable = surface renewable water + renewable water resources groundwater – overlap between surface and groundwater. Where available, this indicator includes water resources coming from desalination used for agriculture (as in Kuwait, Saudi Arabia, the
United Arab Emirates, Qatar, Bahrain, and Spain).
Source: FAO AQUASTAT database, available at http://www.fao. org/nr/water/aquastat/main/index.stm (retrieved May 31, 2012)
The Global Competitiveness Report 2012–2013 | 67
1.2: Assessing the Sustainable Competitiveness of Nations
S12 CO² intensity
S14.02 Forest loss
CO² intensity (kilograms of CO² per kilogram of oil equivalent energy use) | 2008
Forest cover lost over the period 2000–10 based on satellite data | 2010
Carbon dioxide (CO2 ) emissions are those stemming from the burning of fossil fuels and the manufacture of cement. They include carbon dioxide produced during consumption of solid, liquid, and gas fuels and gas flaring. Energy use refers to use of primary energy before transformation to other end-use fuels, which is equal to indigenous production plus imports and stock changes, minus exports and fuels supplied to ships and aircraft engaged in international transport. A logarithm transformation is applied to the ratio of these statistics in order to spread the data distribution. This indicator represents the loss of forest area owing to deforestation from either human or natural causes, such as forest fires. The University of Maryland researchers used Moderate
Resolution Imaging Spectroradiometer (MODIS) 500-meter resolution satellite data to identify areas of forest disturbance, then used Landsat data to quantify the area of forest loss. This indicator uses a baseline forest cover layer (forest cover fraction with a 30 percent forest cover threshold) to measure the area under forest cover in the year 2000. It then combines forest loss estimates from Landsat for the periods 2000–05 and 2005–10 to arrive at a total forest cover change amount for the decade. This total is then divided by the forest area estimate for 2000 to come up with a percent change in forest cover over the decade. Further details on the methods used are found in Hansen, M., S. V.
Stehman, and P. V. Potapov. 2010. “Quantification of Global Gross
Forest Cover Loss.” Proceedings of the National Academies of Science, available at www.pnas.org/cgi/doi/10.1073/ pnas.0912668107. A logarithm transformation is applied to these statistics in order to spread the data distribution.
Source: The World Bank, World Development Indicators Online
(retrieved June 1, 2012)
S13 Fish stocks overexploited
Fraction of country’s exclusive economic zone with overexploited and collapsed stocks | 2006
The Sea Around Us (SAU) project‘s Stock Status Plots (SSPs) are created in four steps (Kleisner and Pauly, 2011). The first step is to define a stock. SAU defines a stock to be a taxon (either at the species, genus, or family level of taxonomic assignment) that occurs in the catch records for at least 5 consecutive years, over a minimum of 10 years, and which has a total catch in an area of at least 1,000 tonnes over the time span. In the second step,
SAU assesses the status of the stock for every year relative to the peak catch. SAU defines five states of stock status for a catch time series. This definition is assigned to every taxon meeting the definition of a stock for a particular spatial area considered
(e.g., exclusive economic zones, or EEZs). Stock status states are: (1) Developing—before the year of peak catch and less than 50 percent of the peak catch; (2) Exploited—before or after the year of peak catch and more than 50 percent of the peak catch; (3) Overexploited—after the year of peak catch and less than 50 percent but more than 10 percent of the peak catch;
(4) Collapsed—after the year of peak catch and less than 10 percent of the peak catch; (5) Rebuilding—occurs after the year of peak catch and after the stock has collapsed, when catch has recovered to between 10 and 50 percent of the peak. In the third step, SAU graphs the number of stocks by status by tallying the number of stocks in a particular state in a given year and presenting these as percentages. In the fourth step, the cumulative catch of stock by status in a given year is summed over all stocks and presented as a percentage in the catch by stock status graph. The combination of these two figures represents the complete Stock Status Plot. The numbers for this indicator are taken from the overexploited and collapsed numbers of stocks over total numbers of stocks per EEZ. A logarithm transformation is applied to these statistics in order to spread the data distribution.
Source: Yale University and Columbia University, Environmental
Performance Index (EPI) 2012 edition based on Sea Around Us data S14.01 Forest cover change
Percent change in forest area over the period 1990–10 | 2010
This measure represents the percent change in forest area, applying a 10 percent crown cover as the definition of forested areas, between time periods. We used total forest extent rather than the extent of primary forest only. The change measure is calculated from forest area data in 1995, 2000, 2005, and 2010.
The data are reported by national governments, and therefore methods and data sources may vary from country to country.
Positive values indicate afforestation or reforestation, and negative values represent deforestation.
Source: Yale University and Columbia University, Environmental
Performance Index (EPI) 2012 edition based on Sea Around Us data 68 | The Global Competitiveness Report 2012–2013
Source: Yale University and Columbia University, Environmental
Performance Index (EPI) 2012 edition, based on University of
Maryland data
S15 Particulate matter (2.5) concentration
Population-weighted exposure to PM2.5 in micrograms per cubic meter, based on satellite data | 2009
This indicator was developed by the Battelle Memorial Institute in collaboration with Columbia University’s Center for International
Earth Science Information Network (CIESIN) and funding from the
NASA Applied Sciences Program. Using relationships between the Moderate Resolution Imaging Spectroradiometer (MODIS)
Aerosol Optical Depth (AOD) and surface PM2.5 concentrations that were modeled by van Donkelaar et al. (2010), annual average
MODIS AOD retrievals were used to estimate surface PM2.5 concentrations from 2001 to 2010. These were averaged into three-year moving averages from 2002 to 2009 to generate global grids of PM2.5 concentrations. The grids were resampled to match CIESIN’s Global Rural-Urban Mapping Project (GRUMP) 1 kilometer population grid. The population-weighted average of the
PM2.5 values were used to calculate the country’s annual average exposure to PM2.5 in micrograms per cubic meter. A logarithm transformation is applied to these statistics in order to spread the data distribution.
Source: Yale University and Columbia University, Environmental
Performance Index (EPI) 2012 edition based on NASA MODIS and MISR data (van Donkelaar et al. [2010]), Battelle, and CIESIN
S16 Quality of the natural environment
How would you assess the quality of the natural environment in your country? [1 = extremely poor; 7 = among the world’s most pristine] | 2011–12 weighted average
Source: World Economic Forum, Executive Opinion Survey, 2011 and 2012 editions
CHAPTER 1.3
The Executive Opinion
Survey: The Voice of the
Business Community
CIARA BROWNE
THIERRY GEIGER
TANIA GUTKNECHT
World Economic Forum
The Global Competitiveness Report provides a useful portrait of a nation’s economic environment and its ability to achieve sustained levels of prosperity and growth. In doing so, the Report continues to be one of the most respected assessments of national competitiveness.
To mirror countries’ economic performance, the World
Economic Forum draws its data from two sources: international organizations and national sources, and its own annual Executive Opinion Survey (Survey).
The Survey is a tool that aims to capture crucial information that is not otherwise available on a global scale. The data gathered thus provide a unique source of insight into each nation’s economic and business environment. The Survey data are used to calculate the Global Competitiveness Index (GCI) and are also used as a prime data source for the Forum’s other industry-specific reports, including The Global
Information Technology Report, The Travel & Tourism
Competitiveness Report, The Global Enabling Trade
Report, The Gender Gap Report, and The Financial
Development Report. The data are also employed for regional studies. Furthermore, the Executive Opinion
Survey data have long served a number of international and national organizations, government bodies, academia, and private-sector companies for their policy or strategy review. For example, the data are used for the elaboration of the renowned Corruption Perceptions
Index and the International Bribe Payers Index published by Transparency International as well as a number of academic publications. Finally, an increasing number of national competitiveness reports draw on or refer to the
Survey data.
The World Economic Forum has conducted its annual Survey for over 40 years, modifying it over time to capture new data points essential to the GCI and other Forum indexes. It has also expanded the scope of its sample, achieving this year a record of over 15,000 surveys almost 150 economies between January and
June 2012.
Following the data editing process (see below), a total of 14,059 surveys were retained.1 This represents an average of 100 respondents per country. Given the extent of the Survey’s country coverage and in order to maximize its outreach, it is translated into over 30 languages. Geographic expansion
Since the first edition of the World Economic Forum report on competitiveness in 1979, the country coverage has expanded from 16 European countries to 144 economies worldwide, which together account for 98 percent of the world’s gross domestic product
(see Figure 1). In this edition, five new economies are included: Gabon, Guinea, Liberia, Sierra Leone, and
Seychelles; also Libya, which has been reinstated following a year of non-inclusion. On the flip side,
The Global Competitiveness Report 2012–2013 | 69
1.3: The Executive Opinion Survey
Figure 1: Country/Economy coverage of the Executive Opinion Survey
n Previous coverage n 2012 additions
Angola and Belize are not included in this year’s edition because of a lack of a sufficient number of surveys.
Furthermore, it was not possible to conduct the Survey in Syria because of the difficult security situation in that country. Finally, the World Economic Forum decided not to use the data collected in Tunisia this year because of a structural break in the data, making comparisons with past years impossible. The Forum’s Global
Benchmarking Network hopes to re-include the above countries in future editions of the Report.
SURVEY STRUCTURE AND METHODOLOGY
The Survey is divided into 14 sections.
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
XI.
XII.
XIII.
XIV.
About Your Company
Overall Perceptions of Your Economy
Government and Public Institutions
Infrastructure
Innovation and Technology
Financial Environment
Foreign Trade and Investment
Domestic Competition
Company Operations and Strategy
Education and Human Capital
Corruption, Ethics and Social
Responsibility
Travel & Tourism
Environment
Health
70 | The Global Competitiveness Report 2012–2013
Box 1: Example of a typical Survey question
To what extent is the judiciary in your country independent from influences of members of government, citizens, or firms?
Heavily influenced < 1 2 3 4 5 6 7 > Entirely independent
Circling 1 ... means you agree completely with the answer on the left-hand side
Circling 2 ... means you largely agree with the left-hand side
Circling 3 ... means you somewhat agree with the left-hand side Circling 4 ... means your opinion is indifferent between the two answers
Circling 5 ... means you somewhat agree with the right-hand side Circling 6 ... means you largely agree with the right-hand side Circling 7 ... means you agree completely with the answer on the right-hand side
Most questions in the Survey ask respondents to evaluate, on a scale of 1 to 7, one particular aspect of their operating environment. At one end of the scale, 1 represents the worst possible situation; at the other end of the scale, 7 represents the best (see Box 1 for an example). 1.3: The Executive Opinion Survey
The yearly administration of the Survey could not be carried out without the strong network of over 160
Partner Institutes worldwide. The Partner Institutes are typically recognized research institutes, universities, business organizations, and in some cases survey consultancies, which are listed in the front section of the Report.2 The Partner Institutes are selected because of their understanding and expertise of the national business environment as well as their capacity to reach out to leading business executives and also for their commitment to the Forum’s research on competitiveness. The Partner Institutes are tasked to follow detailed sampling guidelines in view of capturing a strong and representative sample.
After building a sample frame of potential respondents, the Partner Institutes administer the
Survey. This valuable collaboration helps to ensure that the Survey is conducted according to the sampling guidelines and therefore in a consistent and timely manner across the globe.
The Survey sampling follows a dual stratification procedure based on the size of the company and the sector of activity. Specifically, the Survey sampling guidelines ask the Partner Institutes to carry out the following steps:
1.
2.
3.
Prepare a “sample frame,” or large list of potential respondents, which includes firms representing the main sectors of the economy (agriculture, manufacturing industry, non-manufacturing industry, and services).
Separate the frame into two lists: one that includes only large firms, and a second list that includes all other firms (both lists representing the various economic sectors).3
Based on these lists, and in view of reducing survey bias, choose a random selection of these firms to receive the Survey.
Furthermore, the sampling guidelines specify that the Partner Institute should aim to collect a combination of random respondents with some repeat respondents for further comparative analysis.4 The administration of the Survey may take a variety of formats including face-to-face interviews, with business executives, telephone interviews and mailings, with an online survey as an alternative. Deciding which of these differing methodologies to use may be based on the particular country’s infrastructure, distance between cities, cultural preferences, and other such issues.
For energy, time, and cost considerations, the
Forum encourages the use of the online survey tool, which was available this year in 18 languages. The share of online participation has significantly increased
over the years and now represents almost 37 percent of all responses, with an increase of nearly 40 percent in the last three years. This year, 9 countries used the online tool for 100 percent of respondents (Argentina,
Belgium, Bolivia, Czech Republic, Estonia, Iceland,
Israel, Lebanon, and Venezuela), and 28 economies participated with more than 90 percent online (see
Table 1).
The Partner Institutes also take an active and essential part in disseminating the findings of The Global
Competitiveness Report and additional reports published by The Global Benchmarking Network by holding press events and workshops to highlight the results at the national level to the business community, the public sector, and other stakeholders.
The guidelines and Survey administration process underwent a stringent review in 2007, with the consultation of a renowned survey consultancy. The improved sampling guidelines have now been adopted in all countries for the last five years of the Survey administration process, implementing a best practice procedure and thus ensuring greater data accuracy and allowing for more robust comparison across economies. The entire Survey process will undergo a second audit in 2012 with the aim of implementing those recommendations in the 2013 edition of the Survey.
DATA TREATMENT AND SCORE COMPUTATION
This section details the process whereby individual survey responses are edited and aggregated in order to produce the scores of each economy on each individual question of the Survey. These results, together with other indicators obtained from other sources, feed into the GCI and other projects.5
Data editing
Prior to aggregation, the respondent-level data are subjected to a careful editing process. The first editing rule consists of excluding those surveys with a completion rate inferior to 50 percent.6 This is because a partially completed survey likely demonstrates a lack of sufficient focus on the part of the respondent. In a second step, a multivariate outlier analysis is applied to the data using the Mahalanobis distance technique.
This test assesses whether each individual survey is representative, given the overall sample of survey responses in the specific country, and allows for the deletion of clear outliers.
More specifically, the Mahalonobis distance test estimates the likelihood that one particular point of N dimensions belongs to a set of such points. One single survey made up of N answers can be viewed as the point of N dimensions, while a particular country sample c is the set of points. The Mahalanobis distance is used to compute the probability that any survey i does not belong to the sample c. If the probability is high
The Global Competitiveness Report 2012–2013 | 71
1.3: The Executive Opinion Survey
Table 1: Executive Opinion Survey: Descriptive statistics and weightings
First component*
Country/Economy
Albania
Algeria
Argentina
Armenia
Australia
Austria
Azerbaijan
Bahrain
Bangladesh
Barbados
Belgium
Benin
Bolivia
Bosnia and Herzegovina†
Botswana
Brazil
Brunei Darussalam
Bulgaria
Burkina Faso
Burundi
Cambodia
Cameroon
Canada
Cape Verde
Chad
Chile
Colombia
Costa Rica
Côte d’Ivoire
Croatia
Cyprus
Czech Republic
Denmark
Dominican Republic
Timor-Leste
Ecuador††
Egypt
El Salvador
Estonia
Ethiopia
Finland
Macedonia, FYR
France
Gabon†††
Gambia, The
Georgia††
Germany
Ghana
Greece
Guatemala
Guinea†††
Guyana
Haiti
Honduras
Hong Kong SAR
Hungary
Iceland
India
Indonesia
Iran, Islamic Rep.
Ireland
Israel
Italy
Jamaica
Japan
Jordan
Kazakhstan†
Kenya
Kuwait
Kyrgyz Republic
Latvia
Lebanon
Survey edition
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2010
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011 n/a 2011
2011
2011
2011
2011
2011
n/a
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2010
2011
2011
2011
2011
2011
No. of respondents
79
39
86
83
72
46
96
80
69
37
68
105
79
100
114
185
91
126
40
77
100
83
98
83
113
75
137
99
132
97
99
153
33
54
31
134
121
90
93
100
33
115
109 n/a 91
95
95
84
85
78
n/a
84
146
85
51
50
81
248
86
328
49
47
92
53
105
96
122
104
49
99
176
48
Second component: 2012 Survey*
Weight (%)
44.7
47.1
43.2
45.5
45.7
35.2
45.1
47.6
42.3
37.0
42.5
46.9
46.2
45.0
49.4
48.2
53.7
45.6
44.7
42.8
48.2
48.6
44.4
41.7
45.9
44.5
36.2
45.6
49.5
43.8
47.8
44.2
30.2
38.6
43.5
100.0
51.2
56.3
46.1
51.3
43.9
48.2
42.9 n/a 45.6
100.0
41.4
45.8
45.3
44.2
n/a
44.3
54.3
44.9
41.3
36.3
43.3
53.5
44.7
38.0
42.1
44.0
45.7
40.7
44.3
39.0
47.1
44.1
48.2
45.0
52.1
47.9
No. of respondents
81
33
99
80
68
105
95
65
86
72
83
90
72
100
80
143
44
120
41
92
77
62
103
108
105
78
286
94
92
107
79
163
128
91
35 n/a 73
34
85
60
36
89
129
48
87 n/a 127
79
83
83
60
89
67
86
69
103
93
122
88
585
62
51
87
75
111
156
103
112
38
99
98
38
Use of online tool (%)
Weight (%)
0.0
3.0
100.0
8.8
69.1
53.3
0.0
96.9
0.0
77.8
100.0
0.0
100.0
0.0
31.3
93.7
59.1
0.0
0.0
0.0
0.0
0.0
97.1
24.1
0.0
26.9
83.9
96.8
0.0
47.7
0.0
100.0
0.0
3.3
0.0 n/a 0.0
79.4
100.0
0.0
97.2
1.1
0.8
0.0
0.0 n/a 79.5
21.5
63.9
1.2
0.0
0.0
0.0
12.8
75.4
66.0
100.0
33.6
1.1
36.6
93.5
100.0
3.4
0.0
4.5
16.0
0.0
0.0
31.6
0.0
91.8
100.0
55.3
52.9
56.8
54.5
54.3
64.8
54.9
52.4
57.7
63.0
57.5
53.1
53.8
55.0
50.6
51.8
46.3
54.4
55.3
57.2
51.8
51.4
55.6
58.3
54.1
55.5
63.8
54.4
50.5
56.2
52.2
55.8
69.8
61.4
56.5 n/a 48.8
43.7
53.9
48.8
56.1
51.8
57.1
100.0
54.4 n/a 58.6
54.2
54.7
55.8
100.0
55.7
45.7
55.1
58.8
63.7
56.7
46.5
55.3
62.0
57.9
56.0
54.3
59.3
55.7
61.0
52.9
55.9
51.8
55.0
47.9
52.1
(Cont’d.)
72 | The Global Competitiveness Report 2012–2013
1.3: The Executive Opinion Survey
Table 1: Executive Opinion Survey: Descriptive statistics and weightings (cont’d.)
First component*
Country/Economy
Lesotho
Liberia†††
Libya†††
Lithuania
Luxembourg
Madagascar
Malawi
Malaysia
Mali
Malta
Mauritania
Mauritius
Mexico
Moldova
Mongolia
Morocco†
Mozambique
Namibia
Nepal
Netherlands
New Zealand
Nicaragua
Nigeria
Norway
Oman
Pakistan
Panama
Paraguay
China
Peru
Philippines
Poland
Portugal
Puerto Rico
Qatar†
Korea, Rep.
Montenegro
Serbia
Romania
Russian Federation
Rwanda††
Saudi Arabia†
Senegal
Seychelles†††
Sierra Leone†††
Singapore
Slovak Republic
Slovenia†
South Africa
Spain
Sri Lanka††
Suriname
Swaziland
Sweden
Switzerland
Taiwan, China
Tajikistan
Tanzania
Thailand
Trinidad and Tobago
Turkey
Uganda
Ukraine
United Arab Emirates
United Kingdom
United States
Uruguay
Venezuela
Vietnam
Yemen
Zambia
Zimbabwe
Grand total/Average
Survey edition
2011 n/a n/a
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2010
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2010
2011
2011
2011
2011
2011
2011
2010
2011 n/a n/a
2011
2011
2010
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
No. of respondents
79 n/a n/a
178
35
86
64
87
129
52
71
95
354
108
84
94
112
75
102
87
51
93
110
47
70
130
134
94
370
88
93
198
136
63
75
112
78
81
94
377
40
152
90 n/a n/a
152
78
101
57
103
105
34
40
32
90
68
101
92
55
116
79
94
104
108
93
422
82
45
96
52
88
56
Second component: 2012 Survey*
Weight (%)
43.5 n/a n/a
46.9
41.9
44.2
45.6
46.2
47.9
43.6
43.2
45.5
48.0
44.5
44.9
55.1
47.6
43.9
46.2
45.7
44.1
47.4
45.7
39.3
43.6
47.1
45.1
47.0
45.0
45.7
40.7
44.5
47.1
43.5
38.9
46.7
45.3
42.5
44.5
43.8
100.0
50.8
44.5 n/a n/a
43.0
46.7
43.9
47.9
46.5
100.0
43.9
42.0
34.7
46.6
44.6
45.5
44.1
41.2
41.7
44.1
45.5
44.4
39.5
43.8
45.8
45.2
46.8
45.0
44.8
44.2
43.3
No. of respondents
Use of online tool (%)
Weight (%)
89
85
72
153
45
92
61
79
102
58
82
91
278
112
85
40
91
82
93
82
55
77
104
75
78
110
133
80
371
83
132
206
115
71
123
98
76
99
98
414
n/a
95
94
32
99
178
68
110
45
91
n/a
37
51
77
79
70
97
99
75
151
85
90
109
169
102
397
81
39
96
53
94
64
0.0
0.0
45.8
63.4
93.3
0.0
11.5
38.0
0.0
77.6
0.0
39.6
91.0
0.0
0.0
0.0
0.0
0.0
0.0
98.8
96.4
84.4
1.0
97.3
50.0
23.6
63.2
7.5
0.3
30.1
0.8
93.7
55.7
98.6
16.3
3.1
0.0
0.0
0.0
0.7
n/a
96.8
0.0
34.4
0.0
56.2
80.9
0.0
82.2
83.5
n/a
0.0
68.6
97.4
93.7
50.0
0.0
1.0
73.3
80.1
21.2
0.0
1.8
7.1
96.1
98.2
0.0
100.0
2.1
0.0
0.0
40.6
56.5
100.0
100.0
53.1
58.1
55.8
54.4
53.8
52.1
56.4
56.8
54.5
52.0
55.5
55.1
44.9
52.4
56.1
53.8
54.3
55.9
52.6
54.3
60.7
56.4
52.9
54.9
53.0
55.0
54.3
59.3
55.5
52.9
56.5
61.1
53.3
54.7
57.5
55.5
56.2
n/a
49.2
55.5
100.0
100.0
57.0
53.3
56.1
52.1
53.5
n/a
56.1
58.0
65.3
53.4
55.4
54.5
55.9
58.8
58.3
55.9
54.5
55.6
60.5
56.2
54.2
54.8
53.2
55.0
55.2
55.8
56.7
14,059
36.6
Note: All statistics were computed following the edited process. See text for details.
* The table reports information about the two Survey editions used in the computation of the two-year weighted average score. See Box 2 for details.
Survey edition(s) used for the computation of the two-year weighted average score: † 2010 and 2012; † † 2011; † †† 2012. See Box 2 for details about exceptions.
The Global Competitiveness Report 2012–2013 | 73
1.3: The Executive Opinion Survey
enough—we use 99.9 percent as the threshold—we conclude that the survey is a clear outlier and does not
“belong” to the sample. The implementation of this test requires that the number of responses in a country be greater than the number of answers, N, used in the test.
The test uses 66 questions, selected by their relevance and placement in the Survey instrument.
A univariate outlier test is then applied at the country level for each question of each survey. We use the standardized score—or “z-score”—method, which indicates by how many standard deviations any one individual answer deviates from the mean of the country sample. Individual answers with a standardized score zi,q,c = greater than 3 are dropped.
Data weighting: Sector-weighted country averages
Once the data have been edited, individual answers are aggregated at the country level. We compute sector-weighted country averages to obtain a more representative average that takes into account the structure of a country’s economy. The structure is defined by the estimated contributions to a country’s gross domestic product of each of the four main economic sectors: agriculture, manufacturing industry, non-manufacturing industry, and services (see Table 2).7
An additional step is taken to prevent individual responses within a sample from receiving an excessive weight when the structure of the sample and the underlying economy differ greatly. As an extreme example, imagine the case of a country where just 3 percent of responses come from the services sector, but that sector actually represents 90 percent of the country’s economy. By applying the above sectorweighting scheme, we would be giving a very high weight to a very few surveys. This is avoided by trimming the sector weights. When for a country the ratio of the weight of one sector in the economy to the percentage of surveys from that sector in the country sample exceeds 5, the sector weight used for the weighted average is capped to five times the percentage of surveys from that sector in the sample. The weights of the other sectors are then adjusted proportionally to their weight in the country’s GDP.
Formally, the sector-weighted average of a Survey
S
w s,c q i,s,c indicator i for country c, denoted q i,c =is computed as
,
s follows: q i,c =
S s S
w s,c
q i,s,c
q i,s,c =
N s,c j q i,c = N w s,c q i,s,c ss,c q with i,j,s,c q i,s,c =
N s,c j s,c
N
q i,j,s,c
,
q i,s,c =
N s,c j 74 | The Global Competitiveness Report 2012–2013
q i,j,s,c
N s,c
where ws,c is sector s’s contribution to the economy of country c; qi,s,c is the mean of the answers to question i from sector s in country c; qi,j,s,c is the answer to question i from respondent j in sector s in country c; and
Ns,c is the number of responses from sector s in country c.
When for a given country the sample size is too small or the sectoral representation of the sample is too different from the actual structure in the economy, the xi,q,c – xq,c mechanism described above might not be sufficient σq,c to prevent an individual response from receiving a disproportionate weight.8 In such a case the economic sector stratification average is abandoned and a simple average of the surveys is applied, where all individual responses contribute equally to the country score regardless the sector of activity of the respondents’ companies. In 2012, this was the case for seven countries: Algeria, Burkina Faso, Kuwait, Morocco,
Timor-Leste, Venezuela, and Yemen. Going forward, we will work closely with our Partner Institutes to increase the sample size and improve the sector representation in these countries.
Data weighting: Moving average
As a final step, the sector-weighted country averages for
2012 are combined with the 2011 averages to produce the country scores that are used for the computation of the GCI 2012–2013 and for other projects.
This moving average technique, introduced in 2008, consists of taking a weighted average of the most recent year’s Survey results together with a discounted average of the previous year. There are several reasons for doing this. First, it makes results less sensitive to the specific point in time when the Survey is administered. Second, it increases the amount of available information by providing a larger sample size. Additionally, because the
Survey is carried out during the first quarter of the year, the average of the responses in the first quarter of 2011 and first quarter of 2012 better aligns the Survey data with many of the data indicators from sources other than the Survey, which are often year-average data. For newly introduced questions, for which no time series exists, the final country score simply corresponds to the country score in 2012. Such is the case for indicator 1.13, which is derived from the new Survey question about the provision of government services aiming at improving business performance.
To calculate the moving average, we use a weighting scheme composed of two overlapping elements. On one hand, we want to give each response an equal weight and, therefore, place more weight on the year with the larger sample size. At the same time, we would like to give more weight to the most recent responses because
1.3: The Executive Opinion Survey
Table 2: Sectoral value-added as a share (%) of GDP, most recent year available
Country/Economy
Albania
Argentina
Armenia
Australia
Austria
Azerbaijan
Bahrain
Bangladesh
Barbados
Belgium
Benin
Bolivia
Bosnia and Herzegovina
Botswana
Brazil
Brunei Darussalam
Bulgaria
Burundi
Cambodia
Cameroon
Canada
Cape Verde
Chad
Chile
China
Colombia
Costa Rica
Côte d’Ivoire
Croatia
Cyprus
Czech Republic
Denmark
Dominican Republic
Ecuador
Egypt
El Salvador
Estonia
Ethiopia
Finland
France
Gabon
Gambia, The
Georgia
Germany
Ghana
Greece
Guatemala
Guinea
Guyana
Haiti
Honduras
Hong Kong SAR
Hungary
Iceland
India
Indonesia
Iran, Islamic Rep.
Ireland
Israel
Italy
Jamaica
Japan
Jordan
Kazakhstan
Kenya
Korea, Rep.
Kyrgyz Republic
Latvia
Lebanon
Agriculture
20
9
20
3
2
6
0
19
4
1
32
14
8
3
6
1
5
35
35
19
2
9
14
3
10
7
7
23
7
2
2
1
6
7
10
13
3
48
3
2
4
27
10
1
30
3
12
13
19
25
11
0
4
6
16
16
10
1
3
2
6
1
3
5
19
3
29
4
5
Manufacturing industry 20*
22
15
10
19
4
66*
18
7
14
8
14
13
3
16
10
16
9
15
17
14
7
7
13
32
14
19
19
17
8
23
13
22
11
14
22
17
5
18
11
4
5
9
19
6
10
19
5
7
16*
17
2
22
13
16
26
11
24
32*
16
9
20
19
12
8
28
13
12
8
Nonmanufacturing industry
Services
Country/Economy
Agriculture
n/a
9
18
19
11
65
n/a
11
11
8
6
22
16
42
10
61
14
11
8
14
18
13
42
30
12
18
8
8
12
12
14
9
5
15
15
6
12
9
10
8
50
11
12
7
12
8
8
43
29 n/a 8
6
8
14
12
23
34
8
n/a
9
13
8
11
31
6
9
7
10
8
60
60
47
68
69
24
33
53
78
78
54
50
63
52
68
28
64
45
42
50
67
71
38
54
46
61
66
50
63
78
60
77
67
67
61
59
68
38
69
79
42
57
69
73
51
79
61
40
46
59
64
93
66
66
55
35
45
67
64
73
71
71
66
52
67
61
51
74
78
Lesotho
Liberia
Libya
Lithuania
Luxembourg
Macedonia, FYR
Madagascar
Malawi
Malaysia
Mali
Malta
Mauritania
Mauritius
Mexico
Moldova
Mongolia
Montenegro
Mozambique
Namibia
Nepal
Netherlands
New Zealand
Nicaragua
Nigeria
Norway
Oman
Pakistan
Panama
Paraguay
Peru
Philippines
Poland
Portugal
Puerto Rico
Qatar
Romania
Russian Federation
Rwanda
Saudi Arabia
Senegal
Serbia
Seychelles
Sierra Leone
Singapore
Slovak Republic
Slovenia
South Africa
Spain
Sri Lanka
Suriname
Swaziland
Sweden
Switzerland
Taiwan, China
Tajikistan
Tanzania
Thailand
Trinidad and Tobago
Turkey
Uganda
Ukraine
United Arab Emirates
United Kingdom
United States
Uruguay
Vietnam
Zambia
Zimbabwe
8
61
2
3
0
11
29
31
10
37
2
20
4
4
10
18
10
32
8
33
2
6
18
32
1
2
22
5
19
7
12
4
2
1
0
7
5
34
3
17
11
2
47
0
3
2
3
3
14
5
7
2
1
2
21
28
11
0
9
24
8
2
1
1
12
20
9
17
Manufacturing industry 16
13
4
16
6
23
14
10
25
3
14
4
19
18
12
7
6
13
8
7
13
15
19
3
10
8
17
6
12
14
21
16
13
40
68*
22
15
6
10
13
19*
11
4
22
19
22
15
13
16
20
45
16
19
30*
10
10
34
6
17
8
18
12
11
13
17
20
9
15
Nonmanufacturing industry
Services
19
4
74
11
7
13
2
6
19
21
19
33
10
17
0
29
14
10
12
9
11
10
9
39
31
47
7
11
8
18
11
14
10
3
n/a
4
18
8
52
9
n/a
8
21
6
15
12
16
13
11
19
5
9
8 n/a 13
15
9
46
9
17
11
48
10
8
8
20
28
14
58
22
20
70
87
52
55
53
46
39
65
43
67
61
78
45
70
45
73
52
74
69
53
26
58
43
55
78
62
62
55
66
75
56
32
67
62
52
35
61
70
79
29
72
63
64
66
71
60
56
42
73
72
69
57
47
45
47
65
50
63
38
78
77
63
39
54
53
Sources: World Bank, World Development Indicators (accessed December 8, 2011); Economist Intelligence Unit, CountryData database (accessed December 9, 2011); US Central Intelligence
Agency, The World Factbook (accessed December 9, 2011).
Note: The simple average was used to compute the country scores of Algeria, Burkina Faso, Kuwait, Morocco, Timor-Leste, Venezuela, and Yemen. The values for these countries are therefore not reported. See text for details.
* Combined share of manufacturing and non-manufacturing industries.
The Global Competitiveness Report 2012–2013 | 75
1.3: The Executive Opinion Survey
Box 2: Country score calculation
10–11
q i,
This box presents the method applied to compute the country q i,c scores for the vast majority of economies included in
The Global Competitiveness Report 2012–2013 (see text for exceptions).
10–11
q10–11 i,c q i,
q q10–11 i,c
For any giveni,Survey question i, country c’s final score, q i,c
2011–12
q i, q i,c
10–11
q i,2011–12q i,c 2011
2011
, iw cgiven q i,c s 2011 by:
2012
q i,c
1
–2011
q i,c0–11 q i,c
2012 q i,c
2011–12 q i,c
2012
wc
2011 q i,c
10–11
2012
–2011
2011–12
2011
2012
2012
t
(1)
q2011–12 w2011
0–11
i,c i,c i,c q2011 w2012 q2012 q i,cqq2011–12 qq2012 N ct qq1i,c qq–2011 i,c c i,c c i,c 10–11 q 2011–12 w c2011 q i,c i,c i,c i,c i,c w c2012 q i,c q i,c –2011 q i,c
2011
2012
2011
2011 q 2011–12 q q2012 q 1t0–11 q i,c q i,n,c q i,c i,ci,c wc q i,c wc q i,c i,
Nc
2011 n=1 i,c t i,c
–t
where
1
–2011 q 2012 t 2011–12
2011
2011t
2012
2012 q i,n,c2011–12 qqi,c
(1 )
2011
2012 q i,c q i,c0–11 q i,c
2011
i,c q i,cqt i,c wc q i,c Nt c w c q i,c
Nc
Nc q i,c
N ct i,c 2011 q ti,c t Nc wc t qt i,n,c on question i in year t, with2011 q22011 2012, as computed 2011–12 q 2012 q 10–11 q –2011
2011–12
2012 t 10–11 t i,c 2012
2011
N q i,c i,c t q is
–t N c score q i,c (1 w c2011c qNc2011 = w011, q i,c i,c i,c q 2i,c q i, qqt i,n,c i,c country c’sn=1 ti,n,c
Ni,cc 2012 c
)
q t 2011 n=1 t t q i,c following–ttheN capproach described in the text; c2011 2012 q ti,n,c
(1 )
N 2011 N c q –ti,c n=1q i,n,c
2011
10–11 cN i,c
Ntt c
2011
q2012
Nt c2011 2011c2012
N
i,c q i, q i,c w2011 t (1 qN t
) wc
Nc
q i,c c i,n,c q Nc w c2011 q i,c t N 2 N c Nt c
–t
N ti,n,c
Nt c a q tc
) q 2011–12 N c q t2012 q 10–11 q t; and
2011–12 is respondent n’s response (on (1 1–7 scale) to question i in year –2011 q 2011n=1 ct
2012
2c2011 w 2011
2012
2012
2011
q i,c N i,n,c w c2011 i,c i,c N w c2012 q i,c c2011 i,c i,c i,c q
Nc
Nc
N q i,n,c ct 2012
2012
2011
NN c
2 2012 n=1c i,c c c t 0
1
wc wc w t 10–11
1
2012 c
–2011 –t
2011–12
2011–12
2011
2011
2012
q i,c0–11 q i,c Nq i,c yearqt2011 below). (1 w c) q i, Nwcti,c is the weight i,c q c2012
2012
i,n,c ’s scorec in q applied q i,c country c q 2011
2012
wct i,c to wc q i,c wc q t 2 i,c N 2 2012 N i,c(see
Nc
Nc
2011
2011 c tw 2012 t 2011
2012
N 2011 N 2012 c q i,c c
2011 2012 t
N
Nc c 2012 w c
2011
0
1
wc wc q i,c w2012 N c t N c c N 2011
0
1 wc wc c wc
The weights for each year are i,n,c t q tdetermined as follows: c2011 2c2012c2012 2012 w c2012 0 –2011 w c2011 1 2
N N cc w c2012
N
t
N c 2011–12
10–11
q i,c t 2011–12
2011
2012
2012
2012
2011
Nc
–t2011 n=1 q i,c2 q q i,n,c w c 10–11 qq i,c i,c w c 2011 q i,c w c (1 t ) 2011 2011 2012q2012 wq i,c2011 0q i,c w c 2012 1 2012 t c i,c Nc Nc Nc Nc q i,n,c i,c q i,
N c2011
N c2012
1 2012 w2011 N w2012 0 q i,c
2012 w c
2
2012
N ct N c c 2011
2011
2011
1
2011–122011 1 t –t n=1 w w cc2011 0 )
1
wc 1 w 2011 0 wc c qw cc20122011 c q i,c q i,c t (1 q i,c q i,c q i,n,c
(1 ) i,c q i,c
2012
2011
2012
Nc t 2
2 wc
2 2012 c2011 N c2012 2011
N
N c2011 N c2012 t 02012 w c N c 1 N c
Nc
Nc t N c q i,c
2011
(2a) and 2012
Nc
0
1
wc wc w c (2b) wc t
N c2011 2011 1 0 2011–2011 2012N2012
2011
2012
2012
1
1 q t2
1
Nc
2011
2012w t 2011–12 q 2011–12
2011
2011(1
2012 q2011 2012
N 2011 q d0–11 2011 i,c w 2011c2012 2012
N c2 sample-size weighted average q2012 20122011–12 q2011c2011 c 2012 i,ciscounted-past cweighted average q2012 q i,cq
N1
q i,c i,c i,c
2011–12
i,c w c tq i,cc i,c w c –t 12 q i,c i,n,c w)c) q i,ci,c i,c q q i,c
NcN Nc
N c N N2012 q2011–12 1 n=1 (1
2011
2012 q i,n,c
(1 )q i,c N c 1 2 2012N 2011 c N 2012 q i,c i,c q
2011
2012
2011
2012
0
1 wc wc
N c2011 c2012 c2012
Nc
t c c q 2011 q i,c 2011c2011 22012c q i,c q i,c q i,c i,c 2 N ct (1 )
2012
i,c qN20112012 N2012N N2c N N c2011 c2011c2012 sample-size weighted average c i,c N
2
N c2011 c 2011 N c N c
2011 weighted average
2011
2012 wqcw 2012
1 N c ddiscounted-pastweighted average
1
2011–12 t t
0 in i,c weighted average2012 q i,c 2 q year 20111 q iscounted-pastc
(1 2012)the number of respondents) for 2011 w c 2012 sample-size w ct, with t = 2011, i,c2012. where N c qs thei,csample 2011 N ct (i.e., i i,c q size country c i,c 2
2
N
Nc
Nc
Nc
t
Nc
Ndctiscounted-past weighted average 2 2011 2011 c
N 2011
N c2012 N t
2012
2012 sample-size weighted average1 t
2012
2011
2012
2011–12 q i,n,c c t t 0 q i,c w c 1 N 1 –t (1 1 ) 2011 i,c wc wc
12011 c 2012 N c q i,c t q 2011 t t q tc2012 qN 2011 Nt 2012 t q i,c q i,c
–t
wi,cq i,c 1 q i,c t t Pluggingc Equations (2a) and (2b) into (1) weighted averageN 2012 2 q c 20122w c (1 0 ) weighted average2 i,c yields: w q i,n,c
2n=1 discounted-past and rearranging 2011 i,c
N2
N cN
(1 ) c sample-size q i,c c c
Nc
Nc c Nc c t
N2012 N c t
2011
Nc
0t
w 2012 w2011 N 2011 N 1 c 1 discounted-past tweighted average 2012 t
Nt
Nt t c tw c
1
t sample-size weighted average c c
2012
Nc
Nwc2011t 0 qt i,c w 2011ct tc N tc
N1
qt2012 qti,c q
(1 ) w2011i,c c qt i,c –t 1 1 c t Nt c
12
–
2012
2011 c t
2012
12
2011–12 t c c q q t i,c
Ntc2011c Ntc 2012 qti,cq i,c Ntc N c 2011tc 2012ti,c q i,c .
N
2 (1(1 ) ) q i,c ti,c
(3)
N qq i,c 2 1 q i,c qti,c–t i,ct 2012 c
2
N t c tN N c q i,c
N c N tN ct N q i,c
2
c qN c2011 q i,c
21
2
N
(1 ) q i,c t i,c
2011
2012
2011
N cN t q 2012
Nc
1
1
2011–12 w 2N
N ct 2012cN c1 c t
2
t
1 2012 c
N c 2011 N c2012 w cc2011i,c 0q t q i,c c q t –t q i,c 1 q ti,c w tc
(1 ) q i,c q q i,c –2006
(1iscounted-pasti,c N 2012average
) N 2011 weighted q i,c
N c2005
N c2006 i,c d i,c –2005
2
2
N 201205–06 N1t
Nt
1 sample-sizeN c q –2005 c c
20112 c
Nt
2
(1 ) weighted caverage q i,c N ct qN cc c i,c
2005
2006
N ct q i,c t N 2005 N 2006 i,c Nt
N
t t t
1c
2012
2
Nc c q c2011 1 qN c q i,c c
) 2012 q i,cc–t discounted-past weighted average wi,c 2012 12006 w c sample-size weighted average(1 2011 2w c q i,c 0 i,c N c N 2005 2011
Nc N 2
N t N ct
N ct N ct
2011
2012
2012
1
12
2011–12
2006
c c 1(1 )
05–06
q)i,c q –2005 q i,c q –2006 2 1 2011 N 2005 q i,c q –2005 q i,c c q –2006 q i,c
2012
2011
2012
N c2006 2006 average. The second component
(1
q05–06 first component of –2005 weighting2scheme is the c2005 2011
–2006
–2005
In Equation (3), the 1 the weighted q –2006 i,c i,c i,c i,c
2006
1 N c NN2005 discounted-past N2005 N
2012c
c q –2005 q–2006 (1 ) q i,ci,c2 1 2
0 q i,c N c
N
i,c i,c c c t cN
1 2 N N 2005 c w Nhalf-weightt w c N2005 c1N c2006 5.70i,c
2
N 2006 q –2005 c each. 2006 2006
N c The is the sample-size weighted average. i,c average t components are cgivenc c20060.457i,c N6.03 c2005 0.543 valuei,cfor 5.85 0.6, which q –2006 is c 2005 2005 t
(1 ) t q The q 05–06 1 2 discounted-past weighted two q i,c 1 t t –t i,c
N sample-size weighted N c N i,c q –2005 q –2006 t 1 q i,c q 05–06 1 (1 )
2 score of ccountry c –2005 average cqN c 2 the –2006 t corresponds i,c q i,c discount (1 ) of t q i,c That i,cis, i,c N 2011 N ct N c20052011N c2006 N2i,cit s given 2/3 of 012 weight given to the 2012 to a 2 2 factor N i,c 2/3.
2
N ct q the c q c011 N c 20052012 2006 q i,c c t t t
1
1 t 2006
2 it c N
N c N c Nthat
2012
2011
2012
1 that q t prevents
2011–12
c c (1 score. q i,c additional2characteristic 62011this qapproach is t 1 5.85 i,cN2011 c N2012 a country sample 2012 isq much2005
)
q i,c –t
N c larger in –2005 yearNfrom
One q i,c q i,c 1 of one i,c q t 5.70 q c
(1 0.457 q i,c.03 0.543i,cN 05–06 N
) t Nt
–2005 i,c
–2006
–2006
1
i,c
2011
Nc
2
q q i,c q i,c
(1 )N c q i,c c 0.457 6.03 0.543 c5.70 c
2 2 sample from the otherqyear. 2 5.85 N c
N ci,c N c
2005
2006
2005
i,c overwhelming the smaller 0.457 2011 .03 0.543 20125.70 2
2
Nc
Nc
Nc
N c2006
6
5.85 t
2011
2012 discounted-past weighted average
N
N ct
The formula is easily generalized. For any 01215.70 5.85c sample-size weighted the Survey, country c’s final score on t t
1
2t
0.543 two consecutive editions t1t and tt2 of average q i,c qt q i,c
(1 )0.457011 6.03 q i,c 2 q t –t t t
N c2005 i,c
N 2006 question i ii,c computed as follows: –2005 s 05–06 2 1
N c–2005 N
10–11
2012
–2011
2011–12
–2006
10–11
2012
–2011
2011–12
1 Nc Nc
2011
2–2006
012 2 lower boundc =200551 –2006 5.85q i,cQR
Q c.70 1.5 I q i,c q i,c q i,c q i,c q i,c q i,c q i,c q i,c q i,c 2005 q i,c q i,c
(1 ) i,c 2
2 N c2006 c0.457 c2006 .03 0.543 c
N 2005 N 6
N
Nc
Nc
–2005
–2006
–2005
–2006
1
1
05–06
2011
upper bound 2= Q3 – 1.5 IQR
2011
012 q i,c q i,c q i,c q i,c
(1i,c
q i,c q i,c ) q 2011
2006
2005
2006
10–112005
2
lower bound = N 1 – 1.5 IQR 10–11 t
Q
N ct q i, 2 q i,c N c t t t 1 lower bound t = Qc1 – 1.5 qIi,QR q i,c N c N c
1N c t –t q i,c q i,c q i,c q i,c .
(4)
(1 ) q i,c
2 lower bound == Q3 – 1.5.70QR N ct N 2005ct
N
N ct N ct2006
2011
2011 upper bound Q0.543 5 I 2QR
I 5.85
1.5
0.457 6.03 1 – –2006
Nc
N cc
N
c
–2005 = Q3 – 1.5
–2005
–2006
1
1QR
05–06
upper) bound
I
q q2 q i,c
(1
q i,c
))
2005 lower5.85011 i,c2011= Q12011 i,c012 bound – 1.5 IIQR N 2005 2006 q i,c
2011
2012
2011
2012
–2011
1
2011–12
2012
–2011
2011–12
QR
2
N 2006 1
2011–12
.70 2011–12 2
2012
N cc
N cc 0.457 6.03 0.543 5upper bound = Q3 – 1.5 20122 q 2012c 2011 N c q 2011 q i,cw 2012N c qq2012 c q i,c0–11 q i,c q i,c
N
N q i,c q i,c0–11 q i,c q i,c i,c wc q i,c w c q i,c i,c w c i,c c i,c 1
1
1
2
2
2
1
1
1
1
1
1
2
2
1
2
1
2
1
2
2
1
1
2
1
1
2
1
1
2
1
1
1
1
1
1
2
2
1
2
2
2
2
1
2
1
2
1
1
1
1
1
1
2
2
2
1
1
2
1
1
2
2
2
2
2
1
1
2
2
1
2
1
1
1
2
2011
2
2
1
1
2
2
2
2
1
2
upper bound = Q3 – 1.5
2012
Exceptions
t i,c 2
2
1
1
1
2
2
1
2
2
2
2
1
2
2
1
1
2
2
2
2
1
1
1
2
2
2
1
1
2
2
2
1
2
1
2
IQR lower bound = Q1 – 1.52011 IQR q i,c 2006 t N c2005 N t
–2006
–2005
1
5.70 q5.85 upper bound = Q3 – 1.5 N cIQR
2011 q i,c
–2006 q 1 0.457 6.03 q –2005
05–06
0.543 i,c c q i,c q i,c q i,c
(1 ) q i,c i,c 2006 t
2011
2011
2
N 2005 approach
N c2005 c2006 qt 2011
2012
10–11
10–11
Nc
Asqdescribed in the2text, tthere are a numberi,n,c exceptions toc the N cn=1q i,n,c N c describedNabove. In describing them below, we use t –t lower bound = q –t – n=1 of IQR
Q1 1.5 q qi,c q i,i, i,c q q i,n,c
(1q i,c )
(1 )
N
N
2011
2012
2012
2011
2012
2011 t t2011 N actual0years—rather thani,n,c letters—in i,c equations for the sake of concreteness. c2012 2011
Nc
Nc
Nc
1 IQR w cc w cc
0
1 w Nc
Nc
lower bound = Q1 –w1.5 upper tbound = Q3 – 1.5 IQR w c2011 wc 2
2
In the case of Survey.457 6.03 that were 5.70 ct 5.85 in 2012, where, by definition, no past data exist, the weight applied is
N 0 questions 0.543 introduced
N
c
2
2
10–11
2012
2011 2011
2012
2012
2011–12
bound =
–2011 1 I2012
2011–122011 0 q i, q i,c upper2011–12 w 0 Q3qqw2011 w.2012 qq 2012 (1) simply is qqi,c2011–12 = qqi,c2012. Thei,c0–11 qqi,c–2011 q10–11 i,cis
1 Equation w1.5 wccQR i,c2012 q i,c1 same–2011true for those countries that are newly covered (Gabon, q i,c w q i,c w cc wc2011and i,c cc i,c i,c
2
2012 c i,c i,c 011 t t
2012
2012
10–11
wc
Guinea, Liberia,lower bound = Q1 – 1.5 IQR w creinstated (Libya) in 2012. For these countries too we use
Seychelles, and Sierra Leone) and 2011
Nc
Nc q i, q i,c q i,c q i,c2011
0–11
2011–12
2011–12
2012
2012
tq q 2012 t t N c1i,c q 2012 q –2011 2012
=2011i,c2012. 2012qci,c10–11 q i,c–201120122011–12
2011
2012
2011
2012 q i,c
Nqct2011qi,c
Nc 2011 i,c
N 2012 bound = Q3 – 1.5 IQR q i,c 1 i,c q i,c 1
1
–2011
2011
2011–12
2011 q i,c 2011
2012
N
Nc
cupper q 2012 q i,c0–11 i,c
2012
2011
2012
2011 q i,c that q i,c case t 2012 q w c 2011 qi,c 2012 wq i,c 2011qNNc2011of countriesi,cq i,c failed i,c inter-yearq robustnessc check, the weight2012 0 N c is wN c 1 and w 2012 0 , so that i,c i,c the 1 wc w c w c applied
2011
2011 w c c c
2
N cc2011 N cc2012 Inc the 2011Ncc2011ti,n,cNcc2012
Ni,c q i,n,cN
2
N
N
q q i,c q–t N
N
2011–12
2
t t 2011
2011–12
2011
2012i,c n=1
2012
–t n=1 Equationq(1) simply becomes q i,c (1 =)q i,c2012.2011 qci,c0–11 q i,c of countries that failed the inter-year 2
In c 1 case 10–11 robustness check last year and for q 2011 2011 the 2012 –2011 qq (1 ) i,c q i,n,ci,c wc w c q i,c q i,c t t i,n,c 2012 i,c i,c
2011
2012
2011
2012 t q i,c sample-size weighted average
N
Ncq i,
N
1 w wc t sample-size 2011 data c N cc lower bound
2011
q i,c which the weightedNaveragewerew 2011 = Q1 –2011cc theQR discarded, we 1.5 INSurvey data from 2010 instead, w c combinew c use and 0 them 1 with those of02012 to c
N
2011 wcc t t c Nt 2011
Ncc
i,c
2010,2012
2010
2010
2012
2012
N
N cc compute the scores. Equation (1) = Q3q– 1.5 IQR q i,n,c 2012
2
t
2
upper bound c2011 becomes q i,c then . wc q i,c wc q i,c
(1 )) –t n=1t
N
(1
2011
2011
2012
qti,c
2011
q i,n,c
(1 )
N
N q i,c N ccN c t t N cc
N 2012 N c2011 2012 10–11 –2011 c2012
N
2011
2011 1 2012
2012
2011–12
2011
2011–12
2012 N c
2012
2011
2011
2011
2012
1 2012 2011
1 q i,c c
2011–12
tt q i,c q i,c q i,c2011 q i,c 2011 w cc
N
Nc w 2012 q i,c 2011–12 2011 q i,c q i,c w c q i,c q(1 1 ) w c q i,c q i,c2012 q i,cq i,c q i,c q i,c c N c2011 (1 2012)
Nq i,n,c
2011
w2
2011
2011
2011
i,c tt w cc tt t
–t 2 n=1 c
N
N cc t 2 2012
2
Nc
Nc
N
N c2012 N c2012
2
2c
Nc
N c2012
N cq i,c
Nw c
Nc
Ncc q1 (1t ) tt t
1i,n,c
2011 c 2 c2011 N c 2011 q i,c q q i,c
2011
2012
2012
q i,c
N
tt tt t
Example tt N t2011 q i,c
Ni,ct N
N
N
N cc discounted-past weighted average
N cc
2t
N cc N cc 2012 c
2
N
N 2012
Ncc w ccc
N
discounted-past weighted average
2012
2012
2011
2012
2012
2011 t sample-size weighted average sample-size weighted average
0
1 w2 w
0
1 wct c w cc 2012 q i,c w cc
Ntc
Nw c
N cc
N
t
2
c
2011
Nc
For this example, we compute the score2of Australia for indicator 6.01 i,n,c the intensity of local competition, which is not a newly
2011
2012 q on
2011
2012
Nc
t
N cc
N cc
N
N
2011
2012
2011
2012 t 2012
2012
(1 )
1
w w2011 0 –t n=1cc t test either this year or last year.2012 w i,n,c w cc introducedw c2012 0 Also,2011N c1 question. 20112011 2012 did not fail theqinter-year0q i,c robustness 1
Therefore, the general wc2012 2011 w Australia w c2012 0 N c w ccN 20121 cc 2012
Nc
Nc
Nc
0
1
w wc wc
22005 case of Equation 2006 applies.cAustralia’s score was 6.03c in 2011 and 5.70 in 2012. 2011 weighting scheme described above
2
(1) t 2011
2012
2005
2006
N ct w c The t
N ct
Ntct
N ct
N cc
N
N
2011N
2012
N c 22012N
2011
t N 2011 t t t t 1
1
1t t– 2011
2012
2012 t
–2005
–2005
–2006
1
1
q i,c i,c q i,c t q i,c w c –2006 w ti,c wc 2005 cc 2006 2011 qi,c –t c1 1 2012
)
indicates how2012 0 two scores are combined. In0 i,c Nc cq i,cw 2012q i,c 1size(1 theNcsample wasq72 in 20112andt 68 in 2012. Using =t 0.6 q i,c the Australia, the 2011 t t t q i,c1 wwcc2005 0 2006 2011 cq i,c 1 2 2012 (1 w12012 q N c c2011 2 2011 2of ) N ct q i,c N t q i,c
2011
2012
1
2011–12
2011–12
2006
N 2012 c q i,ci,c
Nc 2 Nc Nc Nc
Nc Nc
0 2011 w c2012 1q i,ci,c w1 c q q q 2012 q i,ci,c
)
(1
2
N cc2005 Nqc2006
N(1 )N cc q i,ci,c 2
2
N 2005 Ncqi,ci,c
Ncc
Nq c 2011
2012
2011
2012
2011 c
2
2
N
N
N
N
2
2
N c cw t N c c
N cc
N cc
2012
2011
2012
c
Nc
0
1
w c 2012
N c2011 ddiscounted-pastweighted2012
N c2012
N c2011 iscounted-past weightedaverage
N c average 2011w c
2012
2011
2012
2012
2011
2012
1
1
(Cont’d.)
2011
2012
q i,c q i,ci,c 2012 2011 q q q N q i,ci,c
Nsample-sizeweighted average sample-size weighted average
2012
c
2011
2012
Nc
Nc
2011–12 i,c 1
(Cont’d.)
2012
2012
2011
2(1 )N c2011q i,cN c2012
2
N c2011 2011 c2012
N
N 2011 N 2012 c 2012 q i,c N c c 1 N c c 2011 q i,c q i,c q5.85 2011
2012
5.85 2 i,c 0
1
wc wc wc
2
N c N 2011
Nc
N c N 2012
Nc
2005
2 N 2006 N 2005 c c
2011
2012
2011
2012
1
ighted 2011–12 average 1
N
N c2006 eighted average c c
–2005
–2005
–2006
–2005c
–2006
–2005
1 2012
1
q i,c sample-sizei,c weighted05–06 q q i,c q 05–062011 q –2006 (1 1q i,c sample-size average
(1 iscounted-past weighted average weighted average 1 2011 (1 2012
)
q i,c
2012
q i,c q i,c2011 q0 q i,c q i,cq i,c d )
)
q i,c2 i,c i,c
2005
2005
2006
i,cN c
2
N c sample-size weighted averagec wc 2N c
2
N c2005 N c2006
N
2N
2 c2005 N c2006 N c2006
Nw c N c1 c Nt
Nt
N ctc
N ctc tt tt tt tt
1
1
1
1 t td–t
–tiscounted-past weighted average q q q q i,ci,c q average t t q i,ci,c
(1 )) q i,ci,c sample-size tweightedq i,c q (1 q i,ci,c i,c 2
Nt Nt
N N ctct
N
2
2
N ctc N c c
N
2
N c2011
N c2012
2012
2011
1 cc
1
2011–12 q 2011 q i,c
(1
qt0.543 5.70 0.457 ) 6.03 i,c 0.543 q5.70 5.85
N ctct
N ctct
N
N i,c 2011
2012
2011 i,c 0.457 6.03
5.85
tt t t
1
1
2
2
Nc
Nc
Nc
N c2012 q i,ci,c t t t 1 t t q i,ci,c N ct qt qt
Nc
|
Global Competitiveness Report 2012–2013 t
R t –qqi,ci,c 1 2 76 N tTt heNq ttt
N
2 (1 Nc)c Nci,c
N
011
2012 i,c
2011
2012 q i,cNc c N c c q2i,c qt q i,c t c t t discounted-past weighted average
2
N ct NN ct
N ct NN ct sample-size weighted average
R t –t 2 c c
1
1 qt qt qt qt
2005
2006
2005
2006
2012
2012
N cc
N
2011
2011
c c t
Nc
2012
2012
c c 11
22
11
11
11
22
1
1
1
2
1
2
2
11
11
11 22
11
1
11
2
22
1
22
11
2
2
11
1
2
2
1
1
1
1
22
1
2
2
1
1
1
2
2
2
1
2
1
1
2
2
1
2
–2006 q i,c
22
22
22
22
2
22
22
11
11
2
1
1
1
11
2012 q i,c
22
22
2
2
2
2012 q i,c
22
2012 q i,c
–2006 q i,c
1
2
t q i,c –t
1
2
(1
)
t q i,c
1
2
t q i,c
1
2
N ct
N c N ct
N ct
N c N ct
1
t1
1.3: The Executive Opinion Survey
2
t q i,c
1
2
t1
t q i,c
2
2
Box 2: Country score calculation (cont’d.)
N c2005
N c2006
–2005
–2006
–2005
1
1
05–06 q i,c q i,c q –2006
(1 ) q i,c and applying Equations (2a) and (2b) yields weights of 45.7q percent2005 2011 andi,c54.3 percent for 2012 (see Table 1). The final for 2006 i,c 2005
2006
2
2
Nc
Nc
Nc
Nc
country score for this question is given by Equation (1):
0.457
6.03
0.543
2011
5.70
5.85 .
2012
This is the final score used in the computation of the GCI and reported in Table 6.01 (see page 450). Although numbers are rounded to two decimal places in this example and to one decimal place in the data tables, exact figures are used in all calculations. lower bound = Q1 – 1.5
10–11 q i,c upper bound = Q3 – 1.5
q i,
2011–12
2011
q i,c
wc
2011
q i,c
2012
wc
IQR
IQR
1
–2011
q i,c0–11 q i,c
2012 q i,c
2011–12 q i,c
2012
q i,c
2011 q i,c t t qhey contain more updated information. That is, we also
Nc
t i,c
2011
qt
N
t
“discount q –t past.” Table 1 reports the exactc weights the n=1 i,n,c q i,n,c
(1 )
2011
2012 i,c N c N ct
2011
used in the computation of cthe scores of ceachNcountry, w t
Nc
2
Based on the IQR test, the 2012 Survey data collected in Ecuador, Georgia, Rwanda, and Sri
Lanka deviate significantly from the 2011 results. The subsequent analysis revealed that this departure was not while Box 2 details the methodology and provides a t 2012 accompanied by a similar trend in indicators taken from clarifying example. wc Nc
2011
2012 other sources, and the recent developments in these
Nc
Nc
2012
2012
2011
0
1
wc wc wc countries do not seem to provide enough justification
Inter-year robustness test
2
2011 forc2012 1
The two tests described above address variability issues 0 w the large swings observed. For these four countries, wc we therefore use only the 2011 Survey data in the among individual responses in a country. Yet they were
N c2011
N c2012
2011
2012
2011
1 not2011–12 1 designed to track the evolution of country scores q i,c q i,c q i,c computation ofi,c this year’s GCI. While this remains a q 2012
(1 ) q i,c
2011
2012
2011
2
2
Nc
N c2012 remedial measure, we will continue to investigate the across time. Therefore, we use an additional N c toc test N discounted-past situation assess the reliability and weighted average of the Survey sample-size weighted average in an effort to improve the reliability of the consistency Survey data in these countries. Last year, the same data. The inter-quartile range test, or IQR test, is used analysis resulted in the Survey data of six countries— to identify large swings—positive and negative—in the
N ct
N ct t t t t t –t
Bosniaqand Herzegovina, Kazakhstan, Morocco, Qatar, country 1 scores. Moreqspecifically, for 1each country q i,c q i,c
(1 ) q i,c i,c i,c
2
N ct N ct
N ct N ct
2
Saudi Arabia, and Slovenia—not being included in the we compute c as the average difference in country analysis. This year, as an intermediate step toward the scores across all the Survey questions from one year to re-establishment of the standard computation method, another. We then compute the inter-quartile range (i.e.,
2005
2006
–2005
–2006
–2006
1
1
05–06 used thei,c difference between the 25th i,c percentile and N c 2006 q i,c the 75th –2005 we N c 2006a weighted average of the Survey data of 2010 q i,c q q i,c
(1 ) q 2005
2005
2
2
Nc
Nc
Nc
Nc
and 2012 for these countries. percentile), denoted iq, of the sample of 144 economies with respect to the previous year. Any value c lying
0.457 6.03 0.543 5 25th percentile minus
CONCLUSION
outside the range bounded by the.70 5.85
2011
2012
The Executive Opinion Survey remains the largest
1.5 times iq and the 75th percentile plus 1.5 times iq is poll of its kind, collecting this year the insight of more identified as a potential outlier. Formally, we have: than 14,000 executives into their business operating environment. This scale could not be achieved without lower bound = Q1 – 1.5 IQR the tremendous efforts of the Forum’s network of over upper bound = Q3 – 1.5 IQR
160 Partner Institutes in carrying out the Survey at a national level. It gathers valuable information on a broad where range of variables for which data sources are scarce
Q1 and Q3 correspond to the 25th and 75th or nonexistent. For this reason, and for the integrity of percentiles of the sample, respectively, and our publications and related research, improving the
IQR is the difference between these two sampling methodology and comparability of data across values. the globe remain an essential and ongoing endeavor of
This test is complemented by an analysis of the
The Global Benchmarking Network. evolution in the results over the past five editions and by a comparison with the evolution in the data used in the
NOTES
GCI that are not derived from the Survey. In addition,
1 Although data were collected for almost 150 economies in 2012, we examine the latest developments in all the countries following the editing process we used the 2012 data for 140 identified as outliers by the tests that might help to economies. Please see the data editing section for further details. explain such large swings.
1
1
2
1
2
2
1
1
2
2
1
2
The Global Competitiveness Report 2012–2013 | 77
1.3: The Executive Opinion Survey
2 The World Economic Forum’s Global Benchmarking Network would like to acknowledge e-Rewards Market Research for carrying out the Executive Opinion Survey 2012 in the United
States, collecting over 450 surveys following the detailed sampling guidelines. Furthermore, e-Rewards supplemented the sample in
Germany.
3 Company size is defined as the number of employees of the firm in the country of the Survey respondent. The company size value used for delineating the large and small company sample frames varies across countries. The size value tracks closely with the overall size of the economy. Adjustments were made to the value based on searches in company directories and data gathered through the administration of the Survey in past years.
4 In order to reach the required number of surveys in each country
(80 for most economies and 300 for the BRIC countries and the
United States), a Partner Institute uses the response rate from previous years.
5 The results are the scores obtained by each economy in the various questions of the Survey. The two terms are used interchangeably throughout the text.
6 The completion rate is the proportion of answered questions among the 130 core questions in the Survey instrument.
7 In some cases, the information about the company’s sector of activity is missing. In these cases, for any given country when the sample includes at least one survey without sector information, the average response values across the surveys are apportioned to the other sectors according to the sample sizes in those other sectors. This has the effect of including these surveys on a one-for-one basis as they occur in the sample—that is, with no adjustment for sector.
8 Concretely, if the weight of an individual response exceeds 10 percent of the country sample, the sector-weighted average is abandoned for the benefit of a simple average.
78 | The Global Competitiveness Report 2012–2013
Part 2
Data Presentation
2.1
Country/Economy Profiles
2.1: Country/Economy Profiles
How to Read the Country/Economy Profiles
The Country/Economy Profiles section presents a twopage profile for each of the 144 economies covered in
The Global Competitiveness Report 2012–2013.
2.1: Country/Economy Profiles
Albania
Key indicators, 2011
GDP (PPP) per capita (int’l $), 1990–2011
Population (millions) .......................................... 3.3
GDP (US$ billions) .......................................... 12.8
GDP per capita (US$) ................................... 3,992
GDP (PPP) as share (%) of world total ............ 0.03
Albania
20,000
Central and Eastern Europe
15,000
10,000
5,000
0
PAGE 1
Rank
(out of 144)
Key indicators
The first section presents a selection of key indicators for the economy under review:
• Population figures are from the World Population
Prospects: The 2010 Revision, (CD-ROM edition), published by the United Nations’ Department of
Economic and Social Affairs, Population Division.
The population figure for Taiwan, China, is sourced from Taiwan’s National Statistics.
• The chart on the upper right-hand side displays the evolution of GDP per capita at purchasing power parity (PPP) from 1990 through 2011 (or the period for which data are available) for the economy under review (blue line). The black line plots the GDPweighted average of GDP per capita of the group of economies to which the economy under review belongs. We draw on the IMF classification, which divides the world into six regions: Central and Eastern
Europe; Commonwealth of Independent States (CIS), which includes Georgia and Mongolia although they are not members; Developing Asia; Middle East and
North Africa; Sub-Saharan Africa; and Latin America and the Caribbean. The last group comprises advanced economies. GDP figures come from the
WEO database. For more information regarding the classification and the data, visit www.imf.org/weo.
Note that no data are available for Puerto Rico.
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Stage of development
Score
(1–7)
GCI 2012–2013 ...................................................... 89 ..... 3.9
Transition
1–2
1
GCI 2011–2012 (out of 142) ..................................... 78 ......4.1
GCI 2010–2011 (out of 139) ..................................... 88 ......3.9
Factor driven Transition
2–3
2
3
Efficiency driven Basic requirements (40.0%) .......................................87 ......4.2
Innovation driven Institutions
Institutions ................................................................ 84 ......3.6
Infrastructure ............................................................ 91 ......3.5
Macroeconomic environment ................................... 98 ......4.3
Health and primary education ................................... 79 ......5.6
7
Innovation
Infrastructure
6
5
Business sophistication Macroeconomic environment 4
3
Efficiency enhancers (50.0%) .....................................92 ......3.8
2
Higher education and training ................................... 76 ......4.1
Goods market efficiency .......................................... 58 ......4.3
Labor market efficiency ............................................ 68 ......4.4
Financial market development ................................ 120 ......3.4
Technological readiness ............................................ 77 ......3.7
Market size ............................................................... 98 ......2.9
Market size
Health and primary education
1
Higher education and training
Technological readiness Financial market development Innovation and sophistication factors (10.0%) .........113 ......3.1
Goods market efficiency Labor market efficiency
Business sophistication ........................................... 98 ......3.6
Innovation ............................................................... 123 ......2.6
Albania
Efficiency-driven economies
The most problematic factors for doing business
Access to financing ...........................................................23.3
Corruption .........................................................................22.2
Inefficient government bureaucracy ...................................11.6
Tax regulations ....................................................................9.8
Policy instability ...................................................................6.1
Tax rates..............................................................................5.2
Foreign currency regulations ................................................4.3
Crime and theft ...................................................................3.9
Inadequate supply of infrastructure ......................................3.0
Poor work ethic in national labor force ................................3.0
Government instability/coups ..............................................2.5
Inflation ................................................................................2.3
Inadequately educated workforce ........................................2.0
Restrictive labor regulations .................................................0.7
Poor public health ...............................................................0.2
0
• Gross domestic product (GDP) data come from the
April 2012 edition of the International Monetary Fund
(IMF)’s World Economic Outlook (WEO) Database, with the exception of Puerto Rico, for which figures were calculated using national sources. Reported
GDP and GDP per capita are valued at current prices.
1991
The Global Competitiveness Index
5
10
15
20
25
30
Percent of responses
Note:
From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between
1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings.
86 | The Global Competitiveness Report 2012–2013
Global Competitiveness Index
This section details the economy’s performance on the various components of the Global Competitiveness Index
(GCI). The first column shows the country’s rank among the 144 economies, while the second column presents the score. The percentage contribution to the overall GCI score of each subindex score is reported next to the subindex name. These weights vary depending on the country’s stage of development. For more information on the methodology of the GCI, refer to Chapter 1.1.
On the right-hand side, a chart shows the country’s performance in the 12 pillars of the GCI (blue line) measured against the average scores across all the economies in the same stage of development (black line). The most problematic factors for doing business
This chart summarizes those factors seen by business executives as the most problematic for doing business in their economy. The information is drawn from the
2012 edition of the World Economic Forum’s Executive
Opinion Survey (Survey). From a list of 16 factors, respondents were asked to select the five most
The Global Competitiveness Report 2012–2013 | 83
2.1: Country/Economy Profiles
problematic and rank them from 1 (most problematic) to 5. The results were then tabulated and weighted according to the ranking assigned by respondents. For
Ecuador, Georgia, Rwanda, and Sri Lanka, we use data from the 2011 edition of the Survey. For these countries, the list comprises only 15 factors—one less than in the 2012 edition. See Chapter 1.3 for details. Due to a logistical issue, the results for Albania were also based on the same list of 15 factors, although the data were collected in 2012.
2.1: Country/Economy Profiles
Albania
The Global Competitiveness Index in detail
INDICATOR
VALUE RANK/144
1st pillar: Institutions
1.01
1.02
1.03
1.04
1.05
1.06
1.07
1.08
1.09
1.10
1.11
1.12
1.13
1.14
1.15
1.16
1.17
1.18
1.19
1.20
1.21
1.22
Property rights ....................................................... 3.1 ..........129
Intellectual property protection ............................... 3.0 ..........103
Diversion of public funds ........................................ 2.8 ............97
Public trust in politicians ......................................... 2.6 ............75
Irregular payments and bribes ................................ 3.6 ............84
Judicial independence............................................ 2.6 ..........121
Favoritism in decisions of government officials ....... 2.9 ............84
Wastefulness of government spending ................... 3.3 ............66
Burden of government regulation ........................... 4.1 ............ 26
Efficiency of legal framework in settling disputes .... 3.3 ............98
Efficiency of legal framework in challenging regs. ... 3.3 ............93
Transparency of government policymaking............. 4.3 ............67
Gov’t services for improved business performance n/a ...........n/a
Business costs of terrorism .................................... 5.6 ............69
Business costs of crime and violence..................... 4.7 ............80
Organized crime ..................................................... 4.7 ............99
Reliability of police services .................................... 4.0 ............77
Ethical behavior of firms ......................................... 3.9 ............71
Strength of auditing and reporting standards ......... 4.2 ..........101
Efficacy of corporate boards .................................. 4.7 ............56
Protection of minority shareholders’ interests ......... 4.2 ............70
Strength of investor protection, 0–10 (best)* .......... 7.3 ............ 16
2.01
2.02
2.03
2.04
2.05
2.06
2.07
2.08
2.09
Quality of overall infrastructure ............................... 4.2 ............77
Quality of roads ...................................................... 4.3 ............59
Quality of railroad infrastructure .............................. 1.2 ..........119
Quality of port infrastructure ................................... 3.7 ............96
Quality of air transport infrastructure....................... 4.8 ............66
Available airline seat kms/week, millions* ............. 22.4 ..........118
Quality of electricity supply ..................................... 4.8 ............71
Mobile telephone subscriptions/100 pop.* ........... 96.4 ............92
Fixed telephone lines/100 pop.* ........................... 10.5 ............91
3.01
3.02
3.03
3.04
3.05
Government budget balance, % GDP* ..................-3.5 ............80
Gross national savings, % GDP* .......................... 11.8 ..........116
Inflation, annual % change* .................................... 3.4 ............ 43
General government debt, % GDP* ..................... 58.9 ..........104
Country credit rating, 0–100 (best)* ...................... 38.9 ............81
2nd pillar: Infrastructure
3rd pillar: Macroeconomic environment
PAGE 2
The Global Competitiveness Index in detail
This page details the country’s performance on each of the indicators entering the composition of the GCI.
Indicators are organized by pillar. For indicators entering at the GCI in two different pillars, only the first instance is shown on this page.
• INDICATOR, UNITS: This column contains the title of each indicator and, where relevant, the units in which it is measured—for example, “days” or
“% GDP.” Indicators that are not derived from the
Survey are identified by an asterisk (*). Indicators derived from the Survey are always expressed as scores on a 1–7 scale, with 7 being the most desirable outcome.
• VALUE: This column reports the country’s score on each indicator.
• R ANK/144: This column reports the country’s position among the 144 economies covered by the GCI 2012–2013. The ranks of those indicators that constitute a notable competitive advantage are highlighted in blue bold typeface (except for inflation). Competitive advantages are defined as follows: For those economies ranked in the top 10 in the overall GCI, individual indicators ranked from 1 through 10 are considered to be advantages.
For instance, in the case of Germany—which is ranked 6th overall—its 7th rank on indicator 1.06
Judicial independence makes this indicator a competitive advantage.
For those economies ranked from 11 through 50 in the overall GCI, variables ranked higher than the economy’s own rank are considered to be advantages. In the case of Iceland, ranked 30th overall, its rank of 12 on indicator 7.08 Female participation in labor force makes this indicator a competitive advantage.
84 | The Global Competitiveness Report 2012–2013
INDICATOR
4th pillar: Health and primary education
4.01
4.02
4.03
4.04
4.05
4.06
4.07
4.08
4.09
4.10
Business impact of malaria .............................. n/appl. .............. 1
Malaria cases/100,000 pop.* ................................(NE) .............. 1
Business impact of tuberculosis ............................. 6.7 .............. 5
Tuberculosis cases/100,000 pop.* ....................... 14.0 ............ 34
Business impact of HIV/AIDS ................................. 6.6 .............. 4
HIV prevalence, % adult pop.* .............................
References: Acemoglu, D. 2002. “Directed Technical Change.” Review of Economic Studies 69 (4): 781–809. — —. 2007. “Equilibrium Bias of Technology.” Econometrica 75 (5): — — —. 2009. Introduction to Modern Economic Growth. New York: — Acemoglu, D., P. Aghion, L. Bursztyn, and D. Hemous. 2012. “The Environment and Directed Technical Change.” American Economic Aghion, P. and P. Howitt. 1998. Endogenous Growth Theory. ILO (International Labour Organization). 2008. Decent Work Indicators for Asia and the Pacific: A Guidebook for Policy-Makers and IOM (International Organization for Migration). 2011. IOM Case Data Global Figures & Trends: Human Trafficking Gleick, P.H. 2003. “Water Use.” Annual Review of Environment and Resources 28: 275–314. Green, A., J. Preston, and G. Janmaat. 2006. Education, Equality and Social Cohesion: A Comparative Analysis Hamilton, K. and M. Clemens. 1998. “Genuine Savings Rates in Developing Countries.” World Bank Economic Review 13 (2): Hanley, N., J. Shogren, and B. White. 2007. Environmental Economics in Theory and Practice Kutzents, S. 1955. “Economic Growth and Income Inequality.” American Economic Review 45 (1):1–28. Marshall, F., M. Ashmore, and F. Hinchcliffe. 1997. A Hidden Threat to Food Production: Air Pollution and Agriculture in the Developing Meyer, S. 1999. The Economic Impact of Environmental Regulation. MIT Project on Environmental Politics & Policy Nordhaus, W. 1994. “Locational Competition and the Environment: Should Countries Harmonize Their Environmental Policies?“ Cowles Foundation Discussion Paper No. 1079, Cowles Foundation for Research in Economics, Yale University. — —. 2012b. Financing Green Growth in a Resource— Constrained World Columbia University). 2012. Environmental Performance Index. — —. 2000. “Alternative Methods for Measuring Productivity Growth,” — Cowles Foundation Discussion Paper No. 1282, Cowles Foundation for Research in Economics, Yale University. — —. 2002. “The Health of Nations: The Contribution of Improved — Health to Living Standards,” NBER Working Paper No. 8818. Perotti R. 1993. “Political Equilibrium, Income Distribution, and Growth.” Review of Economic Studies 60 (4): 755–76. Persson, T. and G.Tabellini 1994. “Is Inequality Harmful for Growth? Theories and Evidence.” American Economic Review 84: (1994): Shorrocks, A. 2005. Inequality Values and Unequal Shares. Helsinki: UNU-WIDER. Smith, A. 2012. “U.S. Drought Drives Up Food Prices Worldwide.” CNNMoney, August 9 Stavins, R. 2011. “The Problem of the Commons: Still Unsettled after 100 Years.” American Economic Review 101 (1): 81–108. Stern, N. 2006. Stern Review on the Economics of Climate Change. Stiglitz, J., A. Sen, and J. Fitoussi. 2009. The Measurement of Economic Performance and Social Progress Revisited: Reflections — —. 2011b. Human Development Report 2011: Sustainability and —
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