Transcript The Global Competitiveness Report

The Global Competitiveness Programme:
An International Perspective
Augusto Lopez-Claros
Chief Economist
Director, Global Competitiveness Programme
World Economic Forum
Geneva, Switzerland
March, 2004
1
Contents
Part I. Global Competitiveness Programme
•
What are we trying to achieve?
•
The Global Competitiveness Report
•
Results and analysis
Part II. Hungary: Results from 2003-2004
2
Part I. Global Competitiveness Programme:
What are we trying to achieve?
GDP per capita, current US$
12000
10000
GHANA
KOREA
8000
HUNGARY
6000
4000
South Korea:Ghana
Ratio in 1970= 1:1
Ratio in 2004= 30:1
2000
20
03
20
00
19
97
19
94
19
91
19
88
19
85
19
82
19
79
19
76
19
73
19
70
0
Source: IMF World Economic Outlook
3
Part I. Global Competitiveness Programme:
What are we trying to achieve?
GDP per capita, current US$
30000
25000
20000
NIGERIA
SINGAPORE
15000
ARGENTINA
10000
5000
2003
2000
1997
1994
1991
1988
1985
1982
1979
1976
1973
1970
0
Nigeria:Singapore
Ratio in1970=1:8
Ratio in 2004=1:76
Source: IMF WEO
4
What are we trying to achieve?
We would like to cast some light on the factors that help explain
these differences and their relative importance.
Why is it that South Korea and Ghana’s GDP per capita have
diverged to such an extent in the last 4 decades?
What factors are crucial to enhancing the capacity of an economy
to achieve sustained growth over the medium term, controlling for
the current level of development ? Why is it that oil-rich Nigeria
lags far behind the city-state of Singapore?
The Growth Competitiveness Index (GCI) attempts to identify
robust indicators of the health of a nation’s economy and its
ability to grow on a sustained basis.
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What are we trying to achieve?
The Global Competitiveness Report
 Evaluates the potential for sustained economic growth of 102
economies worldwide and ranks them accordingly
 Assesses the comparative strengths and weaknesses of the
major economies of the world
 Is the world’s leading global monitor of the competitive condition
of economies
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The Global Competitiveness Report
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The Global Competitiveness Report
In the Global Competitiveness Report:
Competitiveness is defined as
 An economy’s propensity to attain sustained economic growth
in the medium to long term (over the coming 5 to 8 years)
Competitiveness is not
 A country’s share of the world market for its products
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The Global Competitiveness Report
Why is it important?
 Competitiveness leads to growth
 Few things matter more for the welfare of a country’s citizens
than the aggregate growth rate of the economy
 The challenge is to create the conditions for rapid and
sustained economic growth
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The Global Competitiveness Report
 The three determinants of competitiveness are:
1. Technology
2. Quality of Public Institutions
3. Macroeconomic Environment
 The Growth Competitiveness Index measures the current
condition of these three determinants
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The Global Competitiveness Report
The two sources:
 Annual Executive Opinion Survey data
 Publicly available data
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The Global Competitiveness Report
Executive Opinion Survey
 Captures perceptions of the current operating environment
from a representative sample of business leaders in each
country
 Respondents compare their own operating environments with
global standards on a wide range of dimensions
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The Global Competitiveness Report
 The goal is not to predict economic growth in
102 miscellaneous economies
 The goal is to identify and analyze the strengths and
weaknesses of the economies included in our sample
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The Global Competitiveness Report
Growth Competitiveness Index
Technology Index
Macroeconomic
Environment Index
Public Institutions
Index
Innovation Sub-Index
Macroeconomic
stability Sub-Index
Contracts and
law Sub-Index
Technology
Transfer Sub-Index
Country Credit
Rating
Corruption SubIndex
Information &
Communications
Technology Subindex
Government
Waste
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Results and Analysis
Top 10 rankings (out of 102)
COUNTRY
Finland
United States
Sweden
Denmark
Taiwan
Singapore
Switzerland
Iceland
Norway
Australia
GCI
1
2
3
4
5
6
7
8
9
10
Top 10 transition economies (out of 102)
RANKING
Estonia
Slovenia
Hungary
Latvia
Czech Republic
Lithuania
Slovak Republic
China
Poland
Croatia
GCI
22
31
33
37
39
40
43
44
45
53
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Results and Analysis
In the 2003 Survey, Finland emerges as the most competitive
economy in the world. It performes well not only in terms of overall
macroeconomic management but also scores very high on those
measures which assess the quality of its public institutions. Finland, as
do most Scandinavian countries, exhibits very low levels of corruption
and its firms operate in a legal environment where there is widespread
respect for contracts and the rule of law.
RANKING
Finland
GCI
1
Macro environment
2
Public institutions
2
Technology
2
16
Results and Analysis
In the USA, which scores 2nd on the GCI, performance is a little
more uneven. The country exhibits primacy in the area of
technology, with specially high scores for such indicators
as company spending on R&D, the creativity of the scientific
community, personal computer use and internet penetration rates.
However, this is offset by lower scores on the public institutions and
macroeconomic environment indexes.
RANKING
GCI
Technology
Public ins t.
Macro envir.
USA
2
1
17
14
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Results and Analysis
What are some key insights that can be gained from the results of
the 2003 GCI?
(1) A strong macro performance without strong public institutions
does not equal a competitively placed economy.
This is well demonstrated by examples such as China. The country
has a relatively strong macroeconomic performance, but performs
poorly on the public institutions index.
RANKING
GCI
Macro envir.
Public inst.
Technology
CHINA
44
25
52
65
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Results and Analysis
Furthermore, strong growth and stability at the present time offer
no guarantee of a sustainable performance. This would be a
particularly valuable lesson for countries such as the Russian
Federation which have exhibited strong growth, and an
improved fiscal and balance-of-payments performance over the
past five years. Its recovery from crisis has been impressive but
sustained growth will be difficult without substantial improvement
in the quality of its public institutions, where Russia clearly ranks
low:
19
Results and Analysis
(2) Openness and sustained economic reforms are important for
increased competitiveness.
Countries such as Estonia, Hungary, Latvia and Slovenia are examples
of the benefits of coherent policies implemented over prolonged periods
of time. Estonia is the only country that has had to introduce agricultural
subsidies and import duties to join the EU.
Ranking
Estonia
GCI
22
Macro
34
Public Institutions
28
Technology
10
Hungary Latvia
33
37
38
36
33
45
32
26
Slovenia
31
37
35
24
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Results and Analysis
(3) Globalization is important, but so is the domestic policy
environment.
Chile and Argentina have long faced the same external environment
yet the two neighbours display a 50-country gap in their ranks in the
GCI. There may well be many forces outside the control of
governments, but a great deal can be achieved by good
macroeconomic management and sustained, coherent reforms.
RANKING
GCI
Macro envir.
Public inst.
Technology
Chile
28
35
19
31
Argentina
78
93
88
45
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Part II. Hungary: Results from 2003-2004
Growth Competitiveness Index: Hungary among the transition economies
RANKING
Estonia
Slovenia
Hungary
Latvia
Czech Republic
Lithuania
Slovak Republic
China
Poland
Croatia
Vietnam
Bulgaria
Russian Federation
Romania
Serbia
Macedonia
Ukraine
GCI
22
31
33
37
39
40
43
44
45
53
60
64
70
75
77
81
84
Technology
10
24
32
26
21
36
33
65
34
41
73
63
69
55
66
70
84
Public
institutions
28
35
33
45
47
41
51
52
58
67
61
62
81
86
77
93
94
Macro
environment
34
37
38
36
39
41
50
25
49
55
45
73
61
81
87
80
70
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Part II. Hungary: Results from 2003-2004
The Macroeconomic Environment Index
Hungary is placed 5th (out of 17) among the transition economies and 38th in the world
Country
China
Estonia
Latvia
Slovenia
Hungary
Czech Republic
Lithuania
Vietnam
Poland
Slovak Republic
Croatia
Russian Federation
Ukraine
Bulgaria
Macedonia
Romania
Serbia
2.01
Macroeconomic Macroeconomic
Recession
Stability
Environment
Expectations
Subindex
Index
8.05
Access to
credit
3.28
Inflation
3.3
Interest
rate
3.29 Real
Exchange 3.24 Govt
surplus
rate
3.26
Savings
rate
Country
Credit Rating
Waste
25
4
7
63
5
20
94
48
2
34
35
34
25
6
5
57
31
84
10
58
36
26
36
12
3
10
24
41
88
41
32
44
28
37
53
56
12
78
43
39
44
26
29
31
38
66
37
25
69
12
78
86
52
30
41
39
27
35
26
20
27
85
61
40
32
71
41
14
11
8
9
48
100
29
70
46
57
45
16
1
21
56
11
52
71
7
67
40
49
62
67
73
24
52
80
72
79
33
65
50
44
24
9
50
23
74
82
37
43
64
55
51
59
15
32
77
51
78
51
49
59
61
61
34
49
93
76
62
12
10
55
76
70
42
51
64
12
94
96
13
17
78
85
73
76
75
75
72
55
91
24
80
57
86
80
67
85
89
37
65
6
66
97
83
79
81
81
47
60
98
74
86
43
53
66
96
87
86
77
68
95
90
9
65
95
93
56
23
Part II. Hungary: Results from 2003-2004
Public Institutions Index
Hungary is placed 2nd (out of 17) among the transition economies and 33rd in the world
Country
Estonia
Hungary
Slovenia
Lithuania
Latvia
Czech Republic
Slovak Republic
China
Poland
Vietnam
Bulgaria
Croatia
Serbia
Russian Federation
Romania
Macedonia
Ukraine
Public
Institutions
Index
28
33
35
41
45
47
51
52
58
61
62
67
77
81
86
93
94
Favoritism
in decisions
Irregular
Contracts
Judicial
of
payments
and Law Independenc Property government organized Corruption in exports
Subindex
e
rights
officials
crime
Subindex & imports
32
22
32
29
41
27
27
39
29
37
67
46
28
33
43
45
46
49
37
32
31
58
65
51
38
65
34
40
44
47
48
24
51
49
51
61
46
72
68
62
41
41
70
68
60
76
78
40
60
60
62
64
43
60
50
43
66
51
69
69
74
53
52
54
53
62
31
61
61
76
92
78
92
87
93
35
35
81
79
90
73
71
54
57
77
80
87
50
79
74
78
91
81
96
81
87
75
87
83
82
79
93
67
90
98
96
88
99
78
99
86
91
94
83
100
82
91
89
94
Irregular
payments
in public
utilities
31
30
33
32
49
39
34
60
57
64
44
53
82
79
86
76
74
Irregular
payments
in tax
collection
26
22
29
36
50
45
38
52
49
64
31
54
63
59
70
74
89
24
Part II. Hungary: Results from 2003-2004
Technology Index: Innovation subindex
Hungary is placed 5th (out of 17) among the transition economies and 32nd in the world
Country
Estonia
Czech Republic
Slovenia
Latvia
Hungary
Slovak Republic
Poland
Lithuania
Croatia
Romania
Bulgaria
China
Serbia
Russian Federation
Macedonia
Vietnam
Ukraine
Technology
Index
10
21
24
26
32
33
34
36
41
55
63
65
66
69
70
73
84
Innovation
subindex
26
45
23
22
38
44
29
30
48
56
43
70
62
27
63
69
36
Company
Firm-level spending on University/industry
Technological technology research and
research
sophistication absorption development
collaboration
24
19
44
41
38
53
42
34
33
46
20
33
31
38
24
32
47
68
67
61
37
26
54
38
50
54
45
42
56
25
40
47
80
35
57
46
75
65
76
65
79
95
79
80
48
58
29
20
96
86
80
70
61
66
70
56
88
93
83
82
71
15
30
40
68
67
81
36
Patents
29
30
26
72
28
36
53
49
32
60
50
55
72
38
72
72
47
Tertiary
enrollment
17
45
11
10
36
44
19
23
46
52
35
78
54
8
53
75
33
25
Part II. Hungary: Results from 2003-2004
Technology Index: ICT subindex
Government
Hungary is placed 5th (out
of 17) Quality
among
transition
economies
Internet
of the
Government
success
in
Laws and 32nd in the world
Technology
Country
Index
Estonia
10
Czech Republic
21
Slovenia
24
Latvia
26
Hungary
32
Slovak Republic
33
Poland
34
Lithuania
36
Croatia
41
Romania
55
Bulgaria
63
China
65
Serbia
66
Russian Federation
69
Macedonia
70
Vietnam
73
Ukraine
84
ICT
subindex
20
30
26
34
35
37
41
38
39
54
49
62
55
56
63
82
70
access in
schools
13
29
21
28
27
38
39
35
43
45
59
54
72
61
63
71
77
competition in prioritization of
ICT
relating to
the ISP sector
ICT
promotion
ICT
5
18
12
6
47
62
77
35
59
58
55
23
40
52
43
28
94
50
65
49
67
75
78
47
71
84
81
46
58
54
52
45
83
49
64
61
72
73
49
50
70
88
85
70
52
32
24
51
91
45
57
65
80
78
86
76
76
85
89
84
85
34
15
54
75
69
82
85
Mobile
26
8
13
38
28
32
41
35
36
59
56
61
48
67
68
85
81
Internet
Users
16
31
19
40
36
35
44
39
34
48
46
58
53
64
68
76
84
Internet
hosts
17
24
29
34
27
31
30
33
43
55
47
84
56
50
59
95
57
Phone
lines
35
32
30
36
34
43
37
40
31
53
33
56
47
46
42
77
51
PC
28
35
23
30
40
29
43
39
33
62
52
72
68
42
#N/A
81
73
26
Part II. Hungary: Results from 2003-2004
Technology Index: Technology Transfer subindex
Hungary is placed 5th (out of 17) among the transition economies and 32nd in the world
Technology
Country
Index
Estonia
10
Czech Republic
21
Slovenia
24
Latvia
26
Hungary
32
Slovak Republic
33
Poland
34
Lithuania
36
Croatia
41
Romania
55
Bulgaria
63
China
65
Serbia
66
Russian Federation69
Macedonia
70
Vietnam
73
Ukraine
84
Tech
FDI and
Transfer
technology
Subindex transfer
11
5
50
19
21
16
26
42
43
38
67
47
60
69
59
30
71
Prevalence of
foreign
technology
licensing
3
4
63
28
6
5
24
40
64
32
69
42
55
71
59
16
74
25
10
34
10
40
29
29
40
14
40
65
44
55
67
52
44
67
27
Part II. Hungary: Results from 2003-2004
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Part II. Hungary: Results from 2003-2004
NOTABLE COMPETITIVE ADVANTAGES
RANK/102
Macroeconomic Environment
Interest rate spread, 2002
Extent of distortive government subsidies
Access to credit
Country credit rating, 2003
Public Institutions
Irregular payments in tax collection
Judicial independence
Irregular payments in public utilities
Technology
FDI and technology transfer
Internet access in schools
Internet hosts, 2002
Utility patents, 2002
Cellular telephones, 2002
12
14
25
30
22
29
30
6
27
27
28
28
29
Part II. Hungary: Results from 2003-2004
NOTABLE COMPETITIVE DISADVANTAGES
Macroeconomic Environment
Government surplus/deficit, 2002
Real exchange rate, 2002
Inflation, 2002
National savings rate, 2002
Public trust of politicians
Diversion of public funds
Recession expectations
Public Institutions
Favoritism in decisions of government officials
Organized crime
Property rights
Irregular payments in exports and imports
Technology
Quality of competition in the ISP sector
Firm-level technology absorption
Company spending on research and development
Government success in ICT promotion
University/industry research collaboration
Government prioritization of ICT
Laws relating to ICT
Technological sophistication
Prevalence of foreign technology licensing
Personal computers, 2002
Tertiary enrollment
Internet users, 2002
Telephone lines, 2002
RANK/102
86
78
69
52
47
41
37
67
46
37
33
94
68
67
65
61
50
49
47
41
40
36
36
34
30
Part II. Hungary: Results from 2003-2004
Evolution of Hungary’s position in the GCI over the last three years
6
Score (1 to 7)
5.5
Growth
Competitiveness
Index
Macroeconomic
Environment
Index
Public Institutions
Index
5
4.5
4
3.5
Technology Index
3
2001
2002
2003
Year
31