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The Global Competitiveness Report: A Tool for Fostering Better Policies

The Global Competitiveness Report: A Tool for Fostering Better Policies. 8 th November, 2005 Augusto Lopez-Claros Chief Economist & Director Global Competitiveness Programme World Economic Forum Geneva, Switzerland. Contents. Part I. Global Competitiveness Programme

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The Global Competitiveness Report: A Tool for Fostering Better Policies

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  1. The Global Competitiveness Report: A Tool for Fostering Better Policies 8th November, 2005 Augusto Lopez-ClarosChief Economist & Director Global Competitiveness ProgrammeWorld Economic ForumGeneva, Switzerland

  2. Contents Part I. Global Competitiveness Programme • What do we mean by “competitiveness” ? Part II. The Growth Competitiveness Index • Results and Analysis Part III. Global Competitiveness Index • Macroeconomy and Public Institutions • Results and Analysis

  3. Part I. Global Competitiveness Programme: What do we mean by “competitiveness” ? • Competitiveness is defined as the set of factors, policies and institutions that determine the level of productivity of a country • A more competitive economy is one that is likely to grow faster over the medium to long run • We try to shed light on “the factors, policies and institutions” that determine the sharply different growth experiences of 117 economies worldwide

  4. Global Competitiveness Programme: What are we trying to achieve?

  5. The Global Competitiveness Programme • Key insights gained from competitiveness programme • The factors that determine the level of productivity of a country are many and spread over a large number of areas • These factors matter differently for different countries depending on their stage of development • Their relative importance changes over time

  6. Technology Index Macroeconomic Environment Index Public Institutions Index Technology Transfer Sub-Index Corruption Sub-Index Country Credit Rating Government Waste Information & Communications Technology Subindex Part II. The Growth Competitiveness Index Growth Competitiveness Index Macroeconomic stability Sub-Index Contracts and law Sub-Index Innovation Sub-Index

  7. Growth Competitiveness Index Components(out of 117)

  8. Public Institutions Rankings (out of 117)

  9. Public Institutions Ranking: Key Variables(out of 117)

  10. Macroeconomic Environment Rankings(out of 117)

  11. Macroeconomic Environment Rankings: Key Variables(out of 117)

  12. Technology Index Rankings(out of 117)

  13. Part III. The Global Competitiveness Index • The Growth Competitiveness Index is a simple structure which captures some of the key drivers of growth. • It does not incorporate concepts which the theory or empirical observation suggests are important determinants of competitiveness. For instance, the functioning of labour markets, the quality of a country’s infrastructure, the state of public health and the size of the market. • The Global Competitive Index tries to assess both the macroeconomic and microeconomic determinants of competitiveness in one index

  14. The Global Competitiveness Index Three stages of development: • “Factor-driven stage”Firms compete in prices, taking advantage of cheap factors e.g., India, China, Ukraine • “Efficiency-driven stage”Efficient production practices to increase productivity e.g., Poland, Brazil, Mexico • “Innovation-driven stage”Economies need to produce innovative products using sophisticated production methods e.g., Finland, Germany, Japan

  15. The Global Competitiveness Index The Nine Pillars of Competitiveness • Institutions • Infrastructure • Macroeconomy • Health and Primary Education Basic requirements Key for factor-driven economies • Higher Education and Training • Market Efficiency (goods, labour, financial) • Technological Readiness Efficiency enhancers Key for efficiency-driven economies Innovation and sophistication factors • Business Sophistication • Innovation Key for innovation-driven economies

  16. The Global Competitiveness Index Weights given to the groups of pillars (subindexes)

  17. The Global Competitiveness Index List of countries in each stage

  18. The Global Competitiveness Index Top performers in the nine pillars

  19. Public Institutions Property rights Diversion of public funds Public trust of politicians Judicial independence Favoritism in decision of government officials Wastefulness of government spending Burden of government regulation Business costs of terrorism Reliability of police services Business costs of crime and violence Organized crime The Global Competitiveness Index Macroeconomy • Government surplus/deficit • National savings rate • Inflation • Interest rate spread • Government debt / GDP ratio • Real effective exchange rate Technology & Innovation • Country technological readiness • Capacity for innovation • Technology absorption by firms • FDI and technology transfer • Spending on R&D • Technology penetration (cell phones, Internet users, PCs) • Quality of scientific research institutions • Academic/Private sector research collaboration • Availability of scientists and engineers • Appropriate legal framework and intellectual property protection

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