The Global Competitiveness Report (GCR) is a yearly report published by the World Economic Forum. The first report was released in 1979. The 2011–2012 report covers 142 major and emerging economies.[1]
Since 2004, the Global Competitiveness Report ranks countries based on the 'Global Competitiveness Index', developed by Xavier Sala-i-Martin and Elsa V. Artadi.[2] Before that, the macroeconomic ranks were based on Jeffrey Sachs's Growth Development Index and the microeconomic ranks were based on Michael Porter's Business Competitiveness Index. The Global Competitiveness Index integrates the macroeconomic and the micro/business aspects of competitiveness into a single index.
Switzerland leads the ranking as the most competitive economy in the world, as the United States, which ranked first for several years, fell to fifth place due to the consequences of the financial crisis of 2007–2010 and its macroeconomic instability.[3] China continues its relative rise in the rankings reaching 27th.
The report "assesses the ability of countries to provide high levels of prosperity to their citizens. This in turn depends on how productively a country uses available resources. Therefore, the Global Competitiveness Index measures the set of institutions, policies, and factors that set the sustainable current and medium-term levels of economic prosperity."[4][5]
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Since 2004, the report ranks the world's nations according to the Global Competitiveness Index.[6] The report states that it is based on the latest theoretical and empirical research. [1] It is made up of over 110 variables, of which two thirds come from the Executive Opinion Survey, and one third comes from publicly available sources such as the United Nations. The variables are organized into twelve pillars,[7] with each pillar representing an area considered as an important determinant of competitiveness.
One part of the report is the Executive Opinion Survey which is a survey of a representative sample of business leaders in their respective countries. Respondent numbers have increased every year and is currently just over 13,500 in 142 countries (2010). [2]
The report notes that as a nation develops, wages tend to increase, and that in order to sustain this higher income, labor productivity must improve for the nation to be competitive. In addition, what creates productivity in Sweden is necessarily different from what drives it in Ghana. Thus, the GCI separates countries into three specific stages: factor-driven, efficiency-driven, and innovation-driven, each implying a growing degree of complexity in the operation of the economy.
In the factor-driven stage countries compete based on their factor endowments, primarily unskilled labor and natural resources. Companies compete on the basis of prices and sell basic products or commodities, with their low productivity reflected in low wages. To maintain competitiveness at this stage of development, competitiveness hinges mainly on well-functioning public and private institutions (pillar 1), appropriate infrastructure (pillar 2), a stable macroeconomic framework (pillar 3), and good health and primary education (pillar 4).
As wages rise with advancing development, countries move into the efficiency-driven stage of development, when they must begin to develop more efficient production processes and increase product quality. At this point, competitiveness becomes increasingly driven by higher education and training (pillar 5), efficient goods markets (pillar 6), efficient labor markets (pillar 7), developed financial markets (pillar 8), the ability to harness the benefits of existing technologies (pillar 9), and its market size, both domestic and international (pillar 10).
Finally, as countries move into the innovation-driven stage, they are only able to sustain higher wages and a higher standard of living if their businesses are able to compete by providing new or unique products. At this stage, companies must compete by producing new and different goods using the most sophisticated production processes (pillar 11) and through innovation (pillar 12).
Thus, the impact of each pillar on competitiveness varies across countries, in function of their stages of economic development. Therefore, in the calculation of the GCI, pillars are given different weights depending on the per capita income of the nation. [3] The weights used are the values that best explain growth in recent years [4] For example, the sophistication and innovation factors contribute 10% to the final score in factor and efficiency-driven economies, but 30% in innovation-driven economies. Intermediate values are used for economies in transition between stages.
The Global Competitiveness Index is somewhat similar annual reports are the Ease of Doing Business Index and the Indices of Economic Freedom. They also look at factors that affect economic growth, but not as many as the Global Competitiveness Report.
This is the top 30 of the 2011–2012 report [8][9]
The following are the top 30 countries in the 2010-2011 Report.[10]
The following are the top 30 countries in the 2009-2010 Report.[11]
The following are the top 30 countries in the 2008-2009 Report.[12]
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The main outcomes to be highlighted from the 2010-2011 edition are the following:
Switzerland: Switzerland retains its 1st place position, characterized by an excellent capacity for innovation and a very sophisticated business culture, ranked 4th for its business sophistication and 2nd for its innovation capacity. Switzerland’s scientific research institutions are among the world’s best, and the strong collaboration between the 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 and government support of innovation through its procurement processes.
United States: the United States continues the decline that began last year, falling two more places to 4th position. While many structural features still make its economy extremely productive, a number of escalating weaknesses have lowered the US ranking over the past two years. The evaluation of institutions has continued to decline, falling from 34th to 40th this year. The report states that the public does not demonstrate strong trust of politicians (54th), and the business community remains concerned about the government’s ability to maintain arms-length relationships with the private sector (55th) and considers that the government spends its resources relatively wastefully (68th).
Ireland: the Ireland’s decline in rank is attributable to a weakening macroeconomic environment as well as continuing concerns related to financial markets (with a precipitous fall from 7th two years ago to 45th last year and 98th position this year in this pillar). After already falling six places last year.
Iceland: drops a further five places to 31st position, mainly because of a continuing deterioration in the macroeconomic environment (from 119th to 138th) and weaker financial markets (down from 20th two years ago to 85th last year and 122nd this year). Yet despite these concerns, Iceland also benefits from a number of clear competitive strengths in moving to a more sustainable economic situation.
Spain: Spain drops nine places in edition to 42nd position. The decline is in large part attributable to an increasingly negative assessment of the labor and financial markets as well as the level of sophistication of the country’s businesses. On a more positive note, Spain’s competitiveness performance continues to be boosted by the large market (13th) available to its national companies, strong technological adoption (30th in the technological readiness pillar), first-class infrastructure (14th), and good higher education and training (31st).
China: up two positions to 27th place, China has reinforced its position within the top 30. It is the only BRIC country to improve in the rankings this year, thus increasing the gap with the other three. China’s performance remains stable in most areas measured with the Index compared with last year, with its main strengths its large and growing market size, macroeconomic stability, and relatively sophisticated and innovative businesses.
Chile: Stable at 30th, Chile remains the most competitive country in Latin America and the Caribbean, with a very convincing performance resting notably on solid basic requirements (37th) and efficiency enhancers (35th). The country has been at the forefront of market liberalization and opening, resulting in very efficient goods and labor markets (28th and 44th, respectively), one of the most sophisticated financial markets (41st), and the largest pension industry in the region.
Argentina: Argentina is fairly stable at 87th, continuing to feature in the bottom part of the rankings. The picture is rather mixed: important strengths, such as its extensive market size (24th) and fairly good educational system at the primary and higher levels (ranked 60th and 55th for health and primary education and higher education and training, respectively), do not seem to compensate for the serious and enduring shortcomings undermining Argentina’s long-term growth potential.
Qatar: ranked 17th, enters the top 20 this year and reaffirms its position as the most competitive country in the region. With a projected growth rate of 18.5 percent for 2010, the country is the fastest-growing economy in the world, as well as one of the wealthiest. Its strong competitiveness rests on solid foundations made up of a high-quality institutional framework, ranked 10th overall, a stable macroeconomic environment (8th), and an efficient goods market (12th). Low levels of corruption and undue influence on government decisions, high government efficiency, and excellent security are the cornerstones of the country’s solid institutional framework.
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