By : Neha Dhyani
Updated : Apr 1, 2022, 11:38
A recent study by global management consulting firm Bain and Company has revealed that countries with the most competitive economies are not necessarily the wealthiest. The report, entitled Global Competitiveness Index, examined how countries ranked on indicators such as innovation, infrastructure, a skilled workforce, and business dynamism - ranking them based on how they had been able to successfully manage these factors.
The Global Competitiveness Index (GCI) measures a country's ability to provide the conditions for productivity growth and improved quality of life for its citizens. In other words, it is an evaluation of the competitiveness of the economies of countries around the world.
The Global Competitiveness Index Report is calculated annually by the World Economic Forum (WEF). The GCI is not a ranking but rather an index based on a stated set of criteria.
The GCI is consistently used, not only by policy makers but also by international organizations such as the World Bank, the International Monetary Fund (IMF), and UN bodies, as well as by a variety of other experts in academia. The fact that it is an important tool for decision-making is evident from its wide-scale use over the years.
The Global Competitiveness Index was first published in 1979 and has since then been released annually. In its original form, it was based on only 12 indicators.
In the latest iteration, which was released in 2010, the GCI has expanded to cover 113 indicators, thus making it one of the most comprehensive competitiveness indexes in existence.
The Global Competitiveness Index Report is a composite index where each indicator scores zero to 100 points. A score of 1 means that the country has no competitiveness deficiencies, while a score of 99 means that it has all 12 factors covered. A score between 0 and 80 indicates that the country can improve its competitiveness by adding specific factors to its list of priorities.
The index is considered an important indicator for countries as well as for companies and institutions looking at expansion and investment opportunities in respective regions or countries around the world.
One of the main purposes of providing the GCI is that it can help countries improve their competitiveness, which in turn translates into better economic growth.
Similarly, when evaluating investment decisions such as where to locate a new facility or when looking for an appropriate business partner, the Global Competitiveness Index Report becomes a useful measure for comparing and identifying different levels of competitiveness in various countries.
The World Economic Forum's report on the contributions of individual factors to their impact on competitiveness has also been very useful. Such research may lead to a better understanding of how countries can improve their competitiveness and vice versa - leading to more efficient use of resources by producers and consumers alike.
The Global Competitiveness Index uses 12 main factors and 117 sub-factors to measure the competitiveness of countries. The 12 factors are further grouped into 4 categories, each one carrying equal weightage. The categories themselves have a natural order of importance, with I being the most important and IV being the least important category.
The 12 factors to measure the competitiveness of countries are:
Competitive economies are essential in today's globalized world as they give an impetus to technological and scientific advancement and make business transactions smoother and cheaper. Therefore, countries must take steps to improve their competitiveness according to the norms of the Global Competitiveness Index.
The Global Competitiveness Index (GCI) measures a country's ability to provide the conditions for productivity growth and improved quality of life for its citizens. In other words, it is an evaluation of the competitiveness of the economies of countries around the world. The GCI is calculated annually by the World Economic Forum (WEF). The GCI is not a ranking but rather an index based on a stated set of criteria.
The Factor 8-Labour Market in the Global Competitiveness Index Report comprises 12 sub-factors that measure factors such as workforce skills of the country, job opportunities for the youth, wages, and salaries.
The Factor 9-Financial System in the Global Competitiveness Index Report comprises sub-factors that measure the extent to which a country has a well-developed financial infrastructure and strength and its currency's international value.
Factor 11 in the Global Competitiveness Index discusses Business dynamism. This is a measure of a country's ability to create and support new enterprises. It also includes factors such as innovation and safety in doing business and access to capital among others.
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