Methodology and Principles of Analysis

Transcription

1 Methodology and Prncples of Analyss What s the IMD World Compettveness book? The IMD World Compettveness book (WCY) s the world s most thorough and comprehensve annual report on the compettveness of natons, publshed wthout nterrupton snce It s consdered to be the frst access pont to world compettveness, provdng objectve benchmarkng and trends, as well as a worldwde reference pont to statstcs and opnon data that hghlght the compettveness of key economes. The WCY analyzes and ranks how natons and enterprses manage the totalty of ther competences to acheve ncreased prosperty. An economy s compettveness cannot be reduced only to GDP and productvty because enterprses must also cope wth poltcal, socal and cultural dmensons. Therefore natons need to provde an envronment that has the most effcent structure, nsttutons and polces that encourage the compettveness of enterprses. Ths year, the WCY provdes etensve coverage of 61 economes, all key players n world markets. All economes are chosen because of ther mpact on the global economy and the avalablty of comparable nternatonal statstcs. Over 340 compettveness crtera have been selected as a result of etensve research usng economc lterature, nternatonal, natonal and regonal sources and feedback from the busness communty, government agences and academcs. The crtera are revsed and updated on a regular bass as new theory, research and data become avalable and as the global economy evolves. In the 016 book, we added the followng four statstcal crtera: Adjusted consumer prce nflaton (absolute s); Rule of Law (nde); ICT ervce Eports (%); Researchers n R&D (per mllon); and Women wth degrees (%). We also deleted one crtera whch no longer had an mportant mpact on compettveness: Fed telephone lnes. Moreover a long-establshed collaboraton wth our Partner Insttutes worldwde also helps ensure that the data s relable, accurate and as up-to-date as possble. Ths year, we have the prvlege of collaboratng wth a unque network of 55 Partner Insttutes. Who uses the IMD World Compettveness book? The WCY s an nvaluable, dynamc and constantly updated benchmark for decson-makers. The busness communty uses t to help determne and valdate nvestment plans and to assess locatons for new operatons. Governments fnd mportant ndcators to benchmark ther polces aganst those of other countres, to evaluate performance over TABLE 1 Compettveness Factors Economc Performance (83 crtera) Government Effcency (73 crtera) Macro-economc evaluaton of the domestc economy: Domestc Economy, Internatonal Trade, Internatonal Investment, Employment and Prces. Etent to whch government polces are conducve to compettveness: Publc Fnance, Fscal Polcy, Insttutonal Framework, Busness Legslaton and ocetal Framework. Busness Effcency (71 crtera) Etent to whch the natonal envronment encourages enterprses to perform n an nnovatve, proftable and responsble manner: Productvty and Effcency, Labor Market, Fnance, Management Practces and Atttudes and Values. (115 crtera) Etent to whch basc, technologcal, scentfc and human resources meet the needs of busness: Basc, Technologcal, centfc, Health and Envronment and Educaton. 484 IMD WORLD COMPETITIVEE YEARBOOK 016

2 tme and to learn from the success stores of natons that have mproved ther compettveness. The academc world also uses the eceptonal wealth of data n the WCY to better understand and analyze how natons (and not only enterprses) compete n world markets. How does the IMD World Compettveness book measure Compettveness? Over the past two decades, the methodology to assess the compettveness of natons has constantly been fne-tuned to take nto account the evoluton of the global envronment and new research. In ths way, the WCY keeps pace wth structural changes n natonal envronments and the rapdly changng technologcal revoluton. We make these changes gradually so that we can contnue to compare the results from year to year and hghlght the evoluton of an economy s performance relatve to the compettveness of others. Based on analyss made by leadng scholars and by our own research and eperence, the methodology of the WCY dvdes the natonal envronment nto four man Compettveness Factors: Economc Performance, Government Effcency, Busness Effcency and. Each of these four factors has been broken down nto fve sub-factors, each hghlghtng dfferent facets of compettveness. Altogether, the WCY features 0 such sub-factors. (ee Tables 1 and ). ome of these sub-factors have been further dvded nto categores that defne compettveness ssues more eplctly. All crtera have been grouped nto these sub-factors and categores. However, each sub-factor does not necessarly nclude the same number of crtera (for eample, t takes more crtera to assess Educaton than to evaluate Prces). Each sub-factor, ndependently of the number of crtera t contans, has the same weght n the overall consoldaton of results, that s 5% ( ). Ths allows us to lock the weght of the sub-factors regardless of the number of crtera they nclude. We beleve that ths approach mproves the relablty of the results and helps ensure a hgh degree of compatblty wth past results. tatstcs are sometmes prone to errors or omssons Lockng the weghts of sub-factors has the same functon as buldng fre barrers ; t prevents problems from spreadng n a dsproportonate way. In addton, the past fve years results are shown for every economy, n order to hghlght the evoluton of ts compettveness. The WCY uses dfferent types of data to measure quantfable and qualtatve ssues separately. tatstcal ndcators are acqured from nternatonal, natonal and regonal organzatons, prvate nsttutons and our network of 55 Partner Insttutes worldwde. These statstcs are referred to n the WCY as Hard Data and nclude 137 crtera used to determne the overall rankngs and 87 crtera presented as valuable background nformaton but not used n the calculaton of the rankngs. The Hard Data represent a weght of appromately two-thrds n the overall rankng. An addtonal 118 crtera are drawn from our annual Eecutve Opnon urvey and are referred to n the WCY as urvey Data. The survey questons are ncluded n the book as ndvdual crtera and are also used n calculatng the overall rankng, representng a weght of appromately one-thrd. Eecutve Opnon urvey Every year, we conduct an Eecutve Opnon urvey n order to complement the statstcs that we use from nternatonal, natonal and regonal sources. Whereas the Hard Data shows how compettveness s measured over a specfc perod of tme, the urvey Data measures compettveness as t s perceved. The survey was desgned to quantfy ssues that are not easly measured, for eample: management practces, labor relatons, corrupton, envronmental concerns or qualty of lfe. The survey responses reflect present and future perceptons of compettveness by busness eecutves who are dealng wth nternatonal busness stuatons. Ther responses are more recent and closer to realty snce there s no tme lag, whch s often a problem wth Hard Data that shows a pcture of the past. TABLE The Breakdown of Compettveness Factors Economc Performance Domestc Economy Internatonal Trade Internatonal Investment Government Effcency Publc Fnance Fscal Polcy Insttutonal Framework Busness Effcency Productvty Labor Market Fnance Basc Technologcal centfc Employment Busness Legslaton Management Practces Health and Envronment Prces ocetal Framework Atttudes and Values Educaton IMD WORLD COMPETITIVEE YEARBOOK

3 The Eecutve Opnon urvey s sent to eecutves n topand mddle management n all of the economes covered by the WCY. In order to be statstcally representatve, we select a sample sze whch s proportonal to the GDP of each economy. The sample of respondents are representatve of the entre economy, coverng a cross-secton of the busness communty n each economc sector: prmary, manufacturng and servces, based on ther contrbuton to the GDP of the economy. The survey respondents are natonals or epatrates, located n local and foregn enterprses n the economy and whch, n general, have an nternatonal dmenson. They are asked to evaluate the present and epected compettveness condtons of the economy n whch they work and have resded durng the past year, drawng from the wealth of ther nternatonal eperence, thereby ensurng that the evaluatons portray an n-depth knowledge of ther partcular envronment. We try to contact most IMD alumn and all responses returned to IMD are treated as confdental. The surveys are sent n February and are returned n Aprl; n 016, we receved more than 5,400 responses from the 61 economes worldwde. The respondents assess the compettveness ssues by answerng the questons on a scale of 1 to 6. The average for each economy s then calculated and converted nto a 0 to 10 scale. Fnally, the survey responses are transformed nto ther standard devaton s, from whch the rankngs are calculated. How are the rankngs computed? The essental buldng block for the rankngs s the standardzed for all the crtera, whch we call the TD. The frst step s to compute the TD for each crteron usng the data avalable for all of the economes. (For more detals, see Data Processng Methodology that follows). We then rank the economes based on the 55 crtera that are used n the aggregaton: 137 Hard and 118 urvey data. The addtonal 87 crtera are presented for background nformaton only. They are not ncluded n the aggregaton of data to determne the overall rankngs. In most cases, a hgher s better, for eample, for Gross Domestc Product; the economy wth the hghest standardzed s ranked frst whle the one wth the lowest s last. However, wth some crtera the nverse may be true, where the lowest s the most compettve, for eample, Government Debt. In these cases, a reverse rankng s used: the economy wth the hghest standardzed s ranked last and the one wth the lowest s frst. nce all economes statstcs are standardzed, they can be aggregated to compute ndces. We use these nde s, whch we call scores, to compute the followng rankngs: the Overall coreboard, Compettveness Factor rankngs and ub-factor rankngs. When data s unavalable or too old to be relevant for a partcular economy, the name of the economy appears at the bottom of the statstcal table for the crteron TABLE 3 Computng the Rankngs 486 IMD WORLD COMPETITIVEE YEARBOOK 016

4 beng measured and a dash s shown. In the aggregaton of the statstcs, all mssng data are gven TD s mputed from the average of estng data wthn the sub-factor. ee Table 3: Computng the Rankngs. Data Processng Methodology There are 34 crtera n the IMD World Compettveness book, of whch 55 are used to calculate the Overall Compettveness rankngs. The remanng 87 crtera are presented as background nformaton only. Every economy s performance s assessed for each crteron usng the tandard Devaton Method (DM) whch s descrbed below. In most cases, a hgher s better, for eample, for Gross Domestc Product; the economy wth the hghest standardzed s ranked frst whle the one wth the lowest s last. However, wth some crtera, the lowest s the most compettve, whch s the case for Consumer Prce Inflaton. In these cases, a reverse rankng s used: the economy wth the hghest standardzed s ranked last and the one wth the lowest s frst. tandard Devaton Method As most of the crtera are scaled dfferently, a comparable standard scale s used to compute the overall, factor and subfactor results. The tandard Devaton Method (DM) s used. It measures the relatve dfference between the economes performances; therefore, each country s relatve poston n the fnal rankngs s more accurately assessed. Frst, for each crteron, we compute the average for the entre populaton of economes. Then, the standard devaton s calculated usng the followng formula: ( - ) ( ) - The TD for crtera s calculated as follows: ( TD ) Where: orgnal Annual real growth rate 1 average of all the economes number of economes -1 1 standard devaton Aggregaton Average of Data annual and percentage Rankngs growth rate tandardzed s are calculated for each ndvdual crteron, based on the TD Method descrbed above. All Hard data ndcators are revewed to determne the shape of the dstrbuton. on-normal data s normalzed by takng Deflated fnal the log. The TD s then calculated usng the logged s Y The sub-factor rankngs are determned by calculatng the average of the crtera TD s that make up the sub-factor, ecludng the background crtera. All the hard data have a weght of 1. The survey data are weghted so that the survey accounts for one-thrd n the determnaton of the overall rankng. Thus, for 016, each survey crteron has a weght of When data s unavalable for partcular economes, the mssng s are replaced by TD s that are mputed from the average of estng data wthn the sub-factor. Takng the average for each sub-factor enables us to lock the weght of the 0 sub-factors ndependently of the number of crtera they contan so that each sub-factor has an equal mpact on the overall rankng, that s 5%. et, we aggregate the sub-factor TD s to determne the Compettveness Factor rankngs. Only ranked crtera are aggregated to obtan these rankngs. The TD s of the Compettveness Factors are then aggregated to determne the Overall coreboard. All of the ranked crtera comprsed n the four compettveness factors are thus ncluded n the consoldaton of data. -1 Fnally, we compute each of the economes standardzed The 87 remanng crtera are presented as background s (TD) for the ( 55 TDranked crtera. ) The TD s calculated nformaton only and are not ncluded n any aggregaton by subtractng the average of the 61 economes from the of data to determne rankngs. ome background data economy s orgnal and then dvdng the result by the are presented n rankng order whle others are shown standard devaton. alphabetcally, dependng on what the data s meant to measure. Annual real growth rate 1 nce all of the statstcs are standardzed, they can be -1 1 aggregated 100 to compute ndces. We use these nde s, whch we call scores, to compute the rankngs for the four Compettveness Factors and the Overall coreboard Average annual percentage growth rate It should -1be noted that across - the four Compettveness Factors, only one economy n 1 wll have a equal to 100 and one economy wll have a equal to 0. To calculate the Deflated fnal IMD WORLD COMPETITIVEE YEARBOOK

5 ( TD ) Overall coreboard, we take the Annual average real of growth the four rate Factors. Average annual 1percentage 100 growth rate (n number of scores and then convert them nto an nde wth the leadng perods): -1 1 economy gven a of urvey Crtera... Average annual percentage growth rate -1 - Each year we conduct a survey to quantfy ssues related to n 1 compettveness for whch there are no hard statstcs. The survey s an n-depth 118-pont questonnare sent to top- But growth formulas may have shortcomngs. The average and mddle management n the 61 economes covered by annual growth rate fals to reveal the real etent of changes, as the WCY. The dstrbuton Deflated reflects fnal a breakdown of ndustry t flattens or nflates year-to-year growth rates. For eample, by sectors: Prmary, Industry/Manufacturng and ervces/ an average growth rate over two years mght be calculated Fnance. In order to be statstcally representatve, 100 we select a at percent, whle 100 n realty there was 5 percent growth sample sze whch s proportonal to the GDP breakdown of between the frst and second years, and 5 percent between economc sectors of the economy. the second and thrd years. The average annual growth s used only when data vary wdely n the mddle years of a perod, ( - ) In 016, we had more than 5,400 eecutves respond to the and less wdely between the frst and last years of the perod. survey for an average of appromately 100 per economy. The It s also used n cases where t s mpossble to combne target lst s determned by IMD and has been developed over negatve and postve ntal and fnal s. Ths approach many years wth the collaboraton of our Partner Insttutes gves a more accurate pcture than does the compound rate worldwde. Confdentalty s ensured and the lst s revsed under these crcumstances. and updated every year. Respondents are only answerng ( TD wth ) regard to the economy n whch they have worked and resded for the past year; therefore, the results reflect wdespread Deflated s knowledge about each economy and draw on the wealth of ther nternatonal eperence. The followng formula s used when calculatng real Annual real growth rate rates from nomnal s, because 1 t takes nto The respondents assess the compettveness ssues by account cumulatve nflaton (e.g. real growth n Household -1 1 answerng the questons on a scale of 1-6, wth the response Consumpton Ependture). The 100 fnal deflated s then 1 generally ndcatng a negatve percepton and 6 ndcatng used to obtan the annual real growth rate. the most postve percepton. The WCY calculates the average -1-1 for each economy, then the data s converted from a Takng a 5-year tme span as an eample: 1-6 scale to a 0-10 scale, usng the formula Average below. annual Fnally, percentage growth rate -1 - the survey responses are transformed nto ther standard Deflated fnal ( nflaton rate): n 1 devaton s, from whch the rankngs are calculated. -.. ( * ) where average Deflated fnal ( - ) lue) Trends A trend or growth rate, whle offerng a more dynamc assessment than absolute s, s meanngful only f a economy s actual comparatve advantage or dsadvantage at one pont n tme s also measured. The formulas used to calculate trends and growth rates are eplaned below: 1. Annual real growth rate ( nflaton rate): al real growth rate al percentage growth rate IMD WORLD COMPETITIVEE YEARBOOK n 1 016