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Assessing Law and Order The Lesson from the Global Competitiveness Index and the Growth Competitiveness Index

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Assessing Law and Order The Lesson from the Global Competitiveness Index and the Growth Competitiveness Index Irene Mia Senior Economist Global Competitiveness Network – PowerPoint PPT presentation

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Title: Assessing Law and Order The Lesson from the Global Competitiveness Index and the Growth Competitiveness Index


1
Assessing Law and Order The Lesson from the
Global Competitiveness Index and the Growth
Competitiveness Index
  • Irene Mia
  • Senior Economist
  • Global Competitiveness Network
  • Measuring Law- Workshop
  • Paris, December 15th- 16th, 2006

2
Outline
  • Presentation of the Global Competitiveness
    Network.
  • The Global Competitiveness Report and our data
    sources.
  • The Global Competitiveness Index (GCI).
  • The Institution pillar of the GCI and analysis.
  • A brief analysis of the Growth Competitiveness
    Index (Growth CI), and its Public Institution
    Index.

3
Global Competitiveness Network
  • Flagship product Global Competitiveness Report
  • Launched in 1979 covering 16 countries
  • The Report has since expanded its coverage to 125
    countries.
  • 2006 marks our 27th anniversary of measuring
    competitiveness

4
Global Competitiveness Network
  • Regional and special topic reports in the coming
    months
  • Gender Gap Study 2006
  • Lisbon Review 2006
  • Travel and Tourism Competitiveness Report 2007
  • Global Information Technology Report 2007
  • Arab World Competitiveness Report 2007

5
Global Competitiveness Network Geographical
coverage
6
Global Competitiveness Report
  • The most comprehensive data set on
    competitiveness
  • Assesses the comparative strengths and weakness
    of a large number of economies
  • Produced in collaboration with leading academics
    worldwide and a global network of partner
    (research) institutes

7
Global Competitiveness Report Which data do we
use?
  • Executive Opinion Survey
  • It records the perspectives of business leaders
    around the world Survey data is indispensable,
    particularly for variables where no reliable hard
    data sources exist
  • Respondents compare their own operating
    environments with global standards on a wide
    range of dimensions
  • B) Hard data generally available from
    international sources

8
Global Competitiveness Report The Executive
Opinion Survey
  • The sample of respondents is carefully selected
    in each country by the Partner Institute to
    reflect the structure of a countrys business
    environment.
  • It is structured around eleven major issue
    areas, each of significant relevance to the
    current state of an economys business
    environment, the Survey asks participants to
    respond to a total of 150 questions based on
    their own experiences of operating a business in
    the country in which they are based
  • The Survey is translated into over 20 languages.
  • The Survey is also available online.
  • Record response rate this year of over 11,000
    responses.

9
Global Competitiveness Report What are we trying
to achieve?

10
Global Competitiveness Report 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
  • Because productivity is the main driver of
    investment in an economy and investment, in turn,
    unambiguously determines the rate of growth of
    the economy, we say that
  • 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

11
Global Competitiveness Index
  • Three stages of development The process of
    economic development evolves in three stages
    captured by the model
  • Factor-driven stage Firms compete in prices,
    taking advantage of cheap factors
  • Efficiency-driven stage Efficient production
    practices to increase productivity
  • Innovation-driven stage Economies need to
    produce innovative products using sophisticated
    production methods

12
Global Competitiveness Index
  • 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

Key for efficiency-driven economies
EFFICIENCY ENHANCERS
  • Business Sophistication
  • Innovation

Key for innovation-driven economies
INNOVATION SOPHISTICATIONS FACTORS
13
Global Competitiveness Index
  • All pillars matter to a certain extent for all
    countries
  • However, the importance of each pillar depends on
    a countrys particular stage of development
  • The pillars are organized into 3 subindexes, each
    critical to one particular stage
  • Basic requirements ? factor-driven stage
  • Efficiency enhancers ? efficiency-driven stage
  • Innovation and sophistication factors ?
    innovation-driven stage

14
Global Competitiveness Index
  • Weights of the three main groups of pillars at
    each stage of development

15
Global Competitiveness Index
  • Allocation of countries into stages
  • Factor-driven stage GDP per capita below 2,000
  • Efficiency-driven stage GDP per capita between
    3,000 and 9,000
  • Innovation-driven stage GDP per capita above
    17,000
  • Transition from factor? efficiency GDP per
    capita between 2,000 and 3,000
  • Transition from efficiency? innovation GDP per
    capita between 9,000 and 17,000

16
Global Competitiveness Index Countries by stage
of development
17
Global Competitiveness Rankings 2006-2007 Top 20
and selected economies
18
Global Competitiveness Index 2006-2007 Top
performers in the nine pillars
19
Global Competitiveness Index 2006-2007 Focus on
the Institution pillar
  • Transparent and well-functioning institutions are
    one of the basic requirements for
    competitiveness, together with well-developed and
    efficient infrastructure, a sound macroeconomic
    environment and good levels of health and primary
    education.
  • Basic requirements are key for countries placed
    in stage 1, competing on cheap factors.
  • Although France has progressed already to a
    higher stage of development, institutions remain
    very important for the countrys overall
    sustained competitiveness.

20
Global Competitiveness Index 2006-2007 Institution
pillar Composition
Both the Public Institution and Private
Institution sub-indexes are composed only by
Survey data.
21
Global Competitiveness Index 2006-2007 Public
Institution component Composition
  • Government inefficiencies
  • Property rights

Public Institutions
  • Ethics and corruption
  • Security
  • Undue Influence

All sub-components are given the same weight in
the components computation
22
Global Competitiveness Index 2006-2007 Private
Institution component Composition
Private Institutions
  • Corporate Ethics
  • Accountability

Both sub-components are given the same weight in
the components computation
23
Institution Pillar Rankings 2006-2007 Top 20 and
selected economies
24
Global Competitiveness Index 2006-2007 Institution
pillar Variables used rankings
25
Global Competitiveness Index Institutions
pillar International comparisons
26
The Global Competitiveness Index Competitivenes
s is associated to better governance
Sources GCR 2005-2006, Kaufmann et al., 2005
27
The Growth Competitiveness Index
Growth Competitiveness Index
28
The Growth Competitiveness Index Composition
Core Innovators
Growth Competitiveness Index
29
The Growth Competitiveness Index Composition
Non-Core Innovators
Growth Competitiveness Index
30
The Growth Competitiveness Index The Public
Institution index Composition
31
The Growth Competitiveness Index The Public
Institution index Variables used
Both the Public Institution and Private
Institution sub-indexes are composed only by
Survey data.
Corruption Sub-Index
Contracts and Law Sub-Index
32
France The most problematic factor for doing
business
Source EOS 2006. The question asked to the firm
was Select among the above 14 constraints the
five most problematic factors for doing business
in your country.
33
  • THANK YOU FOR YOUR ATTENTION
  • Visit our website http//www.weforum.org
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