The Global Competitiveness Report 2013-2014
When it comes to complex, dynamic systems there are certain criteria which determine a system's success.
What 'success' means depends on its nature, its internal operations, its interaction with the wider environment, and the specific challenges it faces, which in themselves are a function of what it does and what outside factors are able to exert an influence and to what degree. A fishpond deals with different issues compared to a forest, although there are no clear demarcation lines.
Human activity systems are similar as far as that overarching framework is concerned. "The 10 axioms of Life" and "The 10 axioms of Society" list the principle criteria.
The World Economic Forum has just released its Global Competitiveness Report 2013-2014, and what it says about a nation's competitiveness is especially pertinent to complex, dynamic systems (148 economies were surveyed).
One of the major functional components in such systems is the feedback loop, connecting both internal and external functional states with each other. This leads to a high degree of interdependence among the subsystems, so much so that each part should never be considered in isolation.
Here are six quotes from the Report that underline the significance of the phenomenon:
"Particularly important will be the ability of economies to create new value-added products, processes, and business models through innovation. Going forward, this means that the traditional distinction between countries being "developed" or "developing" will become less relevant and we will instead differentiate among countries based on whether they are "innovation rich" or "innovation poor." It is therefore vital that leaders from business, government, and civil society work collaboratively to create enabling environments to foster innovation and, in particular, to create appropriate educational systems." (p. xiii)
"This year's Report features a record number of 148 economies, and thus continues to be the most comprehensive assessment of its kind. It contains a detailed profile for each of the economies included in the study, as well as an extensive section of data tables with global rankings covering over 100 indicators." (p. xiii)
"THE 12 PILLARS OF COMPETITIVENESS - We define competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country. The level of productivity, in turn, sets the level of prosperity that can be reached by an economy. The productivity level also determines the rates of return obtained by investments in an economy, which in turn are the fundamental drivers of its growth rates. In other words, a more competitive economy is one that is likely to grow faster over time." (p. 4)
"Although we report the results of the 12 pillars of competitiveness separately, it is important to keep in mind that they are not independent: they tend to reinforce each other, and a weakness in one area often has a negative impact in others. For example, a strong innovation capacity (pillar 12) will be very difficult to achieve without a healthy, well-educated and trained workforce (pillars 4 and 5) that is adept at absorbing new technologies (pillar 9), and without sufficient financing (pillar 8) for R&D or an efficient goods market that makes it possible to take new innovations to market (pillar 6)." (p. 9)
"While all of the pillars described above will matter to a certain extent for all economies, it is clear that they will affect them in different ways: the best way for Cambodia to improve its competitiveness is not the same as the best way for France to do so." (p. 9)
"The relationship between demography and environmental/social sustainability is extremely intricate. Rapidly growing
populations might be a source of environmental stress, leading to greenhouse gas emissions, high rates of soil erosion, and the extinction of species. If
rapid population growth is not accompanied by environmental management, it can give rise to tensions between groups for the control of scarce resources and
can therefore be a source of further social instability, creating a vicious circle."
(p. 60)
As can be seen, the authors emphasise the phenomenon's importance on several occasions and provide a set of tables featuring the ranking of countries in terms of the criteria used. A complex series of calculations is employed to correlate the results for the tables, one of the reasons being the respective position of countries along their evolutionary timelines.
The following diagram from the Report illustrates the main categories identified as being crucial to the overall competitiveness ranking (the "twelve pillars"):
The "twelve pillars" making up the competitiveness index.
The first five places went to Switzerland, Singapore, Finland, Germany, and the United States, with Chad coming last. Australia is in 21st position.
Since many factors contribute to the final result there are 118 tables, ranking the 148 countries in terms of these particular factors. Below are excerpts from each, showing which came first, then Australia, and the last. Please refer to the Report's table headers for the precise meaning of the criteria.
Criterion
|
Best Country
|
Australia's Rank
|
Worst Country
|
Page Reference
|
Gross domestic product
|
United States
|
12
|
The Gambia
|
404
|
Population
|
China
|
46
|
Seychelles
|
405
|
GDP per capita
|
Luxembourg
|
5
|
Malawi
|
406
|
GDP as a share of world GDP
|
United States
|
18
|
Puerto Rico
|
407
|
Property rights
|
Finland
|
30
|
Venezuela
|
410
|
Intellectual property protection
|
Finland
|
21
|
Venezuela
|
411
|
Diversion of public funds
|
New Zealand
|
21
|
Venezuela
|
412
|
Public trust in politicians
|
Singapore
|
36
|
Lebanon
|
413
|
Irregular payments and bribes
|
New Zealand
|
20
|
Chad
|
414
|
Judicial independence
|
New Zealand
|
16
|
Venezuela
|
415
|
Favouritism in decisions of government officials
|
Singapore
|
27
|
Venezuela
|
416
|
Wastefulness of government spending
|
Qatar
|
56
|
Venezuela
|
417
|
Burden of government regulation
|
Singapore
|
128
|
Venezuela
|
418
|
Efficiency of legal framework in settling disputes
|
Singapore
|
30
|
Venezuela
|
419
|
Efficiency of legal framework in challenging regulations
|
Finland
|
30
|
Venezuela
|
420
|
Transparency of government policymaking
|
Singapore
|
51
|
Haiti
|
421
|
Business costs of terrorism
|
Slovenia
|
46
|
Egypt
|
422
|
Business costs of crime and violence
|
Qatar
|
37
|
Honduras
|
423
|
Organised crime
|
United Arab Emirates
|
27
|
Guatemala
|
424
|
Reliability of police services
|
Finland
|
16
|
Venezuela
|
425
|
Ethical behaviour of firms
|
New Zealand
|
19
|
Mauritania
|
426
|
Strength of auditing and reporting standards
|
South Africa
|
14
|
Myanmar
|
427
|
Efficacy of corporate boards
|
South Africa
|
7
|
Angola
|
428
|
Protection of minority shareholders' interests
|
South Africa
|
24
|
Chad
|
429
|
Strength of investor protection
|
New Zealand
|
57
|
Lao PDR
|
430
|
Quality of overall infrastructure
|
Switzerland
|
34
|
Angola
|
432
|
Quality of roads
|
United Arab Emirates
|
40
|
Moldova
|
433
|
Quality of railroad infrastructure
|
Japan
|
33
|
Nepal
|
434
|
Quality of port infrastructure
|
Netherlands
|
42
|
Kyrgyz Republic
|
435
|
Quality of air transport infrastructure
|
Singapore
|
30
|
Bosnia and Herzegovina
|
436
|
Available airline seat kilometers
|
United States
|
6
|
Lesotho
|
437
|
Quality of electricity supply
|
Hong Kong SAR
|
29
|
Lebanon
|
438
|
Mobile telephone subscriptions
|
Hong Kong SAR
|
82
|
Myanmar
|
439
|
Fixed telephone lines
|
Taiwan
|
16
|
Liberia
|
440
|
Government budget balance
|
Timor-Leste
|
75
|
Venezuela
|
442
|
Gross national savings
|
Timor-Leste
|
45
|
Guinea
|
443
|
Inflation
|
Ukraine
|
1
|
Iran
|
444
|
Government debt
|
Libya
|
34
|
Japan
|
445
|
Country credit rating
|
Norway
|
10
|
Zimbabwe
|
446
|
Business impact of malaria
|
Argentina
|
n/a
|
Angola
|
448
|
Malaria incidence
|
Turkey
|
n/a
|
Guinea
|
449
|
Business impact of tuberculosis
|
Norway
|
24
|
Swaziland
|
450
|
Tuberculosis incidence
|
Luxembourg
|
16
|
Swaziland
|
451
|
Business impact of HIV/AIDS
|
Bosnia and Herzegovina
|
33
|
Swaziland
|
452
|
HIV prevalence
|
Albania
|
45
|
Swaziland
|
453
|
Infant mortality
|
Hong Kong SAR
|
26
|
Sierra Leone
|
454
|
Life expectancy
|
Hong Kong SAR
|
9
|
Sierra Leone
|
455
|
Quality of primary education
|
Finland
|
22
|
Egypt
|
456
|
Primary education enrollment rate
|
Singapore
|
44
|
Liberia
|
457
|
Secondary education enrolment rate
|
Australia
|
1
|
Burkina Faso
|
460
|
Tertiary education enrollment rate
|
Republic of Korea
|
11
|
Malawi
|
461
|
Quality of the educational system
|
Switzerland
|
23
|
Libya
|
462
|
Quality of math and science education
|
Singapore
|
37
|
South Africa
|
463
|
Quality of management schools
|
Switzerland
|
29
|
Angola
|
464
|
Internet access in schools
|
Iceland
|
17
|
Chad
|
465
|
Local availability of specialised research and training services
|
Switzerland
|
23
|
Libya
|
466
|
Extent of staff training
|
Switzerland
|
30
|
Mauritania
|
467
|
Intensity of local competition
|
Japan
|
13
|
Angola
|
470
|
Extent of market dominance
|
Switzerland
|
36
|
Angola
|
471
|
Effectiveness of anti-monopoly policy
|
Finland
|
33
|
Angola
|
472
|
Effect of taxation on incentives to invest
|
Bahrain
|
80
|
Chad
|
473
|
Total tax rate
|
FYR Macedonia
|
109
|
Gambia
|
474
|
Number of procedures required to start a business
|
Canada
|
3
|
Venezuela
|
475
|
Time required to start a business
|
New Zealand
|
2
|
Suriname
|
476
|
Agricultural policy costs
|
New Zealand
|
20
|
Venezuela
|
477
|
Prevalence of trade barriers
|
Hong Kong SAR
|
25
|
Argentina
|
478
|
Trade tariffs
|
Hong Kong SAR
|
53
|
Iran
|
479
|
Prevalence of foreign ownership
|
Luxembourg
|
8
|
Iran
|
480
|
Business impact of rules on foreign direct investment (FDI)
|
Ireland
|
41
|
Venezuela
|
481
|
Burden of customs procedures
|
Singapore
|
16
|
Venezuela
|
482
|
Imports as a percentage of GDP
|
Hong Kong SAR
|
140
|
Brazil
|
483
|
Degree of customer orientation
|
Japan
|
36
|
Angola
|
484
|
Buyer sophistication
|
Japan
|
40
|
Guinea
|
485
|
Cooperation in labour-employer relations
|
Switzerland
|
103
|
South Africa
|
488
|
Flexibility of wage determination
|
Uganda
|
135
|
Uruguay
|
489
|
Hiring and firing practices
|
Hong Kong SAR
|
137
|
Venezuela
|
490
|
Redundancy costs
|
Denmark
|
49
|
Zimbabwe
|
491
|
Effect of taxation on incentives to work
|
Qatar
|
59
|
Italy
|
492
|
Pay and productivity
|
Hong Kong SAR
|
113
|
Uruguay
|
493
|
Reliance on professional management
|
New Zealand
|
11
|
Chad
|
494
|
Country capacity to retain talent
|
Qatar
|
37
|
Myanmar
|
495
|
Country capacity to attract talent
|
Switzerland
|
17
|
Venezuela
|
496
|
Female participation in labor force
|
Malawi
|
60
|
Algeria
|
497
|
Availability of financial services
|
Switzerland
|
21
|
Angola
|
500
|
Affordability of financial services
|
Hong Kong SAR
|
36
|
Libya
|
501
|
Financing through local equity market
|
Hong Kong SAR
|
8
|
Angola
|
502
|
Ease of access to loans
|
Qatar
|
28
|
Iran
|
503
|
Venture capital availability
|
Hong Kong SAR
|
19
|
Myanmar
|
504
|
Soundness of banks
|
Canada
|
9
|
Greece
|
505
|
Regulation of securities exchanges
|
South Africa
|
11
|
Angola
|
506
|
Legal rights index
|
Australia
|
1
|
Venezuela
|
507
|
Availability of latest technologies
|
Finland
|
23
|
Myanmar
|
510
|
Firm-level technology absorption
|
Sweden
|
14
|
Myanmar
|
511
|
FDI and technology transfer
|
Ireland
|
17
|
Libya
|
512
|
Internet users
|
Iceland
|
18
|
Timor-Leste
|
513
|
Fixed broadband Internet subscriptions
|
Switzerland
|
23
|
Sierra Leone
|
514
|
Internet bandwidth
|
Luxembourg
|
34
|
Haiti
|
515
|
Mobile broadband subscriptions
|
Singapore
|
6
|
Suriname
|
516
|
Domestic market size index
|
United States
|
17
|
Seychelles
|
518
|
Foreign market size index
|
China
|
32
|
Timor-Leste
|
519
|
GDP (PPP)
|
United States
|
18
|
Cape Verde
|
520
|
Exports as a percentage of GDP
|
Hong Kong SAR
|
133
|
Timor-Leste
|
521
|
Local supplier quantity
|
Japan
|
72
|
Venezuela
|
524
|
Local supplier quality
|
Switzerland
|
22
|
Angola
|
525
|
State of cluster development
|
Taiwan
|
37
|
Bosnia and Herzegovina
|
526
|
Nature of competitive advantage
|
Switzerland
|
34
|
Myanmar
|
527
|
Value chain breadth
|
Germany
|
105
|
Gabon
|
528
|
Control of international distribution
|
Qatar
|
55
|
Gabon
|
529
|
Production process sophistication
|
Japan
|
24
|
Burundi
|
530
|
Extent of marketing
|
United Kingdom
|
14
|
Burundi
|
531
|
Willingness to delegate authority
|
Denmark
|
15
|
Burkina Faso
|
532
|
Capacity for innovation
|
Switzerland
|
23
|
Burundi
|
534
|
Quality of scientific research institutions
|
Israel
|
8
|
Yemen
|
535
|
Company spending on R&D
|
Switzerland
|
30
|
Yemen
|
536
|
University-industry collaboration in R&D
|
Switzerland
|
15
|
Libya
|
537
|
Government procurement of advanced technology products
|
Qatar
|
57
|
Venezuela
|
538
|
Availability of scientists and engineers
|
Finland
|
34
|
Angola
|
539
|
PCT patent applications
|
Sweden
|
19
|
Zambia
|
540
|
It is to the credit of the Report's authors that factors were tested which enable the analyst to meaningfully compare and delineate from one type to another. For example, consider the entry "Hiring and firing practices" in the table above. Hong Kong received the highest score, Venezuela came last, and Australia's ranking is 137. A score of '7' stands for "extremely flexible" and '1' for "heavily impeded by regulations" (p. 490). In other words, high marks can be interpreted as low job security, and being at the bottom of the list means it is very hard for an employer to fire staff. Since Australia ranks 137th out of 148 and Venezuela came last, with the latter coming last in so many other areas as well (it has an overall ranking of 134 (p. 15)) the inference could be drawn that Australia's competitiveness is comparable to that of Venezuela's. Yet its 21st rank tells us this clearly not so.
Indicators referring to such factors as GDP per capita (Australia: 5), judicial independence (16), efficacy of corporate boards (7), inflation (1), secondary education enrolment rate (1), number of procedures required to start a business (3), soundness of banks (9), etc, speak of a relatively sound general infrastructure. That is to say, if an employer has difficulty dismissing someone, the chances are the employee might be given the chance to up skill. For that to happen the labour force needs to have the necessary potential which in the wider sense relies on educational standards and more personal options coming from a safer environment through greater stability. Since more training makes for a better work force still, the overall standard is raised: competitiveness improves.
On the other hand, a low-skilled work force will continue to be employed, the business suffers in a rigid environment and the options for improvement are stymied: competitiveness suffers.
Such feedback loops are a hallmark of complex, dynamic systems. Their subsystems are intricately linked so that a change in one is capable of affecting its functional neighbours, that is other modules which have a functional relationship with each other.
For that reason a tendency by some politicians to superficially modify a single circumstance - usually accompanied by spending considerable sums of tax payers' money - without considering its wider interdependency and possibly addressing some other instead - in the end far more effective one - leads not only to wastage but can make matters worse.
Most material on this website deals with the more fundamental, and hence general, aspects in the context of interacting functionalities which in their aggregate form determine the ultimate validity of their host system.
This Report represents the equivalent in the context of economic human activity systems and how they can be analysed according to their respective situatedness under the auspices of competitiveness.
On the global scale of humanity this is a most important characteristic defining us all. As such it points to the world of the future.
Reference:
P. Annoni, B. Bilbao-Osorio, J. Blanke, C. Browne, E. Campanella, R. Crotti, L. Dijkstra, M. Drzeniek Hanouz, T. Geiger, T. Gutknecht, C. Ko, X. Sala-i-Martín, C. Serin, The Global Competitiveness Report 2013-2014, World Economic Forum, Cologny/Geneva, 2013, accessed on internet 5 Sep 13.
6 Sep 2013
© Martin Wurzinger - see Terms of Use