Update May 29, 2019: With another “competitiveness index” being released this week to identify which countries most slavishly implement neoliberalism, Crikey has your back with a full guide to the ultra-competitive world of world competitiveness indices.
Back in the 1970s, Klaus Schwab, the German-born economist who started the “World Economic Forum” (originally called the “European Management Forum”) in Switzerland, had a brilliant idea: use the views of business executives as a supposedly infallible guide to the performance of economies. Thus was born the “World Competitiveness Index”, whereby a handful of business executives in each country are quizzed for their views on government spending, industrial relations laws and regulation.
The Index, and the hushed reverence with which it is treated in most media outlets around the world, was crucial to elevating the World Economic Forum and its annual meeting in Switzerland to the status of one of the key gathering of policymakers, corporate heavyweights and celebrities. This week, Our Cate, Elton John, Bollywood legend Shah Rukh Khan and Will.I.Am have all graced the WEF gathering.
The WEF index combines statistics across 12 “pillars of competitiveness” and a survey of business executives. The sample size on average is around 100 executives per country over 120 countries. Strangely, despite “female participation in the labour force” being one of its statistical indicators, the WEF gives no demographic breakdown of what it terms its “Executive Opinion Survey”, presumably for fear it would be shown to be massively skewed toward middle-aged men. For that matter, there are only five women on the 23-member WEF board of trustees.
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Media around the world treat the WCI seriously, but we’ve been pointing out the absurdity of surveying CEOs about economies for years — as well as the WEF’s fondness for the oil theocracies of the Middle East. One of the problems is that business executives are notoriously fickle and prone to changing their views depending on whether a government they like is in power or not, which had led in the past to howling inconsistencies. And the WEF’s enthusiasm for industrial relations deregulation means that it champions countries that use actual slavery in their workforces.
But the idea for an index was so clever, it inspired imitators across the world. The first WEF imitator, IMD World Competitiveness Centre — also based in Switzerland — was established in 1989. They’re a business school flogging workshops to executives, but every year they produces a World Competitiveness Yearbook. It, too, has an “Executive Opinion Survey”, but not quite as big as the WEF one — it’s around 6200 responses across 63 countries. And clearly they’ve used different execs for their survey. Like WEF’s report, in which Switzerland always comes first, the Swiss score highly for IMD, but in the last couple of yearbooks they have been edged out by Hong Kong — which, peculiarly, only managed a lousy ninth in the WEF index. And IMD only gave the Germans 13th spot compared to fifth in the WEF effort. Likewise, the Irish are ranked by WEF below Australia at 23rd but IMD gives them sixth. And China knocks off the Brits to steal 18th spot for IMD while WEF has the Chinese at a distant 28th; the tax dodgers of Luxembourg are eighth for IMD but a lousy 20th for WEF.
In 2007, the Welsh got in on the competitiveness action, when Cardiff’s Centre for International Competitiveness was established. They took a different angle — why not assess regions instead of countries? However, a quick glance through the index makes you wonder whether the Welsh have quite got their methodology right. Silicon Valley is understandably the most competitive region in the world. But that’s followed by, erm, Brussels, then Tokyo, then the Washington/Maryland/Virginia region. Norway gets seventh spot — apparently “Norway” is a region. And which part of Australia gets represented in the top 20? Well, it’s our very own Cool Capital, Canberra, which comes in behind San Francisco but beats out Paris. Hong Kong, strangely, doesn’t get a mention.
Another variant is the manufacturing competitiveness index, proudly brought to you by consultant Deloittes. Sadly, this just looks like a list of the world’s largest economies — the Americans and the Chinese battling it out at the top, then the Germans and the Japanese, the South Koreans, the Brits. That’s based on — you guessed it — an executive survey as well, but it seems like the survey was done during happy hour in an airport executive lounge: they nominated “talent” and “cost” and “productivity” as the big drivers of competitiveness — certainly a real insight there.
The Boao Forum of Asia has yet another approach — its Asian Competitiveness Annual Report focuses on competitiveness in the Asia-Pacific — although the latest we can find is from 2015. The Singaporeans got bragging rights back then, holding out Hong Kong (making the Welsh omission all the weirder). Australia came in fifth, beating the Kiwis — who usually beat us half a dozen or more places in the bigger indices. And Boao are far less enamoured of the Gulf State theocracies, placing them well below Australia — the WEF ranks the fundamentalist sheikhdoms much higher than Australia in areas like “independent judiciary” etc. Confusingly, the Japanese are below Australia for Boao, as they are for IMD, despite being in the top ten in the world for WEF.
But wait, there’s more: there’s the Lee Kuan Yew School of Public Policy Asian Competitiveness Institute. Sadly, there doesn’t appear to be an index yet from the ACI, just a lot of reports. What we do know about the ACI, though, is that “ACI has been rated as one of the “Best University Affiliated Think Tanks” in the recently released 2015 Global Go-To Think Tank Index Report”, ranking 13th out of 90 think tanks. We think ACI will climb even higher on that index once it starts producing its own competitiveness index, which we will proudly add to our competitiveness index index.
Like this index? Why not submit it for consideration in the annual competitiveness index index index, Asia-Pacific region?