States all over the world are trying to get recognition not only of their people, but also to seize the first lines of different ratings. Each country tries to be the best in one thing or all at once. The Powers are recognized as the most cultured, most democratic, economically developed, peaceful or powerful. Everywhere the state will not succeed. Nevertheless, there are also such powers that are fighting for supremacy in everything.
Of the variety of honorary awards, you can choose the first place in another rating, which depends on the global competitiveness index. We will talk more about this later.
The economy is not easy
Most countries of the world have their strategic goals. But there are those that any power is trying to fulfill. Important for the state is to ensure economic growth. This also includes the struggle for the welfare of every citizen.
Such a strategy implies not only the government’s efforts to improve the standard of living, but also defines additional requirements for managing social and economic development. Some states have chosen the path through innovative technologies. As experience in international relations has shown, it is precisely thanks to this strategy that the countries of the “economic miracle” were able to improve their financial growth. It turns out that the global competitiveness index is affected by the stimulation of innovation.
But such an economic model is not subject to all states. There are also those who still cannot establish an effective innovation development strategy. These include not only the Russian Federation, but also the rest of the CIS countries.
Need to do something
Entrepreneurship is a driving force in the development of competitiveness. Of course, along with it there are many factors, however, it is thanks to entrepreneurship that it is possible to influence innovative technologies. In turn, this type of activity is subject to many indicators that reflect the country's economic policy and the position of state institutions.
Who is in charge?
In 1971, the World Economic Forum (WEF) was established. This organization is known for annually gathering heads of state in Davos. In addition to the leaders, business leaders, famous economists and journalists come here. For 45 years, the forum has been discussing issues related not only to the economy, but also to other acute global problems: environmental protection and healthcare.
It is worth noting that this is a Swiss organization, the founder of which was Professor Klaus Schwab. At the moment, he is also the permanent leader. There is also a permanent executive body - the Board of Directors. WEF has about 1000 companies and organizations all over the world.
The World Economic Forum is not just for discussion. Another of his tasks remains the study of the spheres of politics and economics. In 1979, an annual report on global competition was introduced. He evaluated more than a hundred countries around the world according to two criteria: potential growth index and competitiveness.
Expert analytical study
To build states in the rating, a global study was needed aimed at analyzing economic processes. Thus, scientists were able to derive the global competitiveness index of the World Economic Forum.
Previously, this non-governmental organization issued only reports. But since 2004, it has directly created a rating of states, which was based on the index. This indicator assesses the country's ability to ensure a high level of well-being of citizens. Also taken into account the effectiveness of the use of internal resources, support for living standards, labor productivity and quality of services.
WEF Tasks
Before calculating the global competitiveness index, specialists should analyze publicly available statistical information and the results of a global survey of heads of companies.
According to the organization’s definition, national competitiveness is the ability of a state and its institutions to influence the stable growth of the economy. Researchers have found a connection between the level of competitiveness and the welfare of citizens. The higher the first indicator, the more positive the second.
Index target
The idea of the forum is that the state needs to use the results of the study. This assessment allows us to understand that the country should strive to eliminate difficulties on the way to improving economic development and competitiveness. The index is a tool in studying problem sectors of economic policy and developing a strategy to improve the political model.
Influence
WEF representatives argue that in order to determine competitiveness, attention must be paid to numerous and diverse factors. Obviously, the impact on the economy can be negative for a number of reasons: this includes the unfit regulation of the country's budget and high inflation rates.
In turn, there are those factors that positively affect the economy: ensuring the protection of intellectual property rights, a progressive judiciary, and well-balanced political decisions.
Not only institutional factors can affect the financial system. There is also training and retraining of working personnel, the possibility of round-the-clock education and technological development. All factors can affect one or another economic system in different ways.
Constituent elements
It is known that in the analysis, the WEF global competitiveness index is combined with the business competitiveness index. The decisive word is still behind the first indicator. By the way, this index was created by the scientist Xavier Sala-i-Martin, who teaches at Columbia University. It was he who developed this estimate for the World Economic Community.
So, to determine the score, you need to refer to 113 variables. Some of these factors are formed thanks to global surveys; some are composed of statistical data and research results. All 113 variables are divided into 12 categories. They were selected through empirical and theoretical research.
But it is worth noting that none of these variables will be able to independently assess the competitiveness of the state. In addition, all factors are interconnected. Productivity of the market for goods and services depends on the qualifications and professionalism of the workforce.
To control macroeconomic constancy, it is necessary to effectively manage the country's budget, stop corruption and ensure transparency of the economic system. Entrepreneurs can organize new technologies only if their profits exceed investment costs.
Thus, it is clear that the global competitiveness index of a country is led by those countries that can pursue a comprehensive policy, looking at a number of factors and the relationship between them.
What is the difference?
WEF researchers primarily take into account the economic progress of a particular power. At the same time, they trace its development at different stages. The interpretation of each variable for the state is related to its initial circumstances or to structural and organizational parameters. These data allow us to position the power among others through the prism of development.
Scientists work daily on a calculation methodology so that the global competitiveness index remains an objective and adequate mechanism for controlling the level of the economy with constant changes in the global environment.
Methodology
So, as mentioned earlier, the study analyzes 113 indicators. They are combined in 12 categories. Only 34 variables are calculated from publicly available statistics. This includes external debt, budget deficits, living standards and other indicators. The rest of the factors relate to the global survey, which includes the opinion of more than 14 thousand company executives.
According to this principle, states are distributed according to the stages of economic development. In this case, only GDP per capita is taken into account. Although there are exceptions, for example, for Russia in this case, the second criterion is applied - the degree of dependence of the country's development on the main factors. Such a privilege is applicable when the state is dependent on mineral resources.
Stages
As mentioned earlier, first you need to determine the stage of development of the state. There are 5 of them: 37 economies of countries are related to factor development. These include most African states, as well as India, the Kyrgyz Republic, Vietnam, etc.
The second group is a transitional stage from factor development to effective. There are 16 states in this category: Azerbaijan, Iran, Moldova, Mongolia, etc. The third group includes the second stage of development - effective. There are 30 economies: Ukraine, China, Serbia, South Africa, Bulgaria, Armenia, etc.
The fourth group is also considered a transitional stage, but already from effective to innovative. There are 24 economies in this category: Russia, Brazil, Kazakhstan, Turkey, Uruguay, Poland, UAE, etc. The last group is the third stage of development. 37 countries belong to the innovation economy: most of them are European, also the USA, Australia with New Zealand, South Korea, Japan, etc.
2016 study
In 2016, the World Economic Forum has already been held. The study this time covered an analysis of 138 countries. The Global Competitiveness Index 2016-2017 again ranked the state. Now every government has a result that it can rely on.
The leader of this race remains Switzerland. She has been on the first line for eight years in a row. After it, Singapore and the United States still remained. Their global competitiveness index of 2016 is 5.8 and 5.7 units. These countries are leaders in supplying the world with innovative products and services.
Since last year, a dozen leaders have not transformed. After Switzerland, Singapore and the USA, Index 5.6 was received by the Netherlands and Germany, 5.5 - Sweden, Great Britain, Japan and Hong Kong, 5.4 - Finland and Norway.
Loss of position
This year's study showed that there are also negative trends. The 2016 Global Competitiveness Index also depends on the impact of other organizations on states. It's about the EU. The efforts of this institution remain a gap between the European powers. The rating shows that the countries of Northern and Western Europe are leading the economic "hit parade". But the southern part is suffering from financial decline, which affects the performance of the Index. Spain took 32nd place, Italy - 44th, Greece over the past year moved down five positions and takes 86th place.
The Middle East and North Africa continue to descend. Qatar last year ranked 14th, now at 18. Saudi Arabia has also lost four positions and is at 29th place. Again this year, Iraq did not receive the global competitiveness index. This indicates that the situation in the country is very deplorable.
Central and South Africa also grazes the rear. The leaders remain: Mauritius at 45th place, South Africa at 47th and Rwanda at 52th. All other states that are on this territory are far behind. Each of them needs external assistance that would enhance economic development and increase the global competitiveness index.
CIS countries
The Russian Federation, unlike many other powers, managed to rise two steps and took 43rd place. The economy is strange at the moment is in recession, but a positive result was obtained due to the efficiency of the domestic market and the reduction of bureaucratic obstacles. Also, progress has been observed in education. Down the country pulls high inflation, low capital inflows.
Kazakhstan took the 53rd place in the global competitiveness index. Compared to last year, this is a very bad result, since the power has already descended by 11 positions. According to five criteria out of 12, Kazakhstan has improved markedly, the remaining 7, on the contrary, show regression. There are factors that positively influenced the Global Competitiveness Index 2016. Kazakhstan has made progress on innovative technologies, entrepreneurship, secondary and higher education.
Ukraine showed a negative result. She fell from 79th place to 85th. The main problems of the country are political instability, corruption, inflation, state bureaucracy and high taxes.
Azerbaijan improved its last year result by three steps and took 37th place. Now this state is a leader among the CIS countries. Tajikistan showed a positive result, moving from 80th place to 77th. Armenia also improved by three positions and is in 79th place. But Moldova (100) and Kyrgyzstan (111) significantly worsened their testimonies. In the first case, the country went down as many as 16 positions, and in the second - by 9.