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The Global Competitiveness Report 2019

<Previous Next>
  • Read the full report
  • Executive Summary
  • Competitiveness Rankings
  • Chapter One: Global Findings
  • Chapter Two: Regional and Country Analysis
  • Chapter Three: Competitiveness, Equality and Sustainability – The Way Forward
    • In Depth: Sustainability, Growth and Competitiveness—The Way Forward
    • In Depth: Shared Prosperity, Growth and Competitiveness—The Way Forward
  • Economy Profiles
  • Appendix A: The Global Competitiveness Index 4.0 Methodology and Technical Notes
  • Appendix B: The Executive Opinion Survey: The Voice of the Business Community
  • Contributors and Acknowledgements
  • Infographics
  • Blogs and Opinions
  • Press Releases
  • Downloads
Home Previous Next
Home Previous Next
Home Previous Next
  • Report Home
  • Read the full report
  • Executive Summary
  • Competitiveness Rankings
  • Chapter One: Global Findings
  • Chapter Two: Regional and Country Analysis
  • Chapter Three: Competitiveness, Equality and Sustainability – The Way Forward
    • In Depth: Sustainability, Growth and Competitiveness—The Way Forward
    • In Depth: Shared Prosperity, Growth and Competitiveness—The Way Forward
  • Economy Profiles
  • Appendix A: The Global Competitiveness Index 4.0 Methodology and Technical Notes
  • Appendix B: The Executive Opinion Survey: The Voice of the Business Community
  • Contributors and Acknowledgements
  • Infographics
  • Blogs and Opinions
  • Press Releases
  • Downloads

Appendix A: The Global Competitiveness Index 4.0 Methodology and Technical Notes

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This appendix first presents the methodology and detailed structure of the Global Competitiveness Index 4.0 (GCI 4.0) in Section A. Section B lists the minor changes made to the methodology of the Index in 2019. Section C details the methods used to impute missing data points and reports the imputed values by indicator. Section D presents the methodology used to compute progress scores. Finally, Section E provides detailed descriptions and sources for each indicator included in the Index.

A. Computation and Composition of the GCI 4.0

The computation of the GCI 4.0 is based on successive aggregations of scores, from the indicator level (the most disaggregated level) to the overall GCI 4.0 score (the highest level). At every aggregation level, each aggregated measure is computed by taking the average (i.e. arithmetic mean) of the scores of its components, with a few exceptions described in Section D. The overall GCI 4.0 score is the average of the scores of the 12 pillars.

For individual indicators, prior to aggregation, raw values are transformed into a progress score ranging from 0 to 100, with 100 being the ideal state. See Section D for more details.

In the list below, weights are rounded to one decimal place, but full precision is used in the computation. Weight (%) within immediate parent category

Enabling environment

(not used in calculation)1

Pillar 1: Institutions — 8.3%

A. Security — 12.5%

1.01 Organized crime

1.02 Homicide rate

1.03 Terrorism incidence

1.04 Reliability of police services

B. Social capital — 12.5%

1.05 Social capital

C. Checks and balances — 12.5%

1.06 Budget transparency

1.07 Judicial independence

1.08 Efficiency of legal framework in challenging regulations

1.09 Freedom of the press

D. Public-sector performance — 12.5%

1.10 Burden of government regulation

1.11 Efficiency of legal framework in settling disputes

1.12 E-Participation

E. Transparency — 12.5%

1.13 Incidence of corruption

F. Property rights — 12.5%

1.14 Property rights

1.15 Intellectual property protection

1.16 Quality of land administration

G. Corporate governance — 12.5%

1.17 Strength of auditing and accounting standards

1.18 Conflict of interest regulation

1.19 Shareholder governance

H. Future orientation of government — 12.5%

I. Government adaptability — 50%

1.20 Government ensuring policy stability

1.21 Government’s responsiveness to change

1.22 Legal framework’s adaptability to digital business models

1.23 Government long-term vision

II. Commitment to sustainability — 50%

1.24 Energy efficiency regulation

1.25 Renewable energy regulation

1.26 Environment-related treaties in force

Pillar 2: Infrastructure — 8.3%

A. Transport infrastructure2 — 50%

I. Road — 25%

2.01 Road connectivity

2.02 Quality of road infrastructure

II. Railroad 2 — 25%

2.03 Railroad density

2.04 Efficiency of train services

III. Air — 25%

2.05 Airport connectivity

2.06 Efficiency of air transport services

IV. Sea — 25%

2.07 Liner shipping connectivity3

2.08 Efficiency of seaport services

B. Utility infrastructure — 50%

I. Electricity — 50%

2.09 Electricity access

2.10 Electricity supply quality

II. Water — 50%

2.11 Exposure to unsafe drinking water

2.12 Reliability of water supply

Pillar 3: ICT adoption4 — 8.3%

3.01 Mobile-cellular telephone subscriptions

3.02 Mobile-broadband subscriptions

3.03 Fixed-broadband internet subscriptions

3.04 Fibre internet subscriptions

3.05 Internet users

Pillar 4: Macroeconomic stability — 8.3%

4.01 Inflation

4.02 Debt dynamics

Human capital

(not used in calculation)5

Pillar 5: Health — 8.3%

5.01 Healthy life expectancy

Pillar 6: Skills — 8.3%

A. Current workforce — 50%

I. Education of current workforce — 50%

6.01 Mean years of schooling

II. Skills of current workforce — 50%

6.02 Extent of staff training

6.03 Quality of vocational training

6.04 Skillset of graduates

6.05 Digital skills among active population

6.06 Ease of finding skilled employees

B. Future workforce — 50%

I. Education of future workforce — 50%

6.07 School life expectancy

II. Skills of future workforce — 50%

6.08 Critical thinking in teaching

6.09 Pupil-to-teacher ratio in primary education

Markets

(not used in calculation)5

Pillar 7: Product market — 8.3%

A. Domestic market competition — 50%

7.01 Distortive effect of taxes and subsidies on competition

7.02 Extent of market dominance

7.03 Competition in services

B. Trade openness — 50%

7.04 Prevalence of non-tariff barriers

7.05 Trade tariffs

7.06 Complexity of tariffs

7.07 Border clearance efficiency

Pillar 8: Labour market — 8.3%

A. Flexibility — 50%

8.01 Redundancy costs

8.02 Hiring and firing practices

8.03 Cooperation in labour-employer relations

8.04 Flexibility of wage determination

8.05 Active labour market policies

8.06 Workers’ rights

8.07 Ease of hiring foreign labour

8.08 Internal labour mobility

B. Meritocracy and incentivization — 50%

8.09 Reliance on professional management

8.10 Pay and productivity

8.11 Ratio of wage and salaried female workers
to male workers

8.12 Labour tax rate

Pillar 9: Financial system6 — 8.3%

A. Depth

9.01 Domestic credit to private sector

9.02 Financing of SMEs

9.03 Venture capital availability

9.04 Market capitalization

9.05 Insurance premium

B. Stability

9.06 Soundness of banks

9.07 Non-performing loans

9.08 Credit gap

9.09 Banks’ regulatory capital ratio

Pillar 10: Market size7 — 8.3%

10.01 Gross domestic product

10.02 Imports of goods and services

Innovation ecosystem

(not used in calculation)8

Pillar 11: Business dynamism — 8.3%

A. Administrative requirements — 50%

11.01 Cost of starting a business

11.02 Time to start a business

11.03 Insolvency recovery rate

11.04 Insolvency regulatory framework

B. Entrepreneurial culture — 50%

11.05 Attitudes towards entrepreneurial risk

11.06 Willingness to delegate authority

11.07 Growth of innovative companies

11.08 Companies embracing disruptive ideas

Pillar 12: Innovation capability9 — 8.3%

A. Diversity and collaboration

12.01 Diversity of workforce

12.02 State of cluster development

12.03 International co-inventions

12.04 Multistakeholder collaboration

B. Research and development

12.05 Scientific publications

12.06 Patent applications

12.07 R&D expenditures

12.08 Research institutions prominence index

C. Commercialization

12.09 Buyer sophistication

12.10 Trademark applications

B. Changes to the Methodology

Following the introduction of the GCI 4.0 methodology in the 2018 edition, minor changes have been made to the methodology this year. These changes are based on additional feedback received in the past year or made necessary as a result of data that is no longer being collected. They do not affect in any major way the comparability of results across the two editions.

Pillar 1: Institutions

  • Budget transparency (indicator 1.06) is now assessed using the Open Budget Index, sourced from the International Budget Project. This indicator replaces the Open Budget Data score, which has been discontinued.
  • Former indicator 1.13, Future orientation of government, which is comprised of four indicators derived from the Executive Opinion Survey, is now sub-pillar H of Pillar 1 (see Section A). The four indicators remain and are complemented by three new indicators: Energy efficiency regulation (indicator 1.24), Renewable energy regulation (1.25) and Environment-related treaties in force (1.26), which collectively measure a government’s commitment to sustainability, an indication of its future orientation. As a result of these changes, the numbering of indicators in Pillar 1 was modified according to the new order.

Pillar 7: Product market

The Service Trade Restrictiveness Index has been dropped owing both to the absence of updates to that index and to the fact that different methodologies are used to assess countries. These changes make any cross-country and time comparison impossible. By no means should this exclusion been interpreted as implying that services are no longer relevant for competitiveness.

Pillar 8: Labour market

Indicator 8.08, Internal labour mobility, no longer applies to city states, as the concept of internal mobility is of little relevance in such small economies. Bahrain, Brunei Darussalam, Hong Kong SAR, Kuwait, Malta, Qatar and Singapore were identified as city states.

C. Missing Data Imputation

Missing and outdated values (the cut-off year varies by indicator) are imputed for the purpose of the calculation. Table 1 on the following page presents the imputation method and the imputed values by indicator. Note that the Economy Profiles and interactive ranking tables (available online at http://www.weforum.org/gcr) do not report imputed values.

D. Computation of Progress Scores and Frontier Values

To allow the aggregation of indicators of different nature and magnitude, each indicator entering the GCI 4.0 is converted into a unit-less score, called “progress score”, ranging from 0 to 100 using a min-max transformation. Formally, each indicator is re-scaled according to the following formula:

where valuei,c is the “raw” value of country c for indicator i, worst performance (wpi,) is the lowest acceptable value for indicator i and frontieri corresponds to the best possible outcome. Depending on the indicator, the frontier may be a policy target or aspiration, the maximum possible value, or a number derived from statistical analysis of the distribution (e.g. 90th or 95th percentile). If a value is below the worst performance value, its score is 0; if a value is above the frontier value, its score is capped at 100. When a logarithmic transformation is applied on an indicator, the same transformation is applied to the frontier and worst performance values displayed in Table 1.

In the case of indicators derived from the Executive Opinion Survey, frontieri and wpi are always 7 and 1, respectively. These values correspond to the two extreme answers of any questions.

Table 2 on the following page provides the actual floor and frontier values used for the normalization of each individual indicator. In a few cases, reported in the table, a logarithmic transformation is applied to the raw value prior to conversion.

(Appendix A continues on the following page)

1
1 For presentation and analysis purposes, the 12 pillars are also organized into four overarching components—Enabling Environment, Human Capital, Markets, and Innovation Ecosystem—but these components do not enter into the computation of the GCI 4.0.
2
2 For economies where there is no regular train service or where the network covers only a negligible portion of the territory, the Transport infrastructure sub-pillar corresponds to the average score of the Road, Air and Sea components. Assessment of the existence of a network was conducted by the World Economic Forum based on various sources.
3
3 For landlocked countries, this indicator is not included in the computation and the Sea component score corresponds to the score of indicator 2.08.
4
4 In computing the score of this pillar, indicator 3.02 is not directly used in the calculation. Instead the ratio of indicator 3.02 to indicator 3.01 is used, as an approximation of the share of mobile-cellular telephone subscriptions that have broadband capability. The same approach is used for indicator 3.04, as a way to approximate the share of fixed broadband connections that are optical fibre subscriptions. In both cases, the ratios are converted onto 0–100 scale and used in the computation, as explained in Section C.
5
5 For presentation and analysis purposes, the 12 pillars are also organized into four overarching components—Enabling Environment, Human Capital, Markets, and Innovation Ecosystem—but these components do not enter into the computation of the GCI 4.0.
6
6 The score of this pillar corresponds to the average of the scores of the nine individual indicators (9.01– 9.09). Components A and B are used for presentation purposes only, and do not enter the calculation.
7
7 The score of this pillar corresponds to the natural logarithm (LN) of the sum of GDP and imports, valued at purchasing power parity (PPP). Valuation of imports at PPP is estimated by multiplying the share of imports (indicator 10.02) by the value of GDP (indicator 10.01). Score of pillar 10 = LN (GDP+IMPORT/100*GDP).
8
8 For presentation and analysis purposes, the 12 pillars are also organized into four overarching components—Enabling environment, Human capital, Markets, and Innovation ecosystem—but these components do not enter into the computation of the GCI 4.0.
9
9 The score of this pillar corresponds to the average of the scores of the underlying 10 individual indicators (12.01–12.10). Components A, B and C are used for presentation purposes only and do not enter the calculation.
Economy Profiles Appendix B: The Executive Opinion Survey: The Voice of the Business Community
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