This Appendix presents the methodology and detailed structure of the Global Competitiveness Index 4.0 (Section A); provides information about each of the indicators included in the Index (Section B); presents the methodology used to impute missing data points and reports the imputed values by indicator (Section C); presents the methodology used to compute progress scores (Section D); and details the computation of the 2017 (“backcast”) GCI 4.0 scores (Section E).

A. Computation and composition of the GCI 4.0

The computation of the Global Competitiveness Index 4.0 (GCI) is based on successive aggregations of scores, from the indicator level (the most disaggregated level) to the overall GCI 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 B. The overall GCI score is the average of the twelve 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.

B. Technical Notes and Sources

The following notes provide sources for all the individual indicators included in the GCI 4.0. The title of each indicator appears on the first line, preceded by its number to allow for quick reference. Below is a description of each indicator or, in the case of Executive Opinion Survey data, the full question and associated answers. If necessary, additional information is provided underneath.

The interactive ranking tables at http://gcr.weforum.org provide information about the source and period for each individual data point. Select the indicator of interest from the selector and click on the “info” icon next to each economy to access the information. For indicators not sourced from the World Economic Forum, users are urged to refer to the original source for any additional information and exceptions for certain economies and/or data points.

The data used in the computation of the GCI 4.0 2018 represent the most recent and best data available at the time when they were collected. It is possible that data were updated or revised subsequently.

Pillar 1: Institutions

1.01 Business costs of organized crime

Response to the survey question “In your country, to what extent does organized crime (mafia-oriented racketeering, extortion) impose costs on businesses?” [1 = to a great extent, imposes huge costs; 7 = not at all, imposes no costs] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

1.02 Homicide rate

Number of intentional homicides per 100,000 population. | 2016 or most recent year available

“Intentional homicide” refers to unlawful death inflicted upon a person with the intent to cause death or serious injury. More details about the methodology can be found at https://dataunodc.un.org/crime/intentional-homicide-victims.

Source: United Nations Office on Drugs and Crime (UNODC).

1.03 Terrorism incidence

Assesses the frequency and severity of terror attacks. The scale ranges from 0 (highest incidence) to 100 (no incidence). | Weighted count 2013–2017

This indicator has two components: number of terrorism-related casualties (injuries and fatalities) and the number of terrorist attacks over a five-year period, with each year assigned half the weight of the following year. Each component is normalized on a 0 to 100 scale, with 100 meaning “no casualty” and “no attack”, respectively, and then averaged.

Source: National Consortium for the Study of Terrorism and Responses to Terrorism (START).

1.04 Reliability of police services

Response to the survey question “In your country, to what extent can police services be relied upon to enforce law and order?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

1.05 Social capital

Score on the Social Capital pillar of the Legatum Prosperity Index™, which assesses social cohesion and engagement, community and family networks, and political participation and institutional trust. The scale ranges from 0 (low) to 100 (high). | 2017 edition

This indicator measures national performance in three areas: social cohesion and engagement (bridging social capital), community and family networks (bonding social capital), and political participation and institutional trust (linking social capital). More details about the methodology can be found at http://www.prosperity.com/about/methodology.

Source: Legatum Institute.

1.06 Budget transparency

Represents the Open Budget Data Score, which indicates the extent to which the government publishes data related to budget and spending. The scale ranges from 0 (low transparency) to 100 (high transparency). | 2017

The score is based on the evaluation of 20 key criteria related to government practices in publishing open budget data. More details can be found at http://www.worldbank.org/publicfinance/fmis.

Source: The World Bank Group.

1.07 Judicial independence

Response to the survey question “In your country, how independent is the judicial system from influences of the government, individuals, or companies?” [1 = not independent at all; 7 = entirely independent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

1.08 Efficiency of legal framework in challenging regulations

Response to the survey question “In your country, how easy is it for private businesses to challenge government actions and/or regulations through the legal system?” [1 = extremely difficult; 7 = extremely easy] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

1.09 Freedom of the press

Score on the World Press Freedom Index, which measures the level of freedom available to journalists. The scale ranges from 0 (good) to 100 (very bad). | 2018 edition

The index measures media independence, the quality of the infrastructure that supports the production of news, and information and acts of violence against journalists. It is based on two sources: 1) a database of the level of abuses and violence against journalists and media; and 2) an expert opinion survey on pluralism, media independence, self-censorship, transparency and infrastructure in each country. More details about the methodology can be found at https://rsf.org/en/world-press-freedom-index.

Source: Reporters Without Borders (RSF).

1.10 Burden of government regulation

Response to the survey question “In your country, how burdensome is it for companies to comply with public administration’s requirements (e.g., permits, regulations, reporting)?” [1 = extremely burdensome; 7 = not burdensome at all] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

1.11 Efficiency of legal framework in settling disputes

In your country, how easy is it for private businesses to challenge government actions and/or regulations through the legal system? [1 = extremely difficult; 7 = extremely easy] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

1.12 E-Participation

Score on the E-Participation Index, which assesses the use of online services to facilitate the provision of information by governments to citizens. The scale ranges from 0 to 1 (best). | 2018

The E-Participation Index measures the use of online services to facilitate provision of information by governments to citizens (“e-information sharing”), interaction with stakeholders (“e-consultation”) and engagement in decision-making processes (“e-decision making”). More details about the methodology can be found at https://publicadministration.un.org.

Source: United Nations, Department of Economic and Social Affairs (UNDESA).

1.13 Future orientation of government

Average of the responses to the following four Executive Opinion Survey questions: 1) “In your country, how fast is the legal framework of your country in adapting to digital business models (e.g. e-commerce, sharing economy, fintech, etc.)?” [1 = not fast at all; 7 = very fast]; 2) “In your country, to what extent does the government ensure a stable policy environment for doing business?”; 3) “In your country, to what extent does the government respond effectively to change (e.g. technological changes, societal and demographic trends, security and economic challenges)?”; and 4) “In your country, to what extent does the government have a long-term vision in place?”. For the last three questions, the answer ranges from 1 (not at all) to 7 (to a great extent). | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

1.14 Incidence of corruption

Score on the Corruption Perceptions Index, which measures perceptions of corruption in the public sector. This is a composite indicator, and the scale ranges from 0 (highly corrupt) to 100 (very clean). | 2016

The index aggregates data from a number of different sources that provide perceptions of business people and country experts of the level of corruption in the public sector. More details can be found at https://www.transparency.org/cpi.

Source: Transparency International.

1.15 Property rights

Response to the survey question “In your country, to what extent are property rights, including financial assets, protected?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

1.16 Intellectual property protection

Response to the survey question “In your country, to what extent is intellectual property protected?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

1.17 Quality of land administration

Score on the quality of land administration index, which assesses the reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution and equal access to property rights. The scale ranges from 0 to 30 (best). | 2017

More details about the methodology can be found at http://www.doingbusiness.org/Methodology.

Source: The World Bank Group.

1.18 Strength of auditing and reporting standards

Response to the survey question “In your country, how strong are financial auditing and reporting standards?” [1 = extremely weak; 7 = extremely strong] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

1.19 Conflict of interest regulation

Score on the extent of conflict of interest regulation index, which measures the protection of shareholders against directors’ misuse of corporate assets for personal gain. The scale ranges from 0 to 10 (best). | 2017

The index assesses three dimensions of regulation that address conflicts of interest: 1) transparency of related-party transactions, 2) shareholders’ ability to sue and hold directors liable for self-dealing, and 3) access to evidence and allocation of legal expenses in shareholder litigation. More details about the methodology can be found at http://www.doingbusiness.org/Methodology.

Source: The World Bank Group.

1.20 Shareholder governance

Score on the extent of shareholder governance index, which measures shareholders’ rights in corporate governance. The scale ranges from 0 to 10 (best). | 2017

The index assesses three dimensions of good governance: 1) shareholders’ rights and role in major corporate decisions, 2) governance safeguards protecting shareholders from undue board control and entrenchment, and 3) corporate transparency on ownership stakes, compensation, audits and financial prospects. More details about the methodology can be found at http://www.doingbusiness.org/Methodology.

Source: The World Bank Group.

Pillar 2: Infrastructure

2.01 Quality of road network

Score on the Road Quality Index, which measures average speed and straightness of a driving itinerary connecting the 10 or more largest cities that together account for at least 15% of the economy’s total population. The scale ranges from 0 to 100 (excellent). | 2016

The Road Quality Index, developed by the World Economic Forum, comprises two elements: 1) a measure of the average speed of a driving itinerary connecting the 10 or more largest cities in an economy accounting for at least 15% of the economy’s total population; and 2) a measure of road straightness. The itinerary was not optimized and connects the cities from the largest to the smallest. Any leg involving a ferry was excluded from the average speed calculation. As a first step to the identification of cities to include in the itinerary, pairwise distances (“as the crow flies”) were calculated, and when the distance was less than 20 kilometres, the smallest city in the pair was excluded. The road straightness corresponds to the ratio of the sum of driving distances between each city in the journey to the sum of crow fly distances between each city in the journey. For this component, legs involving a ferry were included. The APIs of Google Directions and Open Street Map were used to compute the itinerary. The Geonames database was used for city populations and coordinates. For more information about this indicator, please contact [email protected].

Source: World Economic Forum’s calculations.

2.02 Quality of road infrastructure

Response to the survey question “In your country, what is the quality (extensiveness and condition) of road infrastructure?” [1 = extremely poor—among the worst in the world; 7 = extremely good—among the best in the world] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

2.03 Railroad density

Kilometres of railroad per 1,000 square kilometres of land. | 2016

Source: The World Bank Group.

2.04 Efficiency of train services

Response to the survey question “In your country, how efficient (i.e. frequency, punctuality, speed, price) are train transport services?” [1 = extremely inefficient, among the worst in the world; 7 = extremely efficient, among the best in the world] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

2.05 Airport connectivity

Represents the IATA airport connectivity indicator, which measures the degree of integration of a country within the global air transport network. | 2018

For each airport, the number of available seats to each destination is weighted by the size of the destination airport (in terms of number of passengers handled). The weighted totals are then summed for all destinations, then for all airports in the country to produce a score. The log transformation of the raw value is raised to a cubic power before converting it to the 0 to 100 score.

Source: International Air Transport Association (IATA).

2.06 Efficiency of air transport services

Response to the survey question “In your country, how efficient (i.e. frequency, punctuality, speed, price) are air transport services?” [1 = extremely inefficient, among the worst in the world; 7 = extremely efficient, among the best in the world] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

2.07 Liner shipping connectivity

Score on the Liner Shipping Connectivity Index, which assesses a country’s connectivity to global shipping networks. The index uses an open scale, with the benchmark score of 100 corresponding to the most connected country in 2004 (China).| 2017

The index is based on five components of the maritime transport sector: the number of ships, their container-carrying capacity, the maximum vessel size, the number of services and the number of companies that deploy container ships in a country’s ports.

Source: United Nations Conference on Trade and Development (UNCTAD).

2.08 Efficiency of seaport services

Response to the survey question “In your country, how efficient (i.e. frequency, punctuality, speed, price) are seaport services (ferries, boats) (for landlocked countries: assess access to seaport services)?” [1 = extremely inefficient, among the worst in the world; 7 = extremely efficient, among the best in the world] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

2.09 Electricity access

Percentage of population with access to electricity. | 2016 estimate

Electricity access entails a household having initial access to sufficient electricity to power a basic bundle of energy services—at a minimum, several lightbulbs, task lighting (such as a flashlight), phone.

Source: International Energy Agency (IEA).

2.10 Electricity quality

Electric power transmission and distribution losses as a percentage of domestic supply. | 2015 estimate

Source: International Energy Agency (IEA).

2.11 Exposure to unsafe drinking water

Risk-weighted percentage of population exposed to unsafe drinking water. | 2016

This indicator is reported as a summary exposure value (SEV): it measures a population’s exposure to unsafe drinking water, taking into account the extent of exposure by risk level and the severity of that risk’s contribution to disease burden. The indicator takes the value 0 when no excess risk for a population exists and the value 1 when the population is at the highest level of risk.

Source: Institute for Health Metrics and Evaluation (IHME).

2.12 Reliability of water supply

Response to the survey question “In your country, how reliable is the water supply (lack of interruptions and flow fluctuations)?” [1 = extremely unreliable; 7 = extremely reliable] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

Pillar 3: ICT adoption

3.01 Mobile-cellular telephone subscriptions

Number of mobile-cellular telephone subscriptions per 100 population. | 2016

This indicator includes post-paid subscriptions, active prepaid accounts (i.e. that have been active during the past three months), and all mobile-cellular subscriptions that offer voice communications.

Source: International Telecommunications Union (ITU).

3.02 Mobile-broadband subscriptions

Number of active mobile-broadband subscriptions per 100 population. | 2016

This indicator includes standard mobile-broadband subscriptions and dedicated mobile-broadband data subscriptions to the public internet.

Source: International Telecommunications Union (ITU).

3.03 Fixed-broadband internet subscriptions

Number of fixed-broadband internet subscriptions per 100 population. | 2016

This indicator refers to the number of subscriptions for high-speed access to the public internet (a TCP/IP connection), including cable modem, DSL, fiber, and other fixed (wired)-broadband technologies—such as Ethernet, LAN and broadband over powerline communications.

Source: International Telecommunications Union (ITU).

3.04 Fiber internet subscriptions

Fiber-to-the-home/building internet subscriptions per 100 population. | 2016

This indicator refers to the number of internet subscriptions using fiber-to-the-home or fiber-to-the-building at downstream speeds equal to or greater than 256 kb/s. This should include subscriptions where fiber goes directly to the subscriber’s premises or fiber-to-the-building subscriptions that terminate no more than two metres from an external wall of the building. Fiber-to-the-cabinet and fiber-to-the-node are excluded.

Source: World Economic Forum calculations based on International Telecommunications Union (ITU).

3.05 Internet users

Percentage of individuals who used the internet from any location and for any purpose, irrespective of the device and network used, in the last three months. | 2016

Source: International Telecommunications Union (ITU).

Pillar 4: Macroeconomic stability

4.01 Inflation

Annual percentage change in the Consumer Price Index. | 2016–2017 moving average

Inflation is normalized in a U-shaped function to capture the detrimental effects of high inflation and deflation. Countries with inflation rates between 0.5% and 4% receive the highest possible score of 100. Outside this range, scores decrease linearly as the distance between the optimal value and the actual value increases.

Source: International Monetary Fund (IMF).

4.02 Debt dynamics

Index measuring the change in public debt-to-GDP ratio, weighted by a country’s credit rating and debt level in relation to its GDP. | Difference between the 2017 and 2018 expected values of the debt-to-GDP ratio

This indicator is a category-based min-max normalization of the debt change. The debt change is the difference between the 2017 and 2018 of the debt to GDP ratio expected values. To transform the debt change value into a 0 to 100 score, each country is assigned to a specific category that determines the value boundaries. Categories are based on three criteria: general credit rating, government debt to GDP level for the year 2017, and country classification (1 if country is considered advanced, 0 otherwise according to IMF’s classification). The general credit rating for each country is computed as the average of Fitch, Standard and Poor’s (S&P) and Moody’s credit ratings. A country’s rating is considered “investment grade 1” for S&P’s grades AAA to A, Moody’s grades Aaa to A1, and Fitch’s grades AAA to A. A country’s rating is considered “investment grade 2” for S&P’s grades A- to BBB-, Moody’s grades A- to Baa1, and Fitch’s grades A- to BBB+. A country’s rating is considered “speculative” for S&P’s grades BB+ to CCC+, Moody’s grades Ba3 to Caa2, and Fitch’s grades BBB- to B-. A country credit rating is considered “default” for S&P’s grade SD, Moody’s grades Caa1 and C, and Fitch’s grades CC and RD. Based on these criteria, 12 cases are identified: ii) if a country’s average rating is “investment grade 1” and its debt to GDP level is less than 60%, its debt change is normalized to 100; ii) if a country’s average rating is “investment grade 1” and its debt to GDP level is less than 110%, its debt change is normalized to a score between 90 and 100; iii) if a country’s average rating is graded as “investment grade 1” and its debt to GDP level is greater than 110%, its debt change is normalized to a score between 80 and 90; iv) if the average credit rating is rated as “investment grade 2” and the debt level is lower than 110%, its debt change is normalized to a score between 70 and 80; v) if the average credit rating is “investment grade 2” and the debt level is greater than 110%, its debt change is normalized to a score between 60 and 70; vi) if the average credit rating is “speculative”, the debt level is less than 110%, and the country classification is “advanced”, its debt change is normalized to a score between 50 and 60; vii) if the average credit rating is “speculative”, the debt level is greater than 110%, and the country classification is “advanced”, its debt change is normalized to a score between 40 and 50; viii) if the average credit rating is “speculative”, the debt level is less than 60%, and the country classification is “developing”, its debt change is normalized to a score between 40 and 50; ix) if the average credit rating is “speculative”, the debt level is greater than 60%, and the country classification is “developing”, its debt change is normalized to a score between 30 and 40; x) if the average credit rating is “default”, the debt change is normalized to a score between 0 and 30; xi) if a country does not receive a credit rating from any rating agency and its debt level is below 60%, its debt change is normalized to a score between 40 and 50; and xii) if a country does not receive a credit rating from a rating agency and its debt is above 60% of GDP, its debt change is normalized to a score between 30 and 40. To determine the final value of the debt dynamics indicator within the assigned boundaries, we’ve calculated the normalized debt change, which ranges from a minimum observed value of 0 and the maximum observed value of 20. As part of the normalization process, we assigned a score equivalent to the minimum value of each bracket if the debt change was 20% or higher; assigned the maximum value of the bracket if the debt change was 0% or lower; and assigned a score between the two values if the debt change was between 0% and 20%.

Source: World Economic Forum; calculations based on data from International Monetary Fund and the rating agencies Fitch, Moody’s, and Standard and Poor’s.

Pillar 5: Health

5.01 Healthy life expectancy

Number of years that a newborn can expect to live in good health, taking into account mortality and disability. | 2016 estimate

More details about the methodology can be found at http://www.healthdata.org/research-article/gbd-2015-dalys-hale.

Source: Institute for Health Metrics and Evaluation (IHME).

Pillar 6: Skills

6.01 Mean years of schooling

Average number of completed years of education of a country’s population aged 25 years and older, excluding years spent repeating individual grades. | 2015

Sources: United Nations Educational, Scientific and Cultural Organization (UNESCO); Wittgenstein Centre for Demography and Global Human Capital.

6.02 Extent of staff training

Response to the survey question “In your country, to what extent do companies invest in training and employee development?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

6.03 Quality of vocational training

Response to the survey question “In your country, how do you assess the quality of vocational training?” [1 = extremely poor among the worst in the world; 7 = excellent among the best in the world] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

6.04 Skillset of graduates

Average score of the following two Executive Opinion Survey questions: “In your country, to what extent do graduating students from secondary education possess the skills needed by businesses?” and “In your country, to what extent do graduating students from university possess the skills needed by businesses?” In each case, the answer ranges from 1 (not at all) to 7 (to a great extent).| 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

6.05 Digital skills among active population

Response to the survey question “In your country, to what extent does the active population possess sufficient digital skills (e.g. computer skills, basic coding, digital reading)?” [1 = not all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

6.06 Ease of finding skilled employees

Response to the survey question “In your country, to what extent can companies find people with the skills required to fill their vacancies?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

6.07 School life expectancy

Total number of years of schooling (primary through tertiary) that a child of school entrance age can expect to receive. | 2015

This indicator assumes that the probability of a person being enrolled in school at any particular future age is equal to the current enrolment ratio at that age. More details about the methodology can be found at http://uis.unesco.org/en/glossary.

Source: United Nations Educational, Scientific and Cultural Organization (UNESCO).

6.08 Critical thinking in teaching

Response to the survey question “In your country, how do you assess the style of teaching?” [1 = frontal, teacher based, and focused on memorizing; 7 = encourages creative and critical individual thinking] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

6.09 Pupil-to-teacher ratio in primary education

Average number of pupils per teacher, based on headcounts of both pupils and teachers. | 2016

Source: The World Bank Group.

Pillar 7: Product market

7.01 Distortive effect of taxes and subsidies on competition

Response to the survey question “In your country, to what extent do fiscal measures (subsidies, tax breaks, etc.) distort competition?” [1 = distort competition to a great extent; 7 = do not distort competition at all] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

7.02 Extent of market dominance

Response to the survey question “In your country, how do you characterize corporate activity?” [1 = dominated by a few business groups; 7 = spread among many firms]. | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

7.03 Competition in services

Average of the scores of the three components of the following Executive Opinion Survey question: “In your country, how competitive is the provision of the following services: (a) professional services (legal services, accounting, engineering, etc.); (b) retail services; and (c) network sector (telecommunications, utilities, postal, transport, etc.)?” In each case, the answer ranges from 1 (not at all competitive) to 7 (extremely competitive). | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

7.04 Prevalence of non-tariff barriers

Response to the survey question “In your country, to what extent do non-tariff barriers (e.g. health and product standards, technical and labelling requirements, etc.) limit the ability of imported goods to compete in the domestic market?” [1 = strongly limit; 7 = do not limit at all] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

7.05 Trade tariffs

Measured as the weighted average applied tariff rate, expressed in percentage points. | 2017

The weighted mean applied tariff is the average of effectively applied rates weighted by the product import shares corresponding to each partner country. Applied tariffs are considered to be the tariff rates applied by a customs administration on imported goods. They are the rates published by national customs authorities for duty administration purposes.

Source: International Trade Centre (ITC).

7.06 Complexity of tariffs

Score on an index that measures the complexity of a country’s tariff regime. The index ranges from 1 (very complex) to 7 (not complex). | 2017

Tariff complexity is assessed on four criteria: tariff dispersion, the prevalence of tariff peaks, the prevalence of specific tariffs and the number of distinct tariffs. This index is calculated as the simple average of the normalized score of these four criteria.

Source: International Trade Centre (ITC).

7.07 Border clearance efficiency

Assesses the effectiveness and efficiency of the clearance process by customs and other border control agencies in the eight major trading partners of each country. The scale ranges from 1 (worst) to 5 (best). | 2018

More details about the methodology can be found at https://lpi.worldbank.org/about.

Source: The World Bank Group; Turku School of Economics.

7.08 Service trade openness

Score on the Services Trade Restrictiveness Index (STRI), which assesses the overall openness of the service sector of a country. The scale ranges from 0 (completely open) to 100 (completely closed). | 2011

The STRI measures openness for five major services sectors (financial services, telecommunications, retail distribution, transportation and professional services) and three modes of supply (cross-border supply of services, supply of services through commercial presence or FDI and temporary presence of natural persons). More details about the methodology can be found at http://iresearch.worldbank.org/servicetrade/aboutData.htm#MeasuringRestrictions.

Source: The World Bank Group.

Pillar 8: Labour market

8.01 Redundancy costs

Measures the cost of advance notice requirements and severance payments due when terminating a redundant worker, expressed in weeks of salary. | 2017

The average value of notice requirements and severance payments applicable to a worker with 1 year of tenure, 5 years of tenure, and 10 years of tenure is considered.

Source: The World Bank Group.

8.02 Hiring and firing practices

Response to the survey question “In your country, to what extent do regulations allow for the flexible hiring and firing of workers?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

8.03 Cooperation in labour-employer relations

Response to the survey question “In your country, how do you characterize labour-employer relations?” [1 = generally confrontational; 7 = generally cooperative] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

8.04 Flexibility of wage determination

Response to the survey question “In your country, how are wages generally set?” [1 = by a centralized bargaining process; 7 = by each individual company] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

8.05 Active labour policies

Response to the survey question “In your country, to what extent do labour market policies help unemployed people to reskill and find new employment (including skills matching, retraining, etc.)?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

8.06 Workers’ rights

Score adapted from the ITUC Global Rights Index, which measures the level of protection of internationally recognized core labour standards. The scale of this indicator ranges from 1 (no protection) to 7 (high protection). | 2017

Dimensions of labour protection include civil rights, the right to bargain collectively, the right to strike, the right to associate freely, and access to due process rights. The indicator does not consider firing regulations. More details about the methodology of the Global Rights Index can be found at https://survey.ituc-csi.org/ITUC-Global-Rights-Index.html.

Sources: International Trade Union Confederation (ITUC); World Economic Forum.

8.07 Ease of hiring foreign labour

Response to the survey question “In your country, how restrictive are regulations related to the hiring of foreign labour?” [1 = highly restrictive; 7 = not restrictive at all] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

8.08 Internal labour mobility

Response to the survey question “In your country, to what extent do people move to other parts of the country for professional reasons?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

8.09 Reliance on professional management

Response to the survey question “In your country, who holds senior management positions in companies?” [1 = usually relatives or friends without regard to merit; 7 = mostly professional managers chosen for merit and qualifications] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

8.10 Pay and productivity

Response to the survey question “In your country, to what extent is pay related to employee productivity?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

8.11 Female participation in labour force

Illustrates the ratio of the percentage of women aged 15–64 participating in the labour force as wage and salaried workers to the percentage of men aged 15–64 participating in the labour force as wage and salaried workers. | 2017

Wage and salaried workers (employees) are those workers who hold the type of jobs defined as “paid employment jobs,” where the incumbents hold explicit (written or oral) or implicit employment contracts that give them a basic remuneration that is not directly dependent upon the revenue of the unit for which they work.

Sources: International Labour Organization (ILO); World Economic Forum.

8.12 Labour tax rate

Labour tax and contributions are the amount of taxes (at any level—federal, state, or local) and mandatory contributions on labour paid by the business, expressed as a percentage of commercial profits. | 2016

This measure includes government-mandated contributions paid by the employer to a requited private pension fund or workers’ insurance fund. More details about this indicator can be found at http://www.doingbusiness.org/Methodology/Paying-Taxes.

Source: The World Bank Group.

Pillar 9: Financial system

9.01 Domestic credit to private sector

The total value of financial resources provided to the private sector, expressed as a percentage of GDP. | 2014–2016 moving average

This indicator is computed as the sum of loans, purchases of non-equity securities, trade credits and other accounts receivable that establish a claim for repayment provided by financial corporations to firms and households.

Source: The World Bank Group.

9.02 Financing of SMEs

Response to the survey question “In your country, to what extent can small- and medium-sized enterprises (SMEs) access finance they need for their business operations through the financial sector?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

9.03 Venture capital availability

Response to the survey question “In your country, how easy is it for start-up entrepreneurs with innovative but risky projects to obtain equity funding?” [1 = extremely difficult; 7 = extremely easy] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

9.04 Market capitalization

The total value of listed domestic companies, expressed as a percentage of GDP. | 2014–2016 moving average

Calculated as the share price of all listed domestic companies multiplied by the number of their outstanding shares. Investment funds, unit trusts and companies whose only business goal is to hold shares of other listed companies are excluded. Data are end-of-year values.

Source: World Federation of Exchanges.

9.05 Insurance premiums

Life and non-life insurance premium volumes, expressed as a percentage of GDP. | 2013–2015 moving average

Computed as the sum of life and non-life insurance premium volume divided by GDP. The premium volume is the insurer’s direct premiums earned (if property/casualty) or received (if life/health) during the previous calendar year.

Source: The World Bank Group.

9.06 Soundness of banks

Response to the survey question “In your country, how do you assess the soundness of banks?” [1 = extremely low banks may require recapitalization; 7 = extremely high banks are generally healthy with sound balance sheets] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

9.07 Non-performing loans

The ratio of the value of nonperforming loans divided by the total value of the loan portfolio of all banks operating in a country. | 2016

Defaulting loans are payments of interest and principal past due by 90 days or more. The loan amount recorded as nonperforming includes the gross value of the loan as recorded on the balance sheet, not just the amount that is overdue.

Source: International Monetary Fund (IMF).

9.08 Credit gap

Measures the difference between the credit-to-GDP ratio and its long-term trend. | 2016

Computed as the difference between the latest “Domestic credit to private sector (as a percentage of GDP)” and its trend. Following the methodology from Bank of International Settlements, the trend value is calculated by applying a Hodrick–Prescott filter to the 15-year time series of the “Domestic credit to private sector (% of GDP)” indicator. More details about the methodology can be found at https://www.bis.org/publ/qtrpdf/r_qt1403g.htm.

Source: World Economic Forum; calculations based on The World Bank Group data.

9.09 Banks’ regulatory capital ratio

Banks’ regulatory capital ratio. | 2013–2015 moving average

This indicator measures the capital adequacy of deposit takers. It is a ratio of total banks’ regulatory capital (shareholders’ equity, disclosed and undisclosed reserves, revaluation reserves, general provisions and other instruments) to total banks’ assets, weighted according to the risk of these assets. A log transformation is applied to the raw score before it is normalized to a 0 to 100 scale.

Source: The World Bank Group.

Pillar 10: Market size

10.01 Gross domestic product

Gross domestic product (GDP) valued at purchasing power parity in billions of international dollars (constant 2011 prices). | 2017

Source: International Monetary Fund (IMF).

10.02 Imports of goods and services

Imports of goods and services, expressed as a percentage of GDP. | 2017

This indicator illustrates the value of all goods and other market services received from the rest of the world, as a percentage of the country’s GDP. Imports include the value of merchandise, freight, insurance, transport, travel, royalties, license fees and other services, such as communication, construction, financial, information, business, personal, and government services. They exclude compensation of employees and investment income (formerly called factor services) and transfer payments.

Sources: World Trade Organization (WTO); International Monetary Fund (IMF).

Pillar 11: Business dynamism

11.01 Cost of starting a business

Expressed as a percentage of the economy’s income per capita. | 2017

The costs include all official fees and fees for legal or professional services if such services are required by law or commonly used in practice. Fees for purchasing and legalizing company books are included if these transactions are required by law. Although value-added tax registration can be counted as a separate procedure, value-added tax is not part of the incorporation cost. More details of the methodology can be found at http://www.doingbusiness.org/Methodology/Starting-a-Business.

Source: The World Bank Group.

11.02 Time to start a business

Number of calendar days needed to complete the procedures to legally operate a business. | 2017

The measure captures the median duration that incorporation lawyers or notaries indicate is necessary in practice to complete a procedure with minimum follow-up with government agencies and no unofficial payments. If a procedure can be sped up at additional cost, the fastest procedure, independent of cost, is chosen. More details about the methodology can be found at http://www.doingbusiness.org/Methodology/Starting-a-Business.

Source: The World Bank Group.

11.03 Insolvency recovery rate

Recorded as cents on the dollar recovered by secured creditors through judicial reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. | 2017

The calculation takes into account the outcome, whether the business emerges from the proceedings as a going concern or the assets are sold piecemeal. Then the costs of the proceedings are deducted (1 cent for each percentage point of the value of the debtor’s estate). Finally, the value lost as a result of the time the money remains tied up in insolvency proceedings is taken into account, including the loss of value due to depreciation of the hotel furniture. More details about the methodology can be found at http://www.doingbusiness.org/Methodology/Resolving-Insolvency.

Source: The World Bank Group.

11.04 Insolvency regulatory framework

Score on an index that measures the adequacy and integrity of the legal framework applicable to liquidation and reorganization proceedings. Scores range from 0 to 16, with higher values indicating insolvency legislation that is better designed for rehabilitating viable firms and liquidating nonviable ones. | 2017

The index is calculated as the sum of the scores on the commencement of proceedings index, management of debtor’s assets index, reorganization proceedings index and creditor participation index.

Source: The World Bank Group.

11.05 Attitudes toward entrepreneurial risk

Response to the survey question “In your country, to what extent do people have an appetite for entrepreneurial risk?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

11.06 Willingness to delegate authority

Response to the survey question “In your country, to what extent does senior management delegate authority to subordinates?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

11.07 Growth of innovative companies

Response to the survey question “In your country, to what extent do new companies with innovative ideas grow rapidly?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

11.08 Companies embracing disruptive ideas

Response to the survey question “In your country, to what extent do companies embrace risky or disruptive business ideas?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

Pillar 12: Innovation capability

12.01 Diversity of workforce

Response to the survey question “In your country, to what extent do companies have a diverse workforce (e.g. in terms of ethnicity, religion, sexual orientation, gender)?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

12.02 State of clusters development

Response to the survey question “In your country, how widespread are well-developed and deep clusters (geographic concentrations of firms, suppliers, producers of related products and services, and specialized institutions in a particular field)?” [1 = non-existent; 7 = widespread in many fields] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

12.03 International co-inventions

Number of patent family applications with co-inventors located abroad per million population. | 2012–2014 average

Computed as the sum of the patent family applications with at least one co-inventor located abroad, filed in at least two of the major five (IP5) offices in the World: the European Patent Office (EPO), the Japan Patent Office (JPO), the Korean Intellectual Property Office (KIPO), the State Intellectual Property Office of the People’s Republic of China (SIPO), and the United States Patent and Trademark Office (USPTO). Data is extracted from the PATSTAT database by earliest filing date and inventor country, using fractional counts, and expressed in applications per million population. A log transformation is applied to the raw score before it is normalized to a 0 to 100 scale.

Source: Organisation for Economic Co-operation and Development (OECD).

12.04 Multistakeholder collaboration

Average score of the following three Executive Opinion Survey questions: “In your country, to what extent do people collaborate and share ideas within a company?” [1 = not at all; 7 = to a great extent]; “In your country, to what extent do companies collaborate in sharing ideas and innovating?” [1 = not at all; 7 = to a great extent]; “In your country, to what extent do business and universities collaborate on research and development (R&D)?” [1 = do not collaborate at all; 7 = collaborate extensively] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

12.05 Scientific publications

Score on an index measuring the number of publications and their citations, expressed at the country level. | 2015–2017 average

The H-index measures the number of published papers cited in other papers at least h times. The H-index reflects both the number of publications and the number of citations per publication. Only articles, reviews and conference papers are considered. The document universe is defined by those tracked by Scopus, an abstract and citation database of peer-reviewed literature: scientific journals, books and conference proceedings. A log transformation is applied to the raw score before it is normalized to a 0 to 100 scale.

Source: SCImago.

12.06 Patent applications

Total number of patent family applications per million population. | 2012–2014 average

Computed as the sum of the patent family applications filed in at least two of the major five (IP5) offices in the World: the European Patent Office (EPO), the Japan Patent Office (JPO), the Korean Intellectual Property Office (KIPO), the State Intellectual Property Office of the People’s Republic of China (SIPO), and the United States Patent and Trademark Office (USPTO). Data are extracted from the PATSTAT database by earliest filing date and inventor country, using fractional counts, and expressed in applications per million population. A log transformation is applied to the raw score before it is normalized to a 0 to 100 scale.

Sources: Organisation for Economic Co-operation and Development (OECD).

12.07 R&D expenditures

Expenditures on research and development (R&D), expressed as a percentage of GDP. | 2015

Expenditures for research and development are current and capital expenditures (both public and private) on creative work undertaken systematically to increase knowledge—including knowledge of humanity, culture, and society—and the use of knowledge for new applications. R&D covers basic research, applied research and experimental development.

Source: UNESCO Institute for Statistics.

12.08 Research institutions prominence index

Score on an index that measures the prominence and standing of private and public research institutions. | 2017

The index is computed as the sum of the inverse ranks of all research institutions in a country included in the SCImago Institutions Rankings (SIR). A log transformation is applied to the raw score before it is normalized to a 0 to 100 scale. More details about the SIR methodology can be found at https://www.scimagoir.com/methodology.php.

Sources: SCImago; World Economic Forum.

12.09 Buyer sophistication

Response to the survey question “In your country, on what basis do buyers make purchasing decisions?” [1 = based solely on the lowest price; 7 = based on sophisticated performance attributes] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

12.10 Trademark applications

Number of trademark applications per million population. | 2014–2016 moving average

Number of international trademark applications issued directly or through the Madrid System by country of origin per million population. The residence of the first-named applicant is used to determine the origin of an application. When there are multiple applicants, only the first one is considered. This indicator is based on the concept of “equivalent count”. That is, an application filed at a regional IP office is counted multiple times according to the number of its members. A log transformation is applied to the raw score before it is normalized to a 0 to 100 scale.

Source: World Intellectual Property Organization (WIPO).

C. Missing data imputation

Missing values and values older than 2008 are imputed for the purpose of the calculation, with the exception of indicator 1.05 Social capital, for which missing data is not imputed. Table 1 below presents the imputation method and the imputed values by indicator. Note that the Economy Profiles and Ranking tables (available online at http://gcr.weforum.org) 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 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 value_i,c is the “raw” value of country c for indicator i, worst performance (wp_i,c) is the lowest acceptable value for indicator i and frontier_i,c 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 was 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. In the case of indicators where a higher value corresponds to a worse outcome (e.g. terrorism incidence, power losses), the normalized score becomes 100 minus the expression above, so 100 always corresponds to the ideal outcome. In some cases, signalled in Section A above, a logarithmic transformation is applied to the value, prior to conversion. The following table provides the actual floor and frontier values used for the normalization of each individual indicator.

E. Backcasting the 2017 edition of the GCI 4.0

In order to provide a point of reference against which to compare the inaugural edition of the Global Competitiveness Index 4.0, the index was computed for 2017. The ‘backcast’ edition results were produced by using the GCI 4.0 methodology, the weighted averages of the 2016 and 2017 editions of the Executive Opinion Survey (in most cases) and the values for all the other indicators from one period earlier than the period used in the 2018 edition of the GCI 4.0. For example, for indicator 1.02 Homicide rate, the GCI 4.0 uses 2016 data. For the backcast 2017 edition, the 2015 data was used. More generally, if for any given indicator and country the value used for the 2018 edition of the GCI 4.0 is from period t, for the backcast 2017 edition, the value from period t-1 was used provided the value is available. In most cases, this amounts to ‘going back in the past’, to collect for each indicator the data that would have been available as of July 2017. When doing so would have led to using values older than 2015, the value used for the 2018 edition is used instead. In case the value used for the 2018 edition is from an earlier period, this value is automatically used for the backcast edition. For indicators 2.01, 2.03, 2.05, 6.01, 6.07, 9.05, and 9.10, the exact same dataset was used for both editions. As a result, the differences between the two editions are slightly underestimated.