Wong Check Ying 04003446 Cheung Siu Wun 04004485 Lee Po Hung 04005856 Leung Yee Ka 04014057

Introduction
Global Competitiveness Report is published by the World Economic Forum
Assessed 117 economies understanding the key ingredients of economic growth and prosperity

Introduction
Based on two indexes - Growth Competitiveness Index - Business Competitiveness Index Amendment in 2004 - Global Competitiveness Index - 9 pillars---institutions, infrastructure, market efficiency, business sophistication, higher education and training, etc

Growth Competitiveness Index (GCI)

measure the capacity of the national economy to achieve sustained economic growth
a number of complementary concepts providing a quantified framework for measuring competitiveness Limitations - from small and homogenous economies to big and diverse societies

Growth Competitiveness Index (GCI)

hard data - university enrollment rates, inflation performance, the state of the public finances, the level of penetration of new technologies, etc survey data drawn from the World Economic Forums Executive Opinion Survey - captures the expert opinions of business leaders and entrepreneurs on macroeconomic environment, corruption, technology, innovation and diffusion, domestic competition, etc

Growth Competitiveness Index (GCI)

Core innovators are countries with more than 15 US utility patents registered per million population
non-core innovators are all other countries

Growth Competitiveness Index (GCI)

explaining the evolution of growth in a country--three pillars - the quality of the macroeconomic environment - the state of the countrys public institutions - the level of its technological readiness

3 indexes - the technology index - the public institution index - the macroeconomic environment index

Growth Competitiveness Index (GCI)

Technology Index
measures the capacity for innovation and diffusion of technology
3 sub-indexes - innovation sub-index measures the levels of technological sophistication - technology transfer sub-index - information and communication technology subindex measures of telephone lines, personal computers, Internet usage, etc

Growth Competitiveness Index (GCI)

Technology Index
Technology index for core economies / innovators = 1/2 innovation sub-index + 1/2 ICT sub-index
Technology index for non-core economies / innovators = 1/8 innovation sub-index + 3/8 technology transfer sub-index + 1/2 ICT sub-index

Growth Competitiveness Index (GCI)

Technology Index
Innovation sub-index = 1/4 Survey data + 3/4 hard data Technology Transfer sub-index = un-weighted average of two technology transfer survey questions Information and Communication technology sub-index = 1/3 survey data + 2/3 hard data

Growth Competitiveness Index (GCI)

Technology Index

Growth Competitiveness Index (GCI)

Public Institutions Index
measures the role of politics and the bureaucracy in supporting market-based economic activity and the division of labor 2 sub-indexes - the contracts and law sub-index concerns neutrality in government procurement, clear delineation and respect for property rights, etc - the corruption sub-index measures the pervasiveness of bribery in three key public service areas

Growth Competitiveness Index (GCI)

Public Institutions Index

Public institutions index = 1/2 contracts and law sub-index + 1/2 corruption sub-index

Growth Competitiveness Index (GCI)

Public Institutions Index

Growth Competitiveness Index (GCI)

Macroeconomic Environment Index
Measures variables related to capital accumulation and the efficiency of the division of labor 1 sub-index - the macroeconomic stability sub-index include the real exchange rate relative to the US, the general government budget balance, consumer price inflation, etc

Growth Competitiveness Index (GCI)

Macroeconomic Environment Index
Macroeconomic environment index = 1/2 macroeconomic stability sub-index + 1/4 country credit rating + 1/4 government waste Macroeconomic stability sub-index = 5/7 hard data + 2/7 survey data

Growth Competitiveness Index (GCI)

Macroeconomic Environment Index

Growth Competitiveness Index (GCI)

GCI for core economies / innovators = 1/2 technology index + 1/4 public institution index + 1/4 macroeconomic environment index GCI for non-core economies / innovators = 1/3 technology index + 1/3 public institutions index + 1/3 macroeconomic environment index

Growth Competitiveness Index (GCI)

The Business Competitiveness Index (BCI)

underlying microeconomic factors

determine economies current sustainable levels of productivity and competitiveness

complementary approach to the forward-looking macroeconomic approach of the GCI highly skilled people, efficiency of government processes, quality of infrastructure, the competitive pressures faced by companies, etc

The Business Competitiveness Index (BCI) measures two areas that are critical to the microeconomic business environment in an economy - the sophistication of company operations and strategy - the quality of the overarching national business environment in which they are operating

The Business Competitiveness Index (BCI)

2 sub-indexes - companies operations and strategies - quality of the national business environment

The Business Competitiveness Index (BCI)

Relationship between GCI and BCI

Partial regression results of GCI vs. GDP per capita growth

GDP 2005
Data source: 2005 CIA World Factbook 1 World 2 United States 3 European Union 4 China 5 Japan 6 India 7 Germany 8 United Kingdom 9 France $55,500,000,000,000 $11,750,000,000,000 $11,650,000,000,000 $7,262,000,000,000 $3,745,000,000,000 $3,319,000,000,000 $2,362,000,000,000 $1,782,000,000,000 $1,737,000,000,000 $1,609,000,000,000 36 37 38 39 40 41 42 43 139 Iceland $9,373,000,000 44 45 46 Sweden Switzerland Hong Kong Malaysia Vietnam Greece Algeria Portugal Norway Denmark Czech Republic $255,400,000,000 $251,900,000,000 $234,500,000,000 $229,300,000,000 $227,200,000,000 $226,400,000,000 $212,300,000,000 $188,700,000,000 $183,000,000,000 $174,400,000,000 $172,200,000,000

1 Italy 0

Competitiveness VS. GDP

About GCI Countries with high GDP - United States (rank2)-----GCI ranking 2 - Japan (rank 5)-----GCI ranking 12 Countries with relative high GDP - Denmark (rank 45)---- GCI ranking 4 Countries with low GDP - Iceland (rank 139)---- GCI ranking 7

Competitiveness VS. GDP

About BCI Countries with high GDP - United States (rank2)-----BCI ranking 1 - Japan (rank 5)-----BCI ranking 8 Countries with relative high GDP - Denmark (rank 45)---- BCI ranking 4 Countries with low GDP - Iceland (rank 139)---- BCI ranking 17

GDP - per capita 2005

Data source: 2005 CIA World Factbook
11 11 1 2 3 3 3 4 5 6 7 8 9 10 Luxembourg United States Guernsey Jersey Norway British Virgin Islands Bermuda San Marino Hong Kong Switzerland Cayman Islands Denmark $58,900 12 $40,100 $40,000 $40,000 $40,000 $38,500 18 $36,000 $34,600 $34,200 $33,800 $32,300 23 $32,200 24 25 Aruba Gibraltar Singapore $28,000 $27,900 $27,800 19 Japan Finland $29,400 $29,000 13 14 15 16 17 Canada Austria Australia Belgium United Kingdom Netherlands $31,500 $31,300 $30,700 $30,600 $29,600 $29,500 Iceland Ireland $31,900 $31,900

20
20 21 22

France
Germany Man, Isle of Sweden

$28,700
$28,700 $28,500 $28,400

98

Peru

$5,600

Competitiveness VS. GDP per capita

About GCI Countries with high per capita GDP - United States (rank 2)-----GCI ranking 2 - Hong Kong (rank 7)-----GCI ranking 12 Countries with relative high per capita GDP - Japan (rank 18)---- GCI ranking 4 Countries with low per capita GDP - Peru (rank 98)---- GCI ranking 68

Competitiveness VS. GDP per capita

About BCI Countries with high per capita GDP - United States (rank 2)-----BCI ranking 1 - Hong Kong (rank 7)-----BCI ranking 20 Countries with relative high per capita GDP - Japan (rank 18)---- BCI ranking 8 Countries with low per capita GDP - Peru (rank 98)---- BCI ranking 81

GDP - real growth rate(%) 2005

16
Data source: 2005 CIA World Factbook

Georgia Kazakhstan China Armenia Qatar Argentina Turkey

9.50 9.10 9.10 9.00 8.70 8.30 8.20 69 69 Luxembourg Barbados 2.30 2.30

17 17 18 19 20 21

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Iraq Chad Liberia Equatorial Guinea Venezuela Macau Ukraine Angola Ethiopia Liechtenstein Mongolia Tajikistan Uruguay Faroe Islands Azerbaijan

52.30 38.00 21.80 20.00 16.80 15.60 12.00 11.70 11.60 11.00 10.60 10.50 10.20 10.00 9.80

69
70 71 71 72 72 72 72 73 73 73

Syria
Kenya France Denmark Virgin Islands Andorra Bermuda Comoros Yemen Gabon Guyana Jamaica Austria

2.30
2.20 2.10 2.10 2.00 2.00 2.00 2.00 1.90 1.90 1.90 1.90 1.90

21
22 22 23 24 25 26 26 26 27 27 28 28 29 30

Mozambique
Romania Singapore Hong Kong Vietnam Latvia Afghanistan Congo, Democratic Republic of the San Marino Malaysia Cook Islands Moldova Kuwait Russia Lithuania

8.20
8.10 8.10 7.90 7.70 7.60 7.50 7.50 7.50 7.10 7.10 6.80 6.80 6.70 6.60

73 73

74
74 74 74 75

Greenland
El Salvador Iceland Switzerland Germany

1.80
1.80 1.80 1.80 1.70

Competitiveness VS. GDP real growth rate (%)

About GCI Countries with high GDP real growth rate - Chad (rank 2)-----GCI ranking 117 - Mongolia (rank 11)-----GCI ranking 96 Countries with relative high GDP real growth rate - Hong Kong (rank 23)---- GCI ranking 12 Countries with low GDP real growth rate - Iceland (rank 74)---- GCI ranking 7 - Germany (rank 75)---- GCI ranking 15

Competitiveness VS. GDP real growth rate (%)

About BCI Countries with high GDP real growth rate - Chad (rank 2)-----BCI ranking 116 - Mongolia (rank 11)-----BCI ranking 104 Countries with relative high GDP real growth rate - Hong Kong (rank 23)---- BCI ranking 20 Countries with low GDP real growth rate - Iceland (rank 74)---- BCI ranking 17 - Germany (rank 75)---- BCI ranking 3

What is WCI?
WCI stands for World Competitiveness Index indicated in the World Competitiveness Yearbook most renowned and comprehensive annual report on the competitiveness of nations, ranking and analyzing how a nation environment creates and sustains the competitiveness of enterprises

GCR
Aim assess the capacity of the worlds economies to achieve sustained economic growth more than 100 economies

WCI
evaluate the overall competitiveness of countries 60 national and regional economies 55 Partner Institutes

Cover

Global 122 Partner Institutes network

GCR Aggregation Aggregates data of data over the year Collection of Combines publicly data available data with survey data that captures the perceptions and observations of business leaders in a given country

WCI Aggregates data over a 5-year period

Survey data are drawn from the Executive Opinion Survey (4,166 respondents) Hard data are taken from international and regional organizations and private institutes

Conclusion
GDP and competitiveness are normally positively related , but there still some exception like Iceland which has low GDP but high competitiveness GDP per capita are normally in positive relation Real GDP growth rate are in negative relation to competitiveness They are only one of the sub-indexes should not focus on one pillar only