Economic Indices on a Global Scale

This year’s Global Competitiveness Report 2000, released in September by the World Economic Forum, marks a significant departure from earlier editions by its level of sophistication in addressing the increasingly global nature of the economies of the Forum’s 59 member nations. While past reports have relied on one index providing a snapshot of a country’s economic performance, two indices are used to measure productivity and advances in the standard of living over different time horizons. A third index is introduced this year to measure the role of technology and innovation in a country’s economy while a fourth index is added to reflect the environmental sustainability of nation’s economic growth.

The United States replaced Singapore for top ranking among countries in a Growth Competitiveness Index developed by Jeffrey Sachs and Andrew Warner of Harvard University. The index is designed to capture the ability for a country to achieve rapid economic growth over a long-period. Countries scoring high on economic indicators shown empirically to be related to cross-country growth rates are deemed competitive through the index.

Michael Porter, also of Harvard, developed the report’s Current Competitiveness Index, which is a measure of each countries ability to achieve high current productivity. Finland held top honors in the Current Competitiveness Index, while the U.S. took second place, followed by Germany.

The Economic Creativity Index, developed by Warner, assumes there are several paths to economic growth including one in which a nation is a center of innovation and another strategy that facilitates technology transfer and rapid diffusion of innovation. The index also takes into account the business climate in terms of accessability to venture capital and absence of administrative barriers. According to the World Economic Forum, the new index is an attempt to bring together under one measure several important aspects of innovation, technology transfer and diffusion. The United States ranked first, as an innovator, in comparison with countries good at adopting or importing technologies. Finland claimed second, followed by Singapore.

Also new this year is the Environmental Regulatory Regime Index. Developed by Porter and Daniel E. Esty of Yale University, this index attempts to understand the links between environmental regulation, sustainability and economic competitiveness. Finland, Norway and Switzerland finished in the top three places on this new index. The United States finished a distant ninth.

The Global Competitiveness Report 2000 includes profiles of each country, summarizing the strengths and weaknesses of each nation’s economy as well as data acquired through an Executive Opinion Survey conducted in conjunction with the report. To order the book, visit http://www.weforum.org