Opinion

Felix Salmon

Competitiveness rankings

By Felix Salmon
September 8, 2009

Another year, another silly fuss over the Davos Global Competitiveness Report. There’s lots of good, substantive analysis in the report each year, and each year everybody (I’m including myself here) ignores 99% of it and concentrates solely on the rankings. Daniel Indiviglio has a pretty good write-up of the report, but he gets the headline stuff wrong:

The rankings began in 2004, and this report marks the first time that the U.S. has fallen from the top spot — replaced by Switzerland, which was ranked second last year.

Actually, the rankings began in 2001; the methodology was then changed dramatically for the 2006-7 report. In which the United States came 6th. By that standard, 2nd place this year is perfectly respectable.

The fact is, of course, that one-dimensional rankings and league tables obscure much more than they illuminate, especially when they’re reliant on crazy two-decimal-places levels of specficity. (The US score of 5.61 in 2006-7, which was good for only 6th place, actually fell to 5.59 in 2009-10, where it was good for second place.) Let’s not get hung up on minuscule differences at the top of the table: it’s much more important to wonder what Uruguay (a/k/a “the Switzerland of Latin America”) is doing in 65th place, or why Croatia is 72nd, or why Argentina is 85th. Those are the countries to worry about and concentrate on.

Update: Lance says that the rankings go back at least to 1996, and he should know, he edited that report. But then there was a schism, and the war between the Global Competitiveness Report and the World Competitiveness Yearbook began. One must, I suppose, only expect competitiveness among competitiveness reports.

Comments
5 comments so far | RSS Comments RSS

And historically they have no relationship with future growth (which presumably is the point of them). See this post looking at the indices in the early 1990s (which Japan always topped!)

http://www.matthewturner.co.uk/Blog/2005  /09/competitiveness.html

Posted by Matthew | Report as abusive
 

The competitiveness rankings go back much further than 2001. I have the report from 1996 (edited by me) sitting in front of me. Singapore 1st, Hong Kong 2nd. US was fourth and Switzerland was 6th.

The methodology has changed at various points over the years. It all started as the World Competitiveness Report, and was a joint venture between WEF and IMD, the Swiss business school. But there was a falling out and competitiveness in competitiveness reports resulted. So IMD went on to publish its own World Competitiveness Yearbook (still going) and WEF renamed its effort the Global Competitiveness Report.

The most interesting aspect of being involved with this in the ’90s was the tussle we had with MIT economist Paul Krugman, who thought the whole idea of measuring country competitiveness was anathema. Whatever happened to him?

 

GIGO. They need to ask someone who does not have a personal financial interest in further tilting the playing fields of the economy into their own pockets. “If you’ll only make these changes to drain more productivity into my pocket, ‘competitiveness’ will be better. wink wink nudge nudge”

 

Oh, they go back way before 1996. That just happens to be one I still have in my bookshelves. Stephane Garelli, now at IMD, started the World Competitiveness Report in the early ’80s, I think.

 

Why don’t they call it for what it is: “The list of countries most likely to suck vast wealth from other nations at the expense of millions of human beings and not have any conscience whatsoever at the epic human misery (not to mention the environmental degradation) it causes.”

Seems like the lower you are on the list, the more likely its citizens can wake up not feeling completely filthy about themselves.

Posted by Grrrr... | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •