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2015 competitiveness ranking adds weight to sustainability and job creation

Soon to be released IMD World Competitiveness Yearbook redefines competitiveness

April 14, 2015

The IMD World Competitiveness Yearbook, the leading annual report on the competitiveness of countries, is initiating the process of updating its definition of competitiveness with the aim of creating an even clearer image of what makes countries and companies successful in the global economy.

The survey ranks the performances of 60 countries based on 338 criteria, two-thirds of which reflect statistical data drawn from international and national sources, with one-third based on a poll of senior executives.

The yearbook, which has been published since 1989, currently defines competitiveness as "the facts and policies that shape the ability of a nation to create and maintain an environment that sustains more value creation for its enterprises and more prosperity for its people".

Prosperity is however a subjective concept, henceforth it is difficult to fit "prosperity" into a more general conceptual framework. Research points out that it is difficult to link national prosperity directly to enterprise performance. Some scholars note the absence of clear causality among the existing structural components of the competitiveness ranking.

The IMD World Competitiveness Center, therefore, proposes an updated definition of competitiveness: "the ability of a country to facilitate an environment in which enterprises can generate sustainable value". Value creation is measured by firms' long-term profitability and job-creation rates.

But for value creation to be sustainable, firms have to reduce the negative externalities of their economic activities. On employment, job creation is not the whole story; firms must also seek to promote job satisfaction.

Finally, the Center is developing a new tool for assessing competitiveness – the sustainable value creation "compass".

The compass will measure and gather in an image the four core components of sustainable value creation. These are: country environment, for example environmental regulations; country employment, for example public investment in education or health; company sustainability, or the degree to which sustainability criteria are integrated into the firm's core business strategy for long-term growth; and company talent dynamics, including work satisfaction of employees.

The upcoming yearbook, to be released in May, will not reflect the mentioned changes because the necessary data are not yet available for all countries. However, the new yearbook will use the compass to provide an example of the competitiveness profile of a hypothetical economy.

The IMD World Competitiveness Center has been a pioneer in the field of competitiveness of nations and world economy rankings for the past 27 years.

The 2015 IMD World Competitiveness Yearbook will be released on May 27.

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