Methodology

How do we rank and analyze the ability of nations to create and maintain an environment in which enterprises can compete?

Methodology in a nutshell:

  1. The World Competitiveness Yearbook ranks and analyzes the ability of nations to create and maintain an environment in which enterprises can compete.
  2. It means that we assume that wealth creation takes place primarily at enterprise level (whether private or state owned) - this field of research is called: "competitiveness of enterprises."
  3. However, enterprises operate in a national environment which enhances or hinders their ability to compete domestically or internationally - this field of research is called: "competitiveness of nations" and is covered in our research.
  4. Based on analysis made by leading scholars and by our own research and experience, our methodology thus divides the national environment into four main factors:

    • Economic Performance
    • Government Efficiency
    • Business Efficiency
    • Infrastructure
  5. In turn, each of these factors is divided into 5 sub-factors which highlight every facet of the areas analyzed. Altogether, the World Competitiveness Yearbook features 20 such sub-factors.
  6. These 20 sub-factors comprise more than 340 criteria, although each sub-factor does not necessarily have the same number of criteria (for example, it takes more criteria to assess Education than to evaluate Prices).
  7. Each sub-factor, independently of the number of criteria it contains, has the same weight in the overall consolidation of results, which is 5% (20x5 =100).
  8. Criteria can be hard data, which analyzes competitiveness as it can be measured (e.g. GDP) or soft data, which analyzes competitiveness as it can be perceived (e.g. Availability of competent managers). Hard criteria represent a weight of 2/3 in the overall ranking, whereas the survey data represent a weight of 1/3.
  9. In addition, some criteria are for background information only, which means that they are not used in calculating the overall competitiveness ranking (e.g. Population under 15).
  10. Finally, aggregating the results of the 20 sub-factors makes the total consolidation, which leads to the overall ranking of the World Competitiveness Yearbook.

The rankings are based on two types of data:

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IMD World Competitiveness Yearbook Methodology

By William Milner, Information Researcher at the IMD World Competitiveness Center

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