Course: “International Business Environment”
The task Topic:“Ukraine in the Global Competitiveness report”
(1) Describe the basic methodology of the most recent issue of the GCR available: http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf.
The Global Competitiveness Index is computed according to World Economic Forum’s methodology. It (methodology) is based on the combination of general public statistic data and results of global interview of different companies’ CEOs. This annual research is run annually by World Economic Forum together with a range of partner public organizations. The research started from 2004, every year the number of analyzed countries grows. In 2012 the number of analyzed countries grew for 6 new countries compare to the previous year and it became 144 (6 more, but 2 less). The WEF defines the national competitiveness as the ability of the country and its institutes to provide stable rates of economic growth in mid-term perspective. GCI is based on 112 indexed. 28 indexes are calculated basing on statistic data, others – basing on medium and big companies’ CEOs grades and evaluations. These 112 indexes are combined in 12 factors of competitiveness (12 pillars), which describes competitiveness of different counties with different level of economic development. All countries are divided into 5 different stages of economic development (main 3 stages + 2 transition stages). The key criterion for putting a definite country to a certain group is the GDP level per capita. Figure 1 shows the division of pillarsinto 3 main groups: factor driven, efficiency-driven and innovation-driven economies. (Source: http://reports.weforum.org/global-competitiveness-report-2012-2013/ page.7) The Factor-driven economies (1st stage of development) compete basing on endowments. On the 2nd stage efficiency-driven economies grow its competitiveness through the implementation of more efficient production processes and increasing of quality. The third stage - innovation driven economies make their competitiveness basing on implementation of innovations and using progressive processes and business-models. Thus, due to the methodology of GCI different components have different wages in these groups. Subindexes, which are more important for a certain group of countries, have more wages for this group. Figure2 shows the wages of subindexes for each group of countries (due to the stage of economic development). (Source: http://reports.weforum.org/global-competitiveness-report-2012-2013/ page.9)
Nevertheless, as the world development continues, it’s understandable, that factors themselves (or components of certain pillars) could be changed. Some adjustments in GCI calculating were made this year. They refer to components of 1, 3, 6, 7, 8, 9 and 12 pillars. The changes are in the Figure 3.
Pillar| Component| Moving of a component|
1| A variable capturing the extent| added|
3| the interest rate spread| removed|
6| Imports s a percentage of GDP| added|
7| Rigidity of Employment Index| removed|
8| Restriction on capital flows| removed|
9| mobile broadband| added|
12| patent indicator| Changed the source|
(2) What is Ukraine’s position globally on the summary index of competiveness? How did Ukraine’s global position change during the past several years; has it improved or deteriorated? In either case, speculate briefly about the reasons.
Ukraine improved its position in GCI for 9 positions (compared to 2011-2012) and took the 73rd place among 144 countries. Totally for last several years (2010 – 2012) Ukraine got the growth for 16 points. Due to this fact its rating is almost the same as in pre-crisis year of 2008 (the 72nd place). Looking to the dynamics of Total GCI rating of Ukraine, we observe the slice positive movement for 2 last years. It gives us the picture of after-crisis recovering (Figure 4)....