An alternative index to the global competitiveness index

Area of Science:

• Economics
• Econometrics
• International Business

Background:

• The World Economic Forum Global Competitiveness Index (WEF-GCI) is widely used but relies on subjective data.
• The inclusion of opinion surveys (soft data) may introduce political biases and individual interests into the rankings.

Purpose of the Study:

• To review the methodology of the WEF-GCI.
• To propose and construct an alternative competitiveness index using only objective data (hard data).
• To assess the validity and benefits of the proposed index compared to the WEF-GCI.

Main Methods:

• Review of the World Economic Forum's Global Competitiveness Index (WEF-GCI) methodology.
• Application of Exploratory Factor Analysis (EFA), a multivariate statistical procedure, to determine data weights.
• Construction of a new index based solely on objective data from the WEF-GCI.

Main Results:

• The proposed alternative index demonstrates a high degree of association with the WEF-GCI rankings.
• The new index successfully excludes subjective valuations from opinion surveys.
• Rankings derived from the alternative index are free from political biases and individual interests.

Conclusions:

• An objective-data-only competitiveness index can be reliably constructed using Exploratory Factor Analysis.
• This alternative index provides a more objective and unbiased measure of national competitiveness.
• The proposed methodology offers a valuable alternative for assessing global competitiveness, enhancing data integrity.