Northern Europe is leading the GSCI; US competitiveness set to decline if proposed new policies are all implemented; conventional sovereign bond ratings do not reflect full risks and potential of countries competitiveness
Contrarily to common measurements (GDP) and ratings which are mainly based on financial (economic output, the GSI measures the root causes that define national wealth and competitiveness.
The GSCI is based on the sustainable competitiveness model calculated through 111 measurable, quantitative indicators to exclude all objectivity. Performance data is also analysed against the trends over time to reflect not only the present, but also the outlook into the future. A comprehensive measurement for competitiveness. Sustainable competitiveness.
Key takeaways from the 6th edition of the Sustainable Competiveness Ranking 2017:
- Of the top twenty nations only three are not European – New Zealand on 13, South Korea on 16, and Japan on 20.
- Scandinavia covers the top 5 ranks. Sweden is leading the Sustainable Competitiveness for a second consecutive year – followed by the other 4 the Scandinavian nations.
- The top 20 are dominated by Northern European countries, including the Baltic states and Slovenia
- Germany ranks 14, the UK 22, and the World’s largest economy, the US, is ranked 29. The US ranks particularly low in resource efficiency, but also social capital - undermining the global status of the US in the future
- Of the large emerging economies (BRICs), China is ranked 32, Brazil 42, Russia 43, and India 121.
- Some of the least developed nations have a considerable higher GSCI ranking than their GDP would suggest (e.g. Laos, Timor, Burma, Bhutan, Suriname…)
- Asian nations (South Korea, Japan, Singapore, and China) lead the Intellectual Capital ranking. However, achieving sustained prosperity in these countries might be compromised by Natural Capital constraints and current high resource intensity/low resource efficiency
- The Social Cohesion ranking is headed by Northern European (Scandinavian) countries, indicating that Social Cohesion is the result of economic growth combined with social consensus
- The US is set for decline, in particular vs. China, if policies proposed under the new administration are to be fully implemented
- Conventional sovereign bond ratings do not reflect the full risk and potential associated with nation economies. They need to integrate sustainability, now.
Dark areas indicate high, light areas low Sustainable Competitveness
Download the Report: The Global Competitiveness Report 2017
Read the press release: Press Release - GSCI 2017
The aging super-power set for decline
The USA and China are the World's largest economies. The new US administration is prioritising a set of new policies. China has announced changes to its power and party governance structure on the recent party congress. Both are based on a outspoken rhetoric of national strength and pride, and both continue their respective economic policies of the past 2 or 3 decades.
The US – in particular under the new administration – is advocating a free a market approach, where as much as possible should be left to self-regulation by the market. China, on the other hand, continues to advocate a state-directed free market approach, where the state directs the economic development through investments and policies. With China pushing more and more on the World stage, it is possible that we have a new competition between two different state systems on our hands. Whether we like that or not.
In this light, SolAbility has evaluated the future impacts of US policies as proposed by the new administration on the ground – based on the 111 indicators used for the Global Sustainable Competitiveness Index. The results show that the US is set to forfeit competitiveness and drop from its current ranking of 20 in the Global Sustainable Competitiveness Index 2017 to somewhere in the 80s until 2025. China, on the other hand, is set to gain competitiveness until the mid-2020s, before the new authoritarian style is stifling further developments.
Download the Report: Trump-US, China: Sustainable Competitiveness Outlook
Credit rating define the interest a country has to pay on loans, credits, state bonds, in short – on debt. Considering the level of state debts, the credit rating has a significant impact on the capital cost of nations.
The most important rating agencies are based on the “3 sisters” – Standard & Poor's (S&P), Moody's, and Fitch Group that together dominate the global market. Unfortunately, these ratings are based almost exclusively on economic, financial and political indicators, many of which are qualitative (i.e. cannot exclude subjectiveness). They are not fully reflecting the opportunities and risks associated with the fundamentals of the country; quality of education, infrastructure, social cohesion, and the environment. In addition, there have been accusation of political bias after ratings, in some cases, were adjusted following election and referenda outcomes
The Global Sustainable Competitiveness Index on the other hand is based on quantitative (i.e. subjective) indicators. It based on the fundamentals that define the outcome, including economic success.
Current credit ratings and sustainable adjusted credit ratings for selected countries
The comparison between conventional sovereign bond ratings shows distinctive differences. Current sovereign ratings do not reflect real risks/opportunities. Credit ratings need to integrate sustainability.
Read more in the Sustainable vs Conventional Competitiveness Report: Sovereign bonds and sustainability
Korea & Sustainable Competitiveness
Top in Innovation, bottom in resource management
Korea is ranked on the 41st position of the Global Sustainable Competitiveness Index 2016. The breakdown of results shows a very mixed picture: Korea is the global Number One in terms of Intellectual Capital (the basis for Innovation) – but at the same time, the last of 180 nations in terms of resource efficiency. A very mixed bag.
This report is divided in two parts. Part one analysis Korea’s current status of competitiveness, while part two develops potential policies to ensure Korea’s sustainable competitiveness going forward.
The Global Sustainable Competitiveness Index (GSCI) is based on 109 quantitative performance indicators, analysed for current performance and recent trends to anticipate the future performance. Korea currently ranks #40 of 180 nations in the GSCI, scoring only 5% above average, but more than 25% below the best. Korea’s performance in this index is mixed: while Korea achieved the highest score globally in intellectual capital, it also scores lowest globally in resource intensity.
Korea’s performance and key deficits in each sustainable competitiveness dimension are:
- Natural capital, rank 154: Korea is a comparable small country considering the size of the population, with a limited area of arable land – and no significant mineral resources to speak off. The high water withdrawal rate is a source of concern – potential water scarcity and efficiency are issues that need to be looked at urgently.
- Resource intensity, rank 180 of 180: Korea has a higher share of manufacturing and energy-intensive industries than most other countries. However – Korea uses significantly more energy, water, and raw materials than other economies to generate economic output. High resource intensity is equal to higher cost for the economy, and urgently needs to be addressed – especially given Korea’s dependence on import of virtually all commodities and fossil energy.
- Intellectual capital, rank 1: Korea is doing well in the key area of innovation-driven competitiveness: education and R&D. However – maybe the country could benefit from a shift in focus from higher education to a more skills-based education system.
- Governance, rank 19: investments are at a high level and the infrastructure is modern. However, weak governance, and falling press freedom (from rank 31 to 70 in the last 10 years) are of concern
- Social capital, rank 65: while health care availability is guaranteed, the highest suicide rate in the World indicates some systemic social problems.
Download the Press Release -
Korea GSCI Press Release
Download the full report - Korea & Sustainable Competitiveness: Status & Outlook
What The Donald !!!
...maybe should be worried about.
Or: why the US is only ranked 32 in the Global Sustainable Competitiveness Index.
An analyis of the sustainable competitiveness of the USA, derived from the Global Sustainable Competitiveness Index
The US is currently only ranked 32 of 180 nations in the GSCI, scoring only 10% above average, but nearly 25% below the best. While the US scores above average in natural capital, intellectual capital and governance, the country is considerably below the global average in both resource intensity and social cohesion.
Why the US is not in the top league:
- Natural capital, rank 31: The US is a big and beautiful country with abundant natural resources. However – water scarcity and efficiency are issues that need to be looked at urgently, especially in the dry plains and on the West Coast.
- Resource intensity, rank 161: the US uses significantly more energy, water, and raw materials than other economies to achieve economic output. High resource intensity is equal to higher cost for the economy, and urgently needs to be addressed in order to MAGA.
- Intellectual capital, rank 19: compared to global peers the performance of US student is simply dismal, and R&D investments are scarily low, raising serious doubts over US’ ability to compete in an innovation-driven global economy.
- Governance, rank 41: No real news here – the lack of investment in infrastructure, and a high structural deficit remain the main concerns.
- Social capital, rank 114: high crime rates, and social inequality are not only dividing the nation – they are also costly.
Download the full analysis, The State of Competitiveness of the USA: What The Donald
The Global Sustainable Competitiveness 2016 is topped by Sweden
Scandinavia tops the GSCI (again); Germany ranked 14, Japan 15, UK 21, US only 32, China 37
SolAbility releases the rankings of the 5th edition of the Global Sustainable Competitiveness Index (GSCI). The GSCI is based on an inclusive competitiveness model, analysing 109 indicators. In order to exclude any subjectivity, all indicators are measurable, quantitative indictors derived from the World Bank and UN databases. The GSCI 2016 is topped by Sweden, followed by the other 4 Scandinavia nations. Countries from Northern Europe, the Baltic States and Eastern Europe dominate the top 20. The only non-European economies in the top 20 are New Zealand (12) and Japan (15).
The World’s largest economies show a mixed picture: Germany is ranked 14, Japan 15, the UK 21, and the US 32. The US is scoring particularly low in social issues, and resource intensity – indicating not only development potential, but also cost reduction opportunities.
Of the BRIC countries, China scores highest on rank 37, Brazil 41, Russia 45, and India 153. Social cohesion is the basis for any working economy. China is amongst the leading Nations when it comes to Intellectual capital and investments; however, the combination of limited natural resources, arid areas, and low resource efficiency could possibly jeopardise the future development of the country.
While there seems to be a certain correlation between the rankings of this index to current wealth levels as expressed in the GDP, these correlations are superficial. Some of the World’s richest countries, particularly the oil-rich countries of the Middle East, score significantly lower on the index than their GDP output would suggest. Some of the nominally poorest countries, on the other hand (e.g. Bhutan, Bolivia, Laos) are ranked considerably higher than their current GDP would indicate.
The USA is ranked 41th of 180 countries in the Global Sustainable Competitiveness Index 2015
The US scores below the global average in resource intensity and social cohesion, and while the intellectual capital score is considerably above the global average, it is also significantly below the global best score. In none of the fundamental 5 criteria the US scores in the global top 10. Key findings include:
- Natural capital: rank 50 of 180. While the US has large biodiversity, the decline of several resources (in particular the availability of fresh-water), environmental degradation and pollution negatively affect the natural capital score compared to higher ranked nations
- Resource intensity: 159 of 180. Not surprisingly, the US does not score well in resource efficiency. The US not only uses significant amounts of resources per head and GDP, but efficiency gains are also slow compared to leading economies
- Social capital: 113 of 180. High crime and violence rates, and the growing inequity amongst society groups, negatively affect score and prevent the country on fully capitalising on internal human resources
- Intellectual capital: 22 of 180. High school enrolment rates and high number of patent applications (both per capita and GDP) ensure a fairly high score. However, the gap in education quality (the US has the World’s best, but probably also the World Worst universities), decreasing quality of school, and declining expenditure for R&D undermine the future growth potential
- Governance capital: 19 of 180. The sheer size of the US economy gives the country an undisputed advantage in influencing World policies and treaties according to its will. However, declining investments in infrastructure, services, and industrial manufacturing are a worrying sign in the perspective of future development.
Sustainable competitiveness is the ability to generate wealth and income, and provide security and freedom for all citizens without compromising the ability of future generations to sustain or increase current levels of the same
Read the press release – USA only ranked 41 in GSCI 2015
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