The Global Sustainable Competitiveness Index 2017 is out!

The Sustainable Competitiveness Index 2017

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.

The Sustainable Competitiveness World Map:

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

Credit Ratings vs. Sustainable Competitiveness

Why sovereign bond and credit ratings need to integrate sustainablility

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