The Global Competetiveness Report

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The Global Sustainable Competitiveness Index ranks the World's nations according to their current level of sustainable competitiveness and prospect for achieving sustainable development based on data monitored and collected by the World Bank, the IMF, and various UN agencies

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The Global Competetiveness Report

  1. 1. Acknowledgments Acknowledgments The compilation and calculation of this Index would not have been possible without the data and time series made available by various UN agencies (UNDP, UNEP, UNICEF, FAO, WHO, WMO, www.data.un.org), the World Bank, the International Monetary Fund (IMF), and other non-governmental organisations (including Transparency International, Reporters without Borders, The New Economics Foundation, The Institute for Economics and Peace, and The Fund For Peace). The Global Sustainable Competitiveness Index
  2. 2. About This Report Research and compilation by SolAbility April 2012 © SolAbility. All rights reserved. Reproduction welcome with citation of source About SolAbility SolAbility is a sustainability service provider based in Korea, providing sustainable management services to corporate clients and advanced sustainable investment research covering Pan-Asian equities for institutional investors. Corporate clients who have implemented sustainability strategies and management systems developed and designed by SolAbility have been recognised as global sustainability leaders in their respective industry sector by various corporate sustainability indexes, including (but not limited to) the Dow Jones Sustainability Index and the FTSE4Good Index. SolAbility 802 Meritwin 856 Ilsan, South Korea www.solability.com contact@solability.com The Global Sustainable Competitiveness Index
  3. 3. Table of contents The Global Sustainable Competitiveness Index
  4. 4. Table of contents Executive Summary 8 Methodology Sustainable Competitiveness 16 Indicators 19 Data Sources 21 Calculation 22 Limitations 23 Sustainable Competitiveness Overview 24 Rankings & analysis 26 Natural Capital Model & Indicators 30 Rankings & analysis 34 Resource Intensity & Efficiency Model & Indicators 38 Rankings & analysis 42 Innovation & Competitiveness Model & Indicators 46 Rankings & analysis 50 Social Cohesion Model & Indicators 54 Rankings & analysis 58 Rankings at a Glance Sustainable Competitiveness 62 All Areas 64 Natural Capital 68 Resource Intensity 69 Sustainable Innovation 70 Social cohesion 71 The Global Sustainable Competitiveness Index
  5. 5. Foreword The Global Sustainable Competitiveness Index
  6. 6. ForewordDear Reader,The performance of countries and their competitiveness is measured and comparedby the Gross Domestic Product, expressed in a monetary value. However, it has beenargued that financial indicators (such as the GDP) are not sufficient to fully andcomprehensively express a national balance sheet. The GDP is based on economicfactors and monetary earnings, and does not incorporate external costs such as theenvironment or social cohesion - both of which are significant factors for achievingeconomic success and sustained development. Annual changes in GDP growth ratesare often used as an indicator for the economy’s well-being and development, butthe GDP describes a moment in time and does not allow to make judgments on thelong-term potential and future outlook of countries in the perspective of sustainabledevelopment.It is widely recognised that natural resources are finite, and that the impact of humanactivities on the natural environment do influence future prospects of societies andeconomies. There is also increasing evidence that managing companies byincorporating sustainability in decision making, and investing with sustainabilityprinciples yields significant long term financial benefits. Tools have been developed tomeasure the long-term sustainable growth potential of corporations. With the wealthof statistical data available on a global level and the power of computers to processthis data, an alternative competitiveness measurement to the GDP that includes “non-financial” indicators can be calculated.Based on our experiences in developing corporate sustainability measuringmethodologies, we have developed a model to evaluate country sustainability. Keysustainability data series have been analysed with the aim to evaluate the currentstatus and future outlook of nations-economies in a broader perspective based on keysustainability factors. Given the long-term perspective of sustainable development,country sustainability is equal to long-term competitiveness (“sustainablecompetitiveness”). This Report describes the methodology and the results of a GlobalSustainable Competitiveness Comparison for 176 countries.We hope you find this report informative and inspiring. Andy Gebhardt, CEO Lee Mi-Hyang, Managing Director The Global Sustainable Competitiveness Index
  7. 7. Executive summary The Global Sustainable Competitiveness Index
  8. 8. Executive summaryThe National Sustainability Model“Sustainable development is development that meets the needs of the present withoutcompromising the ability of future generations to meet their own needs”.The definition of sustainable development was formulated by the Brundtland Commission inpreparation for the Rio Conference in 1992. In the 20 years since then, many businesses haverealised that there are economic opportunities and benefits to sustainability - in the form ofcost savings and new business opportunities (every challenge is an opportunity). A numberof corporate sustainability indexes have been developed, aimed at harvesting thesebenefits in the realm of stock investments. However, there is no agreed form of measuringsustainability of nations. Advancements in information technology have facilitated thecollection of an immense wealth of statistical data and time series across all sustainabilityissues - the economy, society, the environment. Further more, computing power allows foranalysing and comparing these data series.Adapting corporate sustainability evaluation methodology for national sustainabilityassessment requires adjustments to the corporate sustainability model, leading to asustainability model based on four pillars: natural capital, resource intensity, sustainableinnovation & competitiveness, and social cohesion: Sustainable Development Environmental Sustainability Economic Achievements Social Stability Sustainable Natural Capital Resource Intensity Social Cohesion Innovation Land Energy Education Health Care Water Water Innovation Equal opportunities Biomass Climate Change Infrastructure Crime Mineral resources Raw materials Economic policies FreedomImplementation of intelligent policies in support of those four pillars will allow countries toachieve sustained and sustainable development. The Global Sustainable Competitiveness Index 9
  9. 9. The Sustainable Competitiveness World Map69 data series, 176 countries69 key sustainability indicators chosen based on relevance and data availability have beenanalysed to calculate a quantitative national sustainable performance score, grouped in 4sustainable development themes: resource efficiency, natural capital depletion, sustainableinnovation & competitiveness, and social cohesion. The score is based on scoring the currentdata as well as the trend (increase/decrease) over the past 5 years. The combination ofabsolute comparison and trend analysis reflects a momentary picture as well as being anindication of the long-term sustainable development potential of countries. The SustainableCompetiveness Ranking reveals some surprising, and other not-so-surprising results: • The Sustainable Competitiveness Index is topped by the Scandinavian countries, followed by North-Western European Nations. • The Natural Capital and Resource Intensity rankings are topped by countries with a rich biodiversity, favourable climate and sufficient water resources. Clear distinctions are visible between the more industrialised countries, indicating that some countries will face lower obstacles with the coming raw material and energy scarcity • Asian nations (Singapore, China, Japan, South Korea) top the Sustainable Innovation Competitiveness 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 countries, indicating that Social Cohesion is the result of economic growth combined with social consensus • The Worlds largest economy, the USA, is ranked 30th. Of the booming emerging economies, Brazil is ranked 25th, South Korea 33rd, China 36th, Russia 56th, and India 100th The Sustainable Competitiveness Map: dark colour indicates high ,light colour limited competitiveness 10 The Global Sustainable Competitiveness Index 13
  10. 10. Sustainable CompetitivenessExecutive summary SUSTAINABLE COMPETETIVENESS (selection)The Sustainable Competitiveness Score is Country Rank Scorecomposed of the four sustainability pillars – Denmark 1 58.8Natural Capital, Resource Intensity, Sweden 2 58.5Sustainable Innovation & Competitiveness, Norway 3 57.6and Social Cohesion. Individual indicators Austria 4 57.6and the four pillars have been weighted Finland 5 57.6according to their relevance, the human Switzerland 6 56.5 Germany 7 56.2leverage factor, and the accuracy of the Netherlands 8 56.2underlying data used. The “human leverage Japan 9 56.0factor” refers to the time and resource Canada 12 55.6allocation required to change or improve the New Zealand 14 54.4momentary status of the indicator in question. France 15 54.4The Sustainable Competitiveness is, to a small Portugal 20 50.3extent, based on natural capital (beyond the Singapore 21 50.0influence of human leverage), but to a Spain 22 49.9significant larger extent on human activities Australia 23 49.9and policies. Provided sufficient political will Brazil 25 49.5and collaboration of the involved players - United Kingdom 26 49.5authorities, communities, economic entities - Italy 28 49.2 USA 30 48.4coupled with pragmatic policies beyond South Korea 33 47.7ideology or economic theories, a nation is Argentina 34 47.5able and capable of significantly improving China 36 47.3its Sustainable Competitiveness over time. Greece 40 46.8However, the absence of intelligent policies Poland 42 46.6and incentives will lead to diminishing Guyana 43 46.2potential of achieving sustainable Sri Lanka 54 44.7development with all its tangible and Russia 56 43.9intangible benefits. Countries with a current Egypt 59 43.7 Indonesia 61 43.4high income (GDP per capita) but Chile 64 42.9comparable low Sustainable Competitiveness Malaysia 76 40.3are facing the potential of decline. Lower Turkey 80 39.9income countries with low Sustainable Kuwait 85 39.1Competitiveness are likely to face serious Philippines 86 39.0obstacles to improve there current status and Algeria 89 38.9the livelihoods (living standard) of its Vietnam 93 38.6populations. India 100 38.3 Morocco 116 37.2 Saudi Arabia 120 36.6For additional information and detailed Jordan 128 35.6analysis please refer to the Sustainable Bangladesh 129 35.6Competitiveness section or the full ranking Mexico 131 35.4tables for all 176 countries. Nigeria 132 35.4 The Global Sustainable Competitiveness Index 11
  11. 11. Natural CapitalExecutive summaryNatural Capital Ranking (selection)Country Rank Score The Natural Capital score is composed ofSuriname 1 63.3 indicators measuring the availability, andGuyana 2 63.0 level of degradation, of natural resources. TheLatvia 3 61.0 indicators used to evaluate the naturalNew Zealand 4 61.0 capital cover the availability of freshwaterCanada 5 60.5 and renewable water resources, biomassColombia 6 60.3 resources (forests, biodiversity) and loss ofBelarus 7 60.0 biomass due to human activity. In addition,Brazil 8 59.7Laos 9 58.7 the availability of arable land and level ofFinland 10 58.4 degradation, the area potentially suitable forDenmark 11 58.2 agricultural use, as well as the availability ofUSA 15 55.9 mineral resource have all been incorporated.Russia 18 54.9 Some of these indicators are determined bySweden 22 54.0 geography, region, climate, and populationNorway 27 52.9 density. While the availability of naturalFrance 29 52.7 capital is as it is (i.e. beyond the influence ofArgentina 31 51.6 human capabilities), the status ofIndonesia 33 50.8 degradation is a result of human activity. TheAustralia 36 50.0Egypt 45 48.3 level of degradation is a measurement of aNetherlands 55 46.5 country’s capability to manage its naturalJapan 59 45.0 capital in a sustainable manner.Malaysia 67 44.1 Countries with a high natural capital scoreGermany 70 43.9 are well positioned to achieve sustainableItaly 72 43.3 development through:Vietnam 74 42.5 • The availability of sufficient agriculturalPortugal 78 42.1Austria 81 41.4 resources to feed its population andGreece 83 40.7 potentially export agricultural productsBangladesh 84 40.6 • The availability of sufficient and renewableSouth Korea 92 40.4 water resources for agricultural andPhilippines 98 39.8 industrial purposes as well as human needsSouth Africa 101 39.6 • The availability of recreational areas forSwitzerland 104 39.1 the domestic population, also indicatingSaudi Arabia 108 37.8Poland 111 37.3 potential for tourismKuwait 113 37.2 While today’s global trade have madeSri Lanka 114 37.1 countries independent of domesticChile 119 36.6 agricultural self-sufficiency, natural capitalSpain 120 36.1 cannot be substituted and needs to beUnited Kingdom 121 36.1 carefully managed.Mexico 124 35.7 For a additional information and detailedAlgeria 128 35.3Thailand 134 34.5 analysis please refer to the Natural CapitalChina 136 34.2 section or the ranking tables. 12 The Global Sustainable Competitiveness Index
  12. 12. Resource IntensityExecutive summaryThe Resource Intensity score is composed of Resource Intensity Ranking Country Rank Scorenational and industrial efficiency coefficients. Sudan 1 61.3In order to reflect both the absolute Sri Lanka 2 60.3consumption of resources as well as the Albania 3 60.1economic productivity of resource Burma 4 60.0consumption, consumption data was Tajikistan 5 59.2calculated per capita as well as a function of Angola 6 58.3the GDP. Indicators used includes water Republic of Congo 7 57.1consumption, energy usage, GHG emissions, Switzerland 8 56.9 Nigeria 9 56.7waste indicators, and raw material usage. In Philippines 14 55.3addition, the raw data was analysed for the Austria 24 54.0current consumption data as well as the Portugal 29 53.0direction of trends over recent years in order Italy 35 52.2to incorporate the future performance of the Argentina 37 52.1country in the score. Brazil 40 51.6The leading nations in this ranking include less Netherlands 46 51.2developed economies with a low per-capita Spain 47 51.0resource consumption. However, there are Greece 53 50.5distinctive differences visible within the Singapore 57 49.9 Germany 60 49.6industrialised nations. Countries with a low France 63 49.1Resource Intensity score are facing obstacles Sweden 65 49.0to achieve sustainable development in terms United Kingdom 77 47.8of: Kenya 79 47.6• Depletion of natural resources (in Japan 90 45.4 particular water resources) Morocco 91 45.2• Higher production cost through lower Indonesia 92 44.8 New Zealand 93 44.6 efficiency, potentially multiplied by the India 114 42.8 rising oil price and other energy costs), Bangladesh 117 42.3 leading to lower industrial competitiveness Canada 118 42.3 and margins Thailand 119 42.2• Higher dependency on imports of raw Pakistan 122 41.3 materials and the fluctuations on Denmark 123 41.2 international commodity markets USA 124 41.2 Poland 126 40.9Resource intensity and efficiency can be Chile 127 40.9influenced by a set of sensitive policies and Egypt 128 40.9incentives. A decade of intelligent policy Turkey 130 40.0making can make a significant difference. Mexico 140 38.6 Finland 142 38.2For a additional information and detailed Russia 146 36.9 Norway 147 36.2analysis please refer to the Resource Intensity China 148 36.1section or the data tables. The Global Sustainable Competitiveness Index 13
  13. 13. Sustainable InnovationExecutive summarySustainable Innovation & Competitiveness The Sustainable Innovation score is aimed atCountry Rank Score evaluating a country’s competitiveness in aSingapore 1 65.5China 2 62.1 knowledge-driven high-tech world, todayJapan 3 60.4 and in the foreseeable future. The score isAustria 4 60.1 calculated based on indicators incorporatingNorway 5 59.6 education availability and education quality,South Korea 6 58.9 R&D efforts and importance, businessNetherlands 7 58.9 facilitation environment, infrastructureDenmark 8 58.6 indicators, and the Gross National Income asSwitzerland 9 58.2 an economic indicator. All indicators haveGermany 10 58.0 been analysed for current performance asSweden 11 57.0 well as the trend over recent years in order toFinland 12 56.9 incorporate the future performance outlook.Portugal 18 55.3Canada 21 54.1 The sustainable innovation ranking is toppedUnited Kingdom 22 53.7 by Asian nations: Singapore, China, JapanFrance 23 53.5 and South Korea (6 th) where educationSpain 24 53.1 historically and culturally was and isAustralia 25 52.6 considered highly important. Other nations inUSA 27 51.4 the top ten are Central European Countries,Brazil 28 51.2 with Brazil in 28th place the highest countryNew Zealand 29 50.9 from another continent.Chile 32 50.6 While the leading countries in this list are set toItaly 36 48.4Russia 38 47.2 be economically highly successful in the nearTurkey 46 45.9 future, countries with a low SustainablePoland 50 44.5 Innovation score are likely to:Saudi Arabia 51 44.3 • Face a lack of qualified workers to sustainAlgeria 52 43.9 or kick-start high-tech industriesGreece 56 43.3 • Remain on a low level of industrialisation,Jordan 59 43.1Argentina 60 43.0 facing difficulties to catch up on with theKuwait 76 40.0 leading nationsSouth Africa 80 38.3 • Dependent on imports to satisfy high-techMalaysia 81 38.2 technology needs, requiring theIndia 86 37.3 generation of foreign exchange throughIndonesia 90 37.0 export of low-value goodsVietnam 96 35.4 Improving the innovation capability requiresEgypt 102 34.0Morocco 109 32.8 investments in education and infrastructure,Thailand 114 32.0 coupled with target industry developmentMexico 119 31.2 programs, possibly accompanied byPhilippines 120 31.2 protective measurements.Pakistan 122 30.5 For a additional information and detailedUnited Arab Emirates 123 30.3 analysis please refer to the SustainableKenya 134 28.1 Innovation section or the ranking tables. 14 The Global Sustainable Competitiveness Index
  14. 14. Social CohesionExecutive summaryIn order to capture the full reality of the social Social Cohesion Ranking (selection) Country Rank Scorestatus of a nation, indicators covering a Norway 1 78.3variety of issues have been incorporated: Iceland 2 76.1health status, availability and affordability of Denmark 3 75.5health care systems, equal opportunity Finland 4 75.0factors (gender equality, economic equality), Ireland 5 74.9demographic balance, crime levels, public Sweden 6 73.7services, freedom indicators (freedom of Austria 7 73.0expression, human rights), and qualitative life Germany 8 71.5satisfaction indicators compiled by other Switzerland 9 71.1research institutions. All indicators have been Japan 10 69.8analysed for current performance as well as Netherlands 12 66.1 Canada 16 64.8the trend over recent years in order to Poland 17 64.4incorporate the future performance outlook. France 20 62.1The ranking is dominated by the New Zealand 21 62.0Scandinavian and Central European Australia 22 60.8countries, with only Canada and Japan Spain 23 57.8breaking into the top 20. While for poor United Kingdom 24 57.8countries a low score indicates difficulties in Egypt 27 56.6achieving sustainable development, for high Greece 31 55.0income countries a low score indicates a Italy 36 53.5 Singapore 40 52.0society in decline. Countries with a low Social South Korea 41 51.6Cohesion score are likely to face some of the United Arab Emirates 43 50.2following problems: Kuwait 47 48.7• Higher child mortality and generally lower Portugal 49 48.2 health levels, leading to higher long-term Vietnam 52 47.4 costs and lower worker productivity China 53 47.3• Higher crime rates due to lack of Argentina 55 46.3 Bangladesh 58 46.1 economic opportunities or high income Malaysia 61 45.8 inequality, leading to increased insecurity, Jordan 64 45.2 additional security cost, and barriers to Indonesia 69 44.8 investment India 71 44.2• General lower life satisfaction, leading to USA 78 42.6 lower motivation and efficiency Morocco 80 41.6 Saudi Arabia 84 40.5 Turkey 85 39.8 Chile 87 38.7For a additional information and detailed Mexico 88 38.6analysis please refer to the Social Cohesion Algeria 90 38.4section or the ranking tables. Pakistan 93 37.4 Philippines 99 35.7 Brazil 102 34.6 The Global Sustainable Competitiveness Index 15
  15. 15. Methodology The Global Sustainable Competitiveness Index
  16. 16. The Sustainability of a NationMethodologySustainability modelsThe three-dimensional sustainability model ofreconciling the economy, the environmentand the society is often used and applied inthe corporate world to evaluate andmanage sustainability issues andperformance.Corporations are entities that operate in verydifferent boundaries and with different goalsthan states and nation-economies. Theelements of the model therefore have to beadapted to the characteristics of nations andtheir fundament of sustained prosperity.While corporate or economic entities(depending on the nature of their business)are working with natural capital, they do notown it, and have the opportunity to move on(geographically, as well as to other businessfields) at any given moment. Transport andinternational trade have made countries andpeople less dependent on their immediateenvironment, However, countries andpopulation cannot simply move on shouldfundamental resources (water, agriculturaloutput) become scarce or the countryinhabitable due to climate change. At theend of the day people rely on, and live off,the natural capital of their environment forbetter or worse.For the purpose of evaluating thesustainability and sustainable developmentlevel (which is equal to sustained economicdevelopment), a fourth element – the naturalcapital – has been added to the threeelements of innovation competitiveness,resource efficiency and social sustainability. The Global Sustainable Competitiveness Index 17
  17. 17. Sustainability FactorsMethodologyNational SustainabilityThe National Sustainable Competitiveness Score has been calculated based on 69 dataindicators grouped in 4 pillars:20 years after Rio, the concept of “Sustainability” is widely used and applied. “Sustainability”or “Sustainable development” is a broad concept, encompassing a large number of themesand issues. In addition, many of the issues are dependent on each other, and are often inter-acting. Factors determining the development level of a country can or should to be viewedfrom a long-term (sustainable) perspective. Given the complexity – the number of issues, inter-relationships and changes over time - it might be argued that “sustainability” is betterdescribed in qualitative than quantitative terms. However, a qualitative description is alwayssubject to the subjectivity and background of the describer. Numeric values (single datapoints), in contrast, are not subjective. The data collected by the various global institutionsacross all countries contain numerous single indicators (quantitative indicators) that are anexpression of the current sustainability level of a certain aspect of sustainability. In order toexclude subjectivity, this Index has been calculated purely based on quantitative indicators.The quantitative indicators are carefully chosen as expressions of relevant aspects ofsustainable development, based on a sustainability model that ensures coverage of allrelevant aspects of sustainability that can be measured in numbers. The sum of all theseindicators together reflect the overall sustainability and sustainable competitiveness level of acountry. 18 The Global Sustainable Competitiveness Index
  18. 18. Sustainability IndicatorsMethodology Arable land per capitaNatural Capital Potentially arable landThe natural capital of a nation or countryconsists of the natural environment, which is Cereal yielddefined by a mixture of size, population, Land degradationgeography, climate, biodiversity and natural Desertification riskresources (renewable and non-renewable Natural Forest area & forest lossresources), as well as the depletion of thoseresources. The combination of these factors Capital Extreme weather eventsand the level of depletion of the natural & Renewable freshwaterresources due to human activity and climate Natural Inland waterchange represents the future potential of Capital Biodiversity potentialsustaining a prosperous livelihood for the Depletion Endangered speciespopulation and the economy of a nation. Resource depletionIndicators used encompass forests and 18 databiodiversity indicator, agricultural indicators, Ecological footprint pointsland degradation and desertification, water Population densityresources, minerals and energy resources, Energy self-sufficiencypollution indicators and depletion indicators. Air pollution SO2 emissionsResource Intensity Hazardous wasteThe more efficient a nation is using resources,the smaller the negative impacts of apotential supply scarcity of resources (energy, Energy per capitawater, and minerals). Higher efficiency is also Energy per GDPequal to lower cost per production unit in GHG per capitaagriculture, industrial production, and to alesser extend also in the service sector. GHG per GDPEfficient use of resources and energy is an Water per capitaindicator for a nation’s ability to maintain orimprove living standard levels both under a Resource Water per GDPbusiness-as-usual scenario of the future and Intensity Steel per capitaunder changing external economic or geo- Steel per GDPpolitical circumstances and influences. 14 data points Electricity per capitaIndicators used cover water usage anddepletion, energy usage, energy intensity Electricity per GDPand energy sources, climate change Renewable electricityemissions and intensity as well as certain raw Coal electricitymaterial usage. However, data availability forraw materials consumption other than steel is Hydropower electricitylimited and therefore could not be included. Transmission losses The Global Sustainable Competitiveness Index 19
  19. 19. Sustainability IndicatorsMethodology Primary completion Sustaining Innovation & Competitiveness Primary school repetitions The backbone of sustained economic Secondary completion success is the ability to continuously improve Tertiary completion and innovate on all levels, and throughout all institutions (not limited to industrial or Sustainable Innovation & Mean school years technology R&D). Sustaining competitiveness GNI per capita also requires a long-term view beyond Competitiveness Investment momentary individual or political interests and 18 data points R&D spending per GDP opinions, and long-term investments in crucial R&D FTEs areas are needed. Economies that are being deprived from investments sooner or later Patent applications face decline, as some nations of the formerly Business registrations “leading” West are currently learning the High-tech exports hard way. Trademark registrations Indicators used cover educational levels, R&D Unemployment performance indictors, infrastructure Industry-service balance investment levels, employment indexes, the balance of the agricultural-industrial-service Obesity rate sectors, business environment indicators, Corruption index obesity (as a measurement of worker Corporate bribery efficiency), and corruption levels affecting business development. Child mortality Hospital bed availability Social Cohesion Doctors per capita Last but not least, nations and societies need Overweight ratio some minimum level of social cohesion, Birth per women coherence, and solidarity between different Teenage mothers regions, between authorities and the people, Women in parliaments between interest groups, between income Social Population over 65 levels, between generations, and between Cohesion Public services individuals. A lack of social cohesion in any of GINI coefficient the above aspects can seriously undermine 19 data Income quintile ratio the long-term stability which an economy points Poverty trends requires as a basis to thrive in the long run. Life satisfaction Indictors used cover health performance Press freedom index indicators, birth statistics, income differences, Peace index equal opportunities (gender, economic), Theft cases per capita freedom of press, human rights Conflicts with laws considerations, and the level of crime against Prison population both possession and humans. Homicide rate 20 The Global Sustainable Competitiveness Index
  20. 20. Scoring MethodologyData sourcesData sources were chosen according to theirreputation and reliability (as well as UNDPavailability of global data). The largestpercentage of indicators was derived fromthe immense wealth of the World Banks FAOindicator database, followed by data setsand indicators provided by various UNagencies. UNEP World BankCalculation WHOThe raw data as provided by the variousdatabases consist of numerical values. While IMFvalues can be ranked against each other, Othersthey cannot be compared or added to othervalues (two apples plus three oranges are notequal to five pineapples). It is thereforenecessary to extract a scalable andcomparable score from the raw data as a firststep. In the second step, the relativeimportance of the indicator is assessedagainst other indicators to calculate thesustainability performance.Inclusion of trends: analysis over timeCurrent or recent data on its own limits theperspective to a momentary picture in time.Of equal importance are recent trends anddevelopment of the performance. Analysingtrends and developments allows forunderstanding of where a country is comingfrom, and more importantly, indicates thedirection of future developments. Increasingagricultural efficiency for example indicatescapability to feed an increasing population,or the opposite if decreasing. Where sufficientdata series are available, the trend was 2000 2005 2010 2015calculated for 5 or 10 year periods andscored to evaluate the current level as well as While the momentary picture of these two series mightthe future outlook and sustainability potential be equal in 2010, the grey series is likely to improve in the future, whereas the blue line is likely to decreaseof a country. The Global Sustainable Competitiveness Index 21
  21. 21. Weighting Methodology Scoring of individual indicators When comparing raw data of country variables, the “absolute best” cannot be defined. Scores therefore cannot be calculated against a best practice score, as is usually practiced in corporate sustainability performance evaluation. For the purpose of this index, the raw data was analyzed and then ranked. Trough calculation of the average deviation, the top quintile (the best 20%) receives a high score, the lowest quintile (the lowest 20%) receives the lowest score, where 100 is the highest score while 0 is the lowest score. Weightings The simplest mathematical methodology to100 calculate the sustainability performance from individual scores would be to average all 22.5 indicators. However, some indicators have a higher importance to the long-term 75 development and competitiveness of a country than others; for some indicators, the 32.5 data is accurate, for other less accurate, and yet other indicators can be influences trough 50 100 government policies or other measurements (provided sufficient political will or economic 20 incentives), while other indicators just are as they are (beyond the influence and 25 manageability of current human powers). The weightings of individual indicators are 25 calculated based on the above three criteria: economic relevance, data accuracy, and 0 human ability to influence the variable trough Natural Resource Competitiveness Total Cohesion Intensity Capital policies, targeted sustainable investment or Social Innovation & other measurements. The application of this methodology led to the weightings of the four sustainability criteria as presented in the graph to the left. 22 The Global Sustainable Competitiveness Index
  22. 22. Limitations of Quantitative DataMethodologyData SourcesOnly data from reliable sources was included in the index. Most data points and data serieswere extracted from the World Banks statistical database as well as from the combined UNdatabase that contains statistical data across several UN agencies.Data reliability & accuracyThe data sources (World Bank, UN agencies) are considered reliable and unbiased. Rawdata from the various databases was used as a basis for calculation as-is, i.e. without verifyingthe actual data.Limitations of quantitative analysisIn order to exclude subjectivity, only quantitative data has been taken into account.However, quantitative indicators sometimes are not able to differentiate or express real andactual levels of quality. High spending on health care for example does not necessarilyguarantee high quality health care system available for the average citizen. Equally, thepercentage of school enrollment(on all levels, form primary levels to college and universities) isnot necessarily an expression of the quality of the education. However, for some indicators,quality is equally important to quantity from a sustainability viewpoint. For such indicators,quantitative indicators have limited informative value and serve as a proxy.While explanatory power of quantitative indicators is limited, conducting a qualitativeevaluation of the 69 indicators used on the global level would go far beyond the limitations ofthis index. For indicators with a potentially low correlation between quantity and quality, theweighting has been adjusted accordingly.Timeliness of dataData for 2011 is not yet available for most indicators from the databases used for this index.Most data used for this index date from 2010. Where 2010 data was not available, 2009 data,and in some cases, 2008 data has been used.Availability of dataFor some indicators data is not available for all countries (in particular for the less or leastdeveloped economies). If the lack of data would be scored as “zero”, the final score forthose countries would be negatively affected. In order to present a balanced overall picture,the missing data from those countries has been extrapolated based on regional averages,income and development levels, as well as geography and climate. The Global Sustainable Competitiveness Index 23
  23. 23. Sustainable Competitiveness The Global Sustainable Competitiveness Index
  24. 24. Sustainable CompetitivenessRegional SpreadRegional spread ScandinaviaScandinavia as a region achieves the highestSustainable Competitiveness score, followed North-western Europeby North-West Europe, Australia & New Australia & New ZealandZealand, North America and North-East Asia –all areas in the Northern hemisphere. Central North AmericaAsia is the only region that falls North-South North-east Asiadivide. From a European perspective, it is Eastern Europeinteresting to note that Eastern Europeachieves higher scores than Sothern Europe Southern Europe(which has nominally higher income levels). South AmericaAll African Regions are in the bottom half,joined by Central America and the Middle South-east AsiaEast. The high-income countries of the Middle Central AsiaEast have sustained their economic successwith the exploitation of their mineral Northern Africaresources. The low Sustainable Central AmericaCompetitiveness of the region raises concerns Western Africaon whether those countries will be able tomaintain or sustain their development level Southern Africaonce there fossil fuel wealth subsidies. Middle EastPart of the objective of this index was toevaluate whether the commonly poor Eastern Africaoutlook of African nations would look different 0 10 20 30 40 50 60when measured against non-financialindicators. Unfortunately, this seems not to bethe case. -50% -30% -10% 10% 30% 50% Denmark IrelandAverage deviation Slovenia ItalyOnly 38% of the 176 countries assessed MaltaSustainable Competitiveness score is above Bhutan Hungarythe average score, i.e. nearly two thirds (62%) Chileare below the average score. The large Greenlanddifference means that there is large gap Mauritius Nepalbetween the leading scores (the top 40 Indianations) and the rest of the World. Mongolia Jamaica Senegal Malawi Guinea Iran Burundi West Bank and Gaza The Global Sustainable Competitiveness Index 25
  25. 25. Country rankingsSustainable CompetitivenessSustainable Competitiveness The leading nations in the SustainableCountry Rank Score Competitiveness ranking are mostly presentDenmark 1 58.8Sweden 2 58.5 high-income countries, suggesting a certainNorway 3 57.6 correlation between SustainableAustria 4 57.6 Competitiveness and GDP per capita orFinland 5 57.6 income levels (high income = highSwitzerland 6 56.5 sustainability). While a certain similarityGermany 7 56.2 between GDP rankings and SustainabilityNetherlands 8 56.2 levels seems to be visible, the correlation isJapan 9 56.0 superficial and refuted by too manyIreland 10 55.7 exceptions to the rule. This indicates that theIceland 11 55.7 correlation is not from GDP to sustainableCanada 12 55.6 competitiveness, but rather from sustainableLuxembourg 13 55.0 competitiveness to income levels. In otherNew Zealand 14 54.4 words: higher sustainable competitivenessFrance 15 54.4Belgium 16 52.5 can be associated with higher income levels.Belarus 17 52.3Czech Republic 18 52.3 -60% -30% 0% 30% 60%Slovenia 19 50.6 FijiPortugal 20 50.3 Trinidad and TobagoSingapore 21 50.0 BurundiSpain 22 49.9 Burkina Faso South AfricaAustralia 23 49.9 GuineaEstonia 24 49.8 Hong KongBrazil 25 49.5 Sierra Leone SenegalUnited Kingdom 26 49.5 LiberiaCroatia 27 49.5 GambiaItaly 28 49.2 Mongolia AfghanistanLithuania 29 48.7 TurkmenistanUSA 30 48.4 NepalLatvia 31 48.4 Kuwait GeorgiaSlovakia 32 47.7 GreenlandSouth Korea 33 47.7 BurmaArgentina 34 47.5 Indonesia HungaryRomania 35 47.4 SerbiaChina 36 47.3 GuyanaMalta 37 47.2 Malta LatviaCosta Rica 38 47.1 BrazilColombia 39 47.0 SloveniaGreece 40 46.8 Luxembourg GermanyUruguay 41 46.7 DenmarkPoland 42 46.6Guyana 43 46.2 Average deviation of Sustainable CompetitivenessTajikistan 44 46.1 (green) and GDP per capita (grey) 26 The Global Sustainable Competitiveness Index
  26. 26. Country rankings Sustainable CompetitivenessHowever, the correlation or the influence of Sustainable Competitivenessthe sustainable competitiveness on the GDP Country Rank Scoreor income level is not immediate; it is time Uzbekistan 45 45.5deferred. Like every endeavor or project, an Bhutan 46 45.5upfront investment is required; the seeds have Armenia 47 45.4to be planted, the plants needs to be cared Cyprus 48 45.3 Serbia 49 45.2for before the harvest can be collected. In Montenegro 50 45.2addition, the sustainable competitiveness Peru 51 45.1can be cheated in the presence of large Venezuela 52 45.1natural resources trough exploration of the Suriname 53 45.1natural capital (e.g. the oil-rich countries of Sri Lanka 54 44.7the Middle East). However, such wealth is Hungary 55 44.2highly unsustainable and the wealth Russia 56 43.9generated will diminish in the absence of Paraguay 57 43.9development of an adequate alternative Laos 58 43.8sustainable economy and the underlying Egypt 59 43.7fundament requirements. Israel 60 43.4 Indonesia 61 43.4 0 10000 20000 30000 40000 50000 60000 Albania 62 43.3 Ecuador 63 43.3 Chile 64 42.9 Kyrgistan 65 42.8 Bulgaria 66 42.7 Burma 67 42.6 Tunisia 68 41.6 Bosnia and Herzegovina 69 41.2 Dominican Republic 70 41.1 Angola 71 41.0 Ghana 72 41.0 Greenland 73 40.8 Ukraine 74 40.6 Qatar 75 40.4 Malaysia 76 40.3 Moldova 77 40.3 Republic of Congo 78 40.2 Georgia 79 40.1 Turkey 80 39.9 Dominica 81 39.9 Mauritius 82 39.8 Equatorial Guinea 83 39.5 Azerbaijan 84 39.2 0 10 20 30 40 50 60 Kuwait 85 39.1 Philippines 86 39.0 Sustainable Competitiveness score (green) and GDP Cuba 87 38.9 per capita (grey) Seychelles 88 38.9 The Global Sustainable Competitiveness Index 27
  27. 27. Country rankingsSustainable CompetitivenessSustainable Competitiveness The time-delay impact of sustainableCountry Rank Score competitiveness works both ways. A countryAlgeria 89 38.9Kosovo 90 38.8 that in the past has achieved a comparableNepal 91 38.8 high level of economic development willKazakhstan 92 38.6 decline over time in the absence of initiativesVietnam 93 38.6 and performance supporting sustainableGabon 94 38.5 competitiveness (as currently seems to be theOman 95 38.5 case with the USA or the UK, for example). AEthiopia 96 38.5 country can sustain its current level for only aTurkmenistan 97 38.5 limited time by exploiting the historicallyPanama 98 38.4 accumulated sustainable capital (naturalBelize 99 38.4 capital, efficiency capital, human capitalIndia 100 38.3 and income). However, the decline in actualGuinea-Bissau 101 38.3 income level will occur at a later pointSudan 102 38.2 (delayed) than decline in actual sustainableAfghanistan 103 38.2Timor-Leste 104 38.1 competitiveness will begin. By the time theLibya 105 38.0 decline commences to be felt in actualMali 106 37.9 economic terms, it will be difficult toZambia 107 37.9 recuperated sustainable competitivenessPapua New Guinea 108 37.7 because the weight of the momentum isMongolia 109 37.6 pulling in the opposite direction. PoliticiansCambodia 110 37.6 tend to turn to extremes and/or introductionSwaziland 111 37.6 of drastic economic policies in suchBahrain 112 37.5 moments. However, failure to consider the fullMacedonia 113 37.4 long-term impacts of such policies often leadsTanzania 114 37.4 to a worsening of the situation rather thanGambia 115 37.2 improvement and causes an even fasterMorocco 116 37.2El Salvador 117 37.1 decline. The sustainable competitiveness canJamaica 118 36.7 serve as an early warning indication forMozambique 119 36.7 misguided development and policies.Saudi Arabia 120 36.6 For countries with a low current income orLiberia 121 36.2 GDP levels, a low sustainabilityCameroon 122 36.2 competitiveness score indicates low potentialSyria 123 36.2 to achieve sustainable development in theMadagascar 124 35.8 short and mid-term future in the absence ofLebanon 125 35.8 significantly changed development andCote dIvoire 126 35.7Senegal 127 35.6 investment policies.Jordan 128 35.6 Low-income countries with a comparableBangladesh 129 35.6 high sustainability competitiveness scoreNorth Korea 130 35.4 have the potential to improve their incomeMexico 131 35.4 and well-being levels based on sustainableNigeria 132 35.4 fundamentals. 28 The Global Sustainable Competitiveness Index
  28. 28. Country rankingsSustainable CompetitivenessSustainable Competitiveness is the results of Sustainable Competitivenessdevelopment policies, designed and Country Rank Scoreimplemented by governments, authorities, Sierra Leone 133 35.2economic entities and other players. Democratic Republic of Congo 134 35.2Sustainable Competitiveness is therefor Central African Republic 135 34.9subject to human influence and can be Malawi 136 34.9 Uganda 137 34.7improved for the better, or will change for the Djibouti 138 34.4worse in the absence of thoughtful and Hong Kong 139 34.3intelligent guidance. While short-term success Niger 140 34.1might be achieved through limited initiatives Mauritania 141 34.0in a single area, long-term sustainable Botswana 142 34.0development can only be achieved through Bolivia 143 33.9polices, regulations, standards and incentives Chad 144 33.9balancing all four areas of national Guinea 145 33.8sustainable competitiveness: Pakistan 146 33.8 Namibia 147 33.7 Thailand 148 33.7• Natural capital: fostering sustainable Brunei 149 33.6 agriculture, protecting biodiversity and Bahamas 150 33.6 biomass (forest areas), protecting surface South Africa 151 33.4 water and water reservoirs, and Nicaragua 152 33.4 sustainable use of natural resources. Zimbabwe 153 33.1• Resource Intensity: increasing industrial Iran 154 33.1 efficiency, advocating of efficient Honduras 155 32.9 Lesotho 156 32.8 technologies, products and services, Burkina Faso 157 32.7 regulating through mandatory efficiency United Arab Emirates 158 32.6 standards, and de-materialisation of Rwanda 159 32.6 production. Togo 160 32.6• Sustainable Innovation: increasing Maldives 161 32.4 universal availability and quality of Eritrea 162 32.0 education, defining key national industrial Burundi 163 31.9 and economic growth areas with Guatemala 164 31.5 supporting programs and policies, Kenya 165 31.4 Benin 166 31.0 incentives fostering entrepreneurship, and Comoros 167 30.7 eradicating corruption. South Sudan 168 29.8• Social Cohesion: Improving availability and Trinidad and Tobago 169 29.6 affordability of health care services, Somalia 170 29.1 guaranteeing equal economic Macao 171 29.1 opportunities, gender equality, integrating West Bank and Gaza 172 28.1 neglected communities and crime Iraq 173 27.6 counter-measurements, ensure freedom of Haiti 174 27.5 thought. Fiji 175 27.3 Yemen 176 25.0 The Global Sustainable Competitiveness Index 29
  29. 29. Natural capital The Global Sustainable Competitiveness Index
  30. 30. Natural CapitalOverviewNatural Capital SustainabilityThe potential for sustaining natural capital as a basis for sustainable development is composedof two main factors: the characteristics of geography and climate, combined with the extendof human activities that have or will affect the ability of natural factors to sustain the populationand the economy.Because the natural capital is as it is, it is problematic to improve or change. While it takes littleto impair or deplete the natural capital, rebuilding or improving natural capital factors is difficult,and requires significant time and resources.The natural capital sustainability map below indicates a certain correlation with the level ofhuman activities and population density. Large countries with a comparably small populationdensity and rich biodiversity are on top of the Natural Capital ranking (North America,Scandinavia, Brazil). A large number of countries located in tropical areas (at the intersection ofCentral and South America, West Africa, South-East Asia) also seem to have the potential toachieve sustainable development based on their respective natural capital.The top ten according to natural capital indicators contains some surprising and not well knowncountries like Suriname, Guyana, and Laos - whereas the OECD’s representation in the toptwenty is limited to Canada, Finland, Denmark and the USA. The ranking of China (133) andIndia (160) are affected by a combination of arid climate, high population density, and highpollution levels. The Natural Capital Map: Dark colour indicates high Natural Capital, light colour limited natural capital The Global Sustainable Competitiveness Index 31
  31. 31. IndicatorsNatural Capital Natural Capital & Natural Capital Depletion Agriculture Biodiversity Water Resources Pollution Renewable Available land Forests freshwater Energy resources Pollution of water Not renewable Pollution of Yield efficiency Flora & Fauna freshwater Mineral resources biodiversity Degradation and Biodiversity Agriculture Resource Air pollution desertification pressure depletion Indicators Arable land per capita The number of data points available from a Potentially arable land variety of sources is nearly endless. The main challenge is to select the most relevant, and Cereal yield meaningful indicators amongst the wealth of Land degradation available data. In order to define meaningful Desertification risk and relevant, the core issues affecting the sustainable use of natural capital have been Natural Forest area & forest loss defined in a natural capital model (see Capital Extreme weather events flowchart above). & Renewable freshwater Based on the definition of key sustainability Natural Inland water areas, data series are chosen as indicators. The indicators have been analyzed for the Capital Biodiversity potential latest data point available as well as their Depletion Endangered species development over time, reflecting the current status and the future outlook of a country Resource depletion 18 data based on the natural capital and the level of points Ecological footprint its depletion due to human activities. Population density As some of the above key areas are difficult Energy self-sufficiency to express in numerical values, quantitative scores compiled by GEF (Global Environment Air pollution Facility, a sub-division of the UNEP) have been SO2 emissions used for certain indicators, such as biodiversity potential, resource depletion, and Hazardous waste the ecological footprint. 32 The Global Sustainable Competitiveness Index
  32. 32. Regional RankingsNatural CapitalRegional spreadNorth America, Scandinavia as well as North AmericaAustralia & New Zealand come out on top of Scandinaviathe regional natural capital ranking – allregions with comparable low population Australia & New Zealanddensity (one of the factors affecting the levelof depletion of the natural capital), coupled South Americawith sufficient availability of renewable Western Africafreshwater resources and a rich biodiversity.South America and Western Africa are Eastern Europefollowing the top three regions thanks to a South-east Asiarich biodiversity and favorable climaticcircumstance. The same applies for South- Southern AfricaEast Asia. However, higher depletion levels North-western Europesomewhat lowers the natural capitalsustainability level of this region. Central AmericaEastern Africa, Southern Europe, Central Asia North-east Asiaand the Middle East are forming the bottomof the Natural Capital ranking. Common to all Northern Africaof these regions is the arid climate,underlining the fundamental - and until Eastern Africarecently grossly underestimated and Southern Europeneglected importance of sufficient andrenewable water resources and the stable Central Asiasupply of clean water for all purposes Middle East(irrigation, human, industrial). Wateravailability is also strongly correlated to the 0 10 20 30 40 50 60level and richness of the local biodiversity.Average deviation Suriname -75% -50% -25% 0% 25% 50%42% of all countries are above the absolute Cote dIvoireWorld average (i.e. 58% are below average). Burma BhutanThe unequal spread between above and Egyptbelow average indicates that a comparably Bosnia and Herzegovinasmall number of countries reach a relative Malaysia Portugalhigh score, while the majority of the countries Panamaare somewhere in the middle. Some countries Djiboutiat the very bottom, affected by the Mauritania Mexicocombination of arid climate, high population Chinadensity, and absence of other natural Cubaresources possess very little natural capital Israel Cypruslevels even compared to the average. The Global Sustainable Competitiveness Index 33
  33. 33. Country RankingsNatural CapitalNatural Capital Sustainability Nations cannot choose their naturalCountry Rank Score environment. The natural capital factor isSuriname 1 63.3Guyana 2 63.0 determined by the natural environment andLatvia 3 61.0 available natural resources. This seems to beNew Zealand 4 61.0 why most top nations – with a few exceptionsCanada 5 60.5 – are countries with a comparably smallColombia 6 60.3 population density, coupled with sufficientBelarus 7 60.0 yearly water availability (yearly rainwaterBrazil 8 59.7 volume). Water availability in turn is the basisLaos 9 58.7 for a rich biodiversity and agricultural yield.Finland 10 58.4 However, the natural capital indicators alsoDenmark 11 58.2 take into account level of depletion andCote dIvoire 12 57.9 pollution, an indicator for the nations ability toVenezuela 13 57.7 manage and use resources in a sustainableLithuania 14 56.2 and efficient manner.USA 15 55.9Guinea-Bissau 16 55.3 Countries that rank high on this list have highPeru 17 55.2 potential for sustaining their current level ofRussia 18 54.9 development as an economy and a society,Papua New Guinea 19 54.9 providing the basic principle for the economyDemocratic Republic of Congo 20 54.7 (in the form of raw materials and water) andUruguay 21 54.7 the society to prosper (in the form of water,Sweden 22 54.0 food, and a healthy natural environment).Burma 23 53.7 However, the natural capital is only the basis.Madagascar 24 53.7Ireland 25 53.6 Some of the top twenty nations in this list (forAngola 26 53.0 example Suriname, Guyana, Laos, IvoryNorway 27 52.9 Coast) are amongst the poorest nations in theEstonia 28 52.9 World measured in monetary economicFrance 29 52.7 output such as GDP per capita. ThisRepublic of Congo 30 52.1 observation indicates that while naturalArgentina 31 51.6 resources present a basis for sustainedEquatorial Guinea 32 51.2 development, natural capital is not equal toIndonesia 33 50.8 sustainable development without adequateBhutan 34 50.6 measurements to kick-start the social andMozambique 35 50.4 economic development in the form ofAustralia 36 50.0Cameroon 37 49.8 investments in education, R&D, andParaguay 38 49.7 infrastructure. On a positive note it can beCentral African Republic 39 49.6 observed that some countries currentlySudan 40 49.1 classified amongst the World’s poorestZambia 41 49.1 nations do in fact possess a solid basis toLiberia 42 48.7 achieve sustainable development.Gabon 43 48.4Belize 44 48.4 34 The Global Sustainable Competitiveness Index

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