The Global Sustainable Competitiveness Index


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The Global Sustainable Competitiveness Index ranks 176 countries against their capabilities to create and sustain sustainable wealth based on 72 data indicators

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The Global Sustainable Competitiveness Index

  1. 1. The Global Sustainable Competitiveness IndexThe sustainable competitiveness index 20131
  2. 2. Table of contentsThe Sustainable Competitiveness Index 2013DisclaimerPage 2DisclaimerNo warrantyThis publication is derived from sources believed to be accurate and reliable, but neither itsaccuracy nor completeness is guaranteed. The material and information in this publication areprovided "as is" and without warranties of any kind, either expressed or implied. SolAbility disclaimsall warranties, expressed or implied, including, but not limited to, implied warranties ofmerchantability and fitness for a particular purpose. Any opinions and views in this publicationreflect the current judgment of the authors and may change without notice. It is each readersresponsibility to evaluate the accuracy, completeness and usefulness of any opinions, advice,services or other information provided in this publication.Limitation of liabilityAll information contained in this publication is distributed with the understanding that the authors,publishers and distributors are not rendering legal, accounting or other professional advice oropinions on specific facts or matters and accordingly assume no liability whatsoever inconnection with its use. In no event shall SolAbility be liable for any direct, indirect, special,incidental or consequential damages arising out of the use of any opinion or informationexpressly or implicitly contained in this publication.CopyrightUnless otherwise noted, text, images and layout of this publication are the exclusive property ofSolAbility. Republication is welcome.No OfferThe information and opinions contained in this publication constitutes neither a solicitation, nor arecommendation, nor an offer to buy or sell investment instruments or other services, or toengage in any other kind of transaction. The information described in this publication is notdirected to persons in any jurisdiction where the provision of such information would run counterto local laws and regulation.
  3. 3. Table of contents The Sustainable Competitiveness Index 2013About this reportResearch, calculation and compilation by SolAbilityApril 2013© SolAbility.Reproduction welcome & encouragedAcknowledgementsThe compilation and calculation of this Index would not have been possible without the dataand time series made available by various UN agencies (UNDP, UNEP, UNICEF, FAO, WHO, WMO,, the World Bank, the International Monetary Fund (IMF), and other non-governmental organisations (including Transparency International, Reporters without Borders, TheNew Economics Foundation, The Institute for Economics and Peace, and The Fund For Peace).About SolAbilitySolAbility is a sustainability advisory consultancy based in Korea, providing sustainablemanagement tools & services to corporate clients and advanced sustainable investmentresearch covering Pan-Asian equities for institutional investors.Three corporate clients who have implemented sustainability strategies and managementsystems developed and designed by SolAbility have been recognised as global sustainabilityleaders (“global super-sector leader”) in their respective industry sector by the Dow JonesSustainability Index (DJSI), an honour that is awarded to only 19 of the annually evaluated 2’500companies world-wide.SolAbility802 Meritwin 856Ilsan, South Koreawww.solability.comcontact@solability.comAbout this ReportPage 3
  4. 4. Table of contentsThe Sustainable Competitiveness Index 2013ForewordPage 4Inclusive alternative to the GDPThe wealth of nations is commonly expressed in the “Gross Domestic Product” (GDP), expressedin a monetary value. The GDP is composed of the economic output of a country, in turncomposed of financial transactions in exchange for goods and services.However, economic activities do have certain adverse side-effects on the naturalenvironment, resources, and on the socio-cultural fabric of a society. In addition, naturalresources are not renewable and many vital resources – water, energy, but also certainminerals and metals – are scarce (or are set to become scarce goods in the near/mediumfuture). Yet none of these adverse effects, external, or “non-financial” aspects are factoredinto the commonly expression of wealth of Nations, the GDP. In other words – the GDP is a verylimited expression of a national balance sheet. GDP growth rates and changes in growth ratesare often used as an indicator for an economy’s well-being and development. However, dueto the lack of integrating all aspects of development drivers – natural resources, efficiency,innovation capabilities and social cohesion - the GDP describes a moment in time. CurrentGDP levels therefore have limited informative value relating to the future potential of achievingand sustaining inclusive development and creation of wealth.It is not suspiring that where the money rolls – in the real economy – that corporations have longstarted to incorporate sustainability factors in their corporate score cards, and are activelypursuing new opportunities related to sustainable development. In the financial world, modelshave been developed aiming at evaluating a companys capability to mange future risks andto capitalise on new opportunities for investment decision purposes, most often referred to as“ESG” models (environment , social, governance).The Sustainable Competitiveness Index is based on a sustainable competitiveness model thatincorporates all relevant pillars of sustained growth and wealth creation of a nation – naturalcapital availability, resource intensity, innovation and business capabilities, and socialcohesion. In addition to the full integration of sustainability performance data, it also analysesand incorporates the data trends over time to allow for a better expression of the futuredevelopment potential. The results aim at serving as an alternative to the GDP, and to be usedto analyse future development prospects of nations.What is competitiveness ?The definition of competitiveness of nations is a controversially discussed issue, unfortunatelyand too often impaired by ideological prejudice or economic theories developed in a aseptictheoretical environment. By comparing the outcomes of the sustainable competitivenessanalysis with the probably best recognised conventional competitiveness index – The WEF’s“Davos Man” Competitiveness Report – the Sustainable Competitiveness Index aims atcontributing to the discussion of what policies can help a country to identify and developsuitable development models adapted to its special characteristics in order to achievesustainable wealth creation.We hope you find this report informative.
  5. 5. Table of contents The Sustainable Competitiveness Index 2013Table of ContentsPage 51 The Index: Sustainable Competitiveness Sustainable Competitiveness 6Natural Capital 14Resource Intensity 20Sustainable Innovation &Economy26Social Cohesion 322 Measuring Sustainable Competitiveness The Sustainable CompetitivenessModel38Indicators 42Index Calculation 453 Sustainable Competitiveness vs. DavosMan CompetitivenessThe WEF Competitiveness Model 48Methodology Comparison 53Ranking Comparison 56Analysis: Economic growth &competitiveness584 Achieving Sustainable Competitiveness Problem-Solution Tree 64Sustaining Natural Capital 66Competitiveness & Efficiency 68Creating Sustainable Wealth 70Ensuring Social Cohesion 725 Spotlight: Korea Sustainably competitive Korea 746 Tables: Rankings at a Glance Sustainable Competitiveness 84All Areas 86Natural Capital 90Resource Intensity 91Sustainable Innovation 92Social cohesion 93
  6. 6. The Global Sustainable Competitiveness IndexSustainable competitiveness6
  7. 7. Table of contents The Sustainable Competitiveness Index 2013Sustainable CompetitivenessIntroductionIt is now more than 20 years ago that the Brundtland Commission formulated the definition ofsustainable development in the run-up to the Rio 92’ summit: “Sustainable development isdevelopment that meets the needs of the present without compromising the ability of futuregenerations to meet their own needs”. While there is some controversy surrounding this definition– in particular the definition of “needs” – the definition is widely accepted and often quoted.However, there is no agreed indicator to measure “sustainable development” of nations.Countries are ranked against each other in numerous indexes, but they tend to eitherconcentrate on economic performance or else on sustainability indicators while excluding oromitting the other. There is no agreed model to comprehensively measure sustainability ofnations, i.e. a model that integrates economic and sustainability (financial and “non-financial”performance) – the sustainable competitiveness of a country.It is now widely accepted that economic growth and wealth creation can have adverse impactsor side-effects on the non-financial assets of a country and the region (depletion of resources isnormally affecting the country itself, while pollution can have wider regional impacts in othercountries, or global impacts like climate change). The negative impacts of economic activities -including negative impacts on the social fabric and cohabitation within a society - canundermine or even reverse future wealth creation. Economic competitiveness indicators aloneare therefore a measurement of current wealth levels, but bear limited informative value forfuture developments due to the omission of key fundamentals required for the smoothfunctioning of economies.Sustainable competitiveness means the ability of a country to meet the needs and basicrequirements of current generations while sustaining or growing the national and individualwealth into the future without depleting natural and social capital.In the financial market realm, the ESG (Environment, Social, Governance) model has become aaccepted standard to measure sustainability of corporations for investment purposes. While thereare significant methodological differences between the different corporate sustainability Indexesand rankings depending on the issuing organisation, the main pillars of the model are widelyestablished. The Sustainable Competitiveness Index is based on the adaption of the ESG modelto country level, with adjustments to fundamental pillars and indicators to measure sustainability-based competitiveness of a country. A distinctive difference between countries and corporationsis that corporations are mobile. Countries are bound within their frontiers, and therefore depend,for good or for worse, on the geographical and climatic environment within their given physicalboundaries. The environmental component has therefore been divided into two separate pillarsof competitiveness: the Natural Capital, and Resource Intensity, where the Natural Capital standsfor availability of resources and Resource Intensity for the efficient use of available resources.The “G” for “Governance” in ESG might be somewhat misleading, because it encompasses alleconomic aspects, including governance and management, and are therefore also referred toas “economic” aspects. In the context of a country, the economic pillar refers to the ability of acountry to generate and sustain wealth in a globalised economy.Page 7Sustainable development and sustainable competitiveness
  8. 8. Table of contentsThe Sustainable Competitiveness Index 2013The Sustainable Competitiveness ModelFour PillarsThe Sustainable Competitiveness model is based on four fundamental pillars that together fromthe base capability of a country to generate and sustain sustainable wealth, i.e. wealth that isnot in danger of being reduced or diminished through overexploitation of resources (natural andhuman), the lack of innovative edge required to competed in the globalised markets, or theexploitation of segments of a society. These four pillars are:• Natural Capital: the given natural environment within the frontiers of a country, includingavailability of resources, and the level of the depletion of those resources.• Resource Intensity: the efficiency of using available resources(domestic or imported) as ameasurement of operational competitiveness in a resource-constraint World.• Sustainable Innovation: the capability of a country to generate wealth and jobs throughinnovation and value-added industries in the globalised markets• Social Cohesion: the health of populations, equality, security and freedom within a countryIn order to calculate the Sustainable Competitiveness, a total of 73 indicators have beenanalyses against latest available performance data. A 5-year trend of the same indicators(whether the development shows positive or negative trends) has also been incorporated in theindex calculation.65 of the 73 indicators are based on pure data (quantitative indicators) collected by the WorldBank, the IMF and various UN agencies (UNEP, UNDP, WHO, WTO, FAO, UNESCO). The remaining 7have been calculated by external agencies or are based on perception surveys in the differentcountries.4 sustainable competitiveness pillars, 73 data sets8
  9. 9. Table of contents The Sustainable Competitiveness Index 2013Sustainable CompetitivenessWorld MapThe Sustainable Competitiveness score is based on scoring current performance data as well asthe trend analysis (increase/decrease) over the past 5 years. The combination of absolutecomparison and trend analysis reflects a momentary picture as well as being an indication ofthe long-term sustainable development potential of countries. The Sustainable CompetivenessRanking reveals some surprising, and other not-so-surprising results:• The Sustainable Competitiveness Index is topped by the four Scandinavian countries,followed by other North-Western European Nations. The only non-European country in thetop 20 are Canada (7), Japan (12), and New Zealand (14).• The Worlds largest economy, the US, is ranked 27th. Of the booming emerging economies,Brazil is ranked 28th, South Korea 30st, China 38th, Russia 48th, and India 126h.• The Natural Capital and Resource Intensity rankings are topped by countries with a richbiodiversity, favourable climate and sufficient water resources. Distinctions are also visiblebetween the more industrialised countries, indicating that some countries will face lowerobstacles with the coming raw material and energy scarcity• Asian nations (Singapore, South Korea, Japan, China) lead the Sustainable InnovationCompetitiveness ranking. However, achieving sustained prosperity in these countries mightbe compromised by Natural Capital constraints and current high resource intensity/lowresource efficiency• The Social Cohesion ranking is headed by Northern European countries, indicating that SocialCohesion is the result of economic growth combined with social consensusPage 9The Sustainable Competitiveness World map: dark colour indicates high, light colour limited Sustainable CompetitivenessThe Sustainable Competitiveness World Map
  10. 10. Table of contentsThe Sustainable Competitiveness Index 2013Sustainable CompetitivenessRegional SpreadRegional spreadScandinavia as a region achieves the highestSustainable Competitiveness score, followedby North-Western Europe, Australia & NewZealand, North America and North-East Asia –all areas in the Northern hemisphere. CentralAsia is the only region that doesnt fit into theNorth-South divide. From a Europeanperspective, it is interesting to note thatEastern Europe achieves a higher score thanSothern Europe (which has nominally higherincome levels). All African Regions are in thebottom half, joined by Central America andthe Middle East. The high-income countries ofthe Middle East have sustained theireconomic success with the exploitation oftheir mineral resources. The low SustainableCompetitiveness of the region raises concernson whether those countries will be able tomaintain or sustain their development levelonce there fossil fuel wealth subsidies.Part of the objective of this index was toevaluate whether the commonly pooroutlook of African nations would look differentwhen measured against non-financialindicators. Unfortunately, this seems not to bethe case.Average deviationOnly 38% of the 176 countries assessedSustainable Competitiveness score is abovethe average score, i.e. nearly two thirds (62%)are below the average score. The largedifference means that there is large gapbetween the leading scores (the top 40nations) and the rest of the World.0 10 20 30 40 50 60Eastern AfricaMiddle EastSouthern AfricaWestern AfricaCentral AmericaNorthern AfricaCentral AsiaSouth-east AsiaSouth AmericaSouthern EuropeEastern EuropeNorth-east AsiaNorth AmericaAustralia & New ZealandNorth-western EuropeScandinavia10-50% -30% -10% 10% 30% 50%DenmarkIrelandSloveniaItalyMaltaBhutanHungaryChileGreenlandMauritiusNepalIndiaMongoliaJamaicaSenegalMalawiGuineaIranBurundiWest Bank and Gaza25
  11. 11. Table of contents The Sustainable Competitiveness Index 2013Relation to Economic Output:Sustainable Competitiveness Score & GDPThe leading nations in the SustainableCompetitiveness ranking are mostly (current)high-income countries, suggesting a certaincorrelation between SustainableCompetitiveness score and GDP per capitaor income levels (high income = highsustainability). The same is true whenvisualizing average deviations of GDP percapita and the sustainable competitivenessscore.While a certain similarity between GDPrankings and sustainability levels seems to bevisible, the correlation is superficial andrefuted by too many exceptions to the rule.This indicates that the correlation is not fromGDP to sustainable competitiveness, butrather from sustainable competitiveness toincome levels. In other words: highersustainable competitiveness can beassociated with higher income levels.However, the correlation or the influence ofthe sustainable competitiveness on GDP orincome level is not immediate; it is timedeferred. Like every endeavor or project, anupfront investment is required to achieve thedesired results. The seeds have to be planted,the plants need to be cared for before theharvest can be collected. In addition,sustainable competitiveness can betemporarily “cheated on” in the presence oflarge natural resources trough exploitation ofthe natural capital (e.g. the oil-rich countriesof the Middle East). However, such wealth ishighly unsustainable and the wealthgenerated will diminish in the absence ofdevelopment of an adequate alternativesustainable economy and the underlyingfundament requirements to achievesustainable wealth that does not depend onthe exploitation of non-renewable resources.Page 11High sustainability = high income levels-100% -50% 0% 50% 100%Average deviation of GDP and sustainablecompetitiveness05,00010,00015,00020,00025,00030,00035,00040,00025 30 35 40 45 50 55 60 65Sustainable Competitiveness and GDP
  12. 12. Table of contentsThe Sustainable Competitiveness Index 2013Sustainable Competitiveness Rankings1-88Country Rank Score 2012Denmark 1 62.8 -Sweden 2 61.6 -Finland 3 60.9 +2Norway 4 60.8 -1Switzerland 5 59.9 +1Germany 6 59.7 +1Canada 7 57.5 +5Ireland 8 57.1 +2Austria 9 56.7 -5Luxembourg 10 56.3 +3Netherlands 11 55.9 -3Japan 12 55.2 -3Iceland 13 55.1 -2New Zealand 14 54.8 -France 15 54.3 -Slovenia 16 54.0 +3Czech Republic 17 53.0 +1Estonia 18 52.6 +6Spain 19 52.5 +3Portugal 20 52.2 -Belarus 21 52.1 -4Italy 22 52.0 +6Lithuania 23 51.9 +6Australia 24 51.7 -1United Kingdom 25 51.6 +1Belgium 26 51.5 -10USA 27 51.2 +3Brazil 28 50.6 -3Hungary 29 50.4 +16South Korea 30 50.1 +3Poland 31 49.9 +11Singapore 32 49.9 -11Bhutan 33 49.8 +13Romania 34 49.6 +1Slovakia 35 48.5 -3Latvia 36 48.3 -5Croatia 37 48.3 -10China 38 48.2 -2Uzbekistan 39 47.9 +6Argentina 40 47.8 -6Costa Rica 41 47.3 -3Montenegro 42 47.3 +8Indonesia 43 47.2 +18Uruguay 44 47.2 -3Page 12Country Rank ScoreMalta 45 46.9Timor-Leste 46 46.9Israel 47 46.7Russia 48 46.6Peru 49 46.6Serbia 50 46.4Albania 51 46.4Bulgaria 52 46.3Republic of Congo 53 46.1Tajikistan 54 46.0Tanzania 55 45.6Greece 56 45.3Ghana 57 45.1Malaysia 58 44.9Colombia 59 44.9Zambia 60 44.7Cyprus 61 44.6Sri Lanka 62 44.6Cameroon 63 44.5Qatar 64 44.4Dominica 65 44.3Liberia 66 44.1Moldova 67 44.1Guyana 68 44.1Guinea-Bissau 69 44.0Mozambique 70 43.7Laos 71 43.7Armenia 72 43.5Macao 73 43.3Venezuela 74 43.1Ethiopia 75 43.0Ecuador 76 43.0Cote dIvoire 77 42.8Dominican Republic 78 42.8Paraguay 79 42.7Suriname 80 42.6Tunisia 81 42.3Sudan 82 42.2Kosovo 83 42.2Democratic Republic ofCongo84 42.2Kyrgistan 85 42.1Sierra Leone 86 42.0Gambia 87 42.0Zimbabwe 88 41.9
  13. 13. Table of contents The Sustainable Competitiveness Index 2013Sustainable Competitiveness Rankings89-176Page 13Country Rank ScoreMali 89 41.9Malawi 90 41.9Cambodia 91 41.9Niger 92 41.7Belize 93 41.7Papua New Guinea 94 41.7Georgia 95 41.5Nepal 96 41.5Egypt 97 41.4Guinea 98 41.4Greenland 99 41.3Madagascar 100 41.2Togo 101 41.1Ukraine 102 41.0Mauritius 103 41.0Nicaragua 104 40.8Burkina Faso 105 40.8Bosnia and Herzegovina 106 40.7Azerbaijan 107 40.7Uganda 108 40.7Oman 109 40.7El Salvador 110 40.5Djibouti 111 40.5Thailand 112 40.3Lesotho 113 40.2Lebanon 114 40.1Angola 115 40.1Burma 116 40.0Panama 117 39.8Philippines 118 39.8Chile 119 39.6Vietnam 120 39.5Cuba 121 39.3Senegal 122 39.3Turkey 123 39.1Bangladesh 124 39.1Chad 125 39.1India 126 38.9Central African Republic 127 38.9Rwanda 128 38.8Mauritania 129 38.7Kuwait 130 38.6Burundi 131 38.6Morocco 132 38.6Country Rank ScoreMongolia 133 38.4Syria 134 38.4Gabon 135 38.3Kazakhstan 136 38.3Afghanistan 137 38.2Benin 138 38.2Turkmenistan 139 38.0Nigeria 140 38.0Jamaica 141 37.9Seychelles 142 37.8Mexico 143 37.7Macedonia 144 37.6Saudi Arabia 145 37.5Bolivia 146 37.4Algeria 147 37.3Eritrea 148 37.2Jordan 149 37.1Kenya 150 37.1Bahrain 151 37.0Pakistan 152 36.9Botswana 153 36.8Guatemala 154 36.6North Korea 155 36.6Libya 156 36.3Comoros 157 36.1Swaziland 158 35.9South Africa 159 35.6United Arab Emirates 160 35.2Bahamas 161 35.1Iraq 162 34.8Iran 163 34.6Hong Kong 164 34.4South Sudan 165 34.2Honduras 166 34.1Namibia 167 34.0Brunei 168 33.7Somalia 169 33.3Maldives 170 33.2Fiji 171 32.7Trinidad and Tobago 172 31.4Haiti 173 31.2West Bank and Gaza 174 30.0Equatorial Guinea 175 28.4Yemen 176 26.0
  14. 14. The Global Sustainable Competitiveness IndexNatural capital14
  15. 15. Table of contentsElements of sustainable competitivenessNatural CapitalThe “Natural Capital” of a country is the capital that is given to a country in the form of land andits geography, climate, biodiversity, fertility, water availability, and the availability of mineral andfossil resources.The number of data points available from a variety of sources is nearly endless. The mainchallenge is therefore to select the most relevant and meaningful indicators amongst the wealthof available data. In order to define meaningful and relevant, the core issues affecting thesustainable use of natural capital have been defined in a natural capital model. The naturalcapital model incorporates the essence of resources available that in effect would allow acountry to be completely self-sustaining: land, water, food production, capacity, and energyand mineral resources. In addition, the level of depletion, or degradation of those resources thatcould endanger future self-efficiency have also been taken into account.Natural capital indicatorsBased on the definition of the key natural capital sustainability areas, data series are chosen asindicators that reflect the sustainable competitiveness of a country based on its natural resources(natural capital).The indicators have been analyzed for the latest data point available as well as theirdevelopment over time, reflecting the current status and the future outlook of a country basedon the natural capital and the level of its depletion due to human activities.As some of the above key areas are difficult to express in numerical values, quantitative scorescompiled by GEF (Global Environment Facility, a sub-division of the UNEP) have been used forcertain indicators, such as biodiversity potential, resource depletion, and the ecological footprint.For the full list of indicators, refer to the methodology section.The Sustainable Competitiveness Index 2013 Page 15Elements of the national natural capitalNatural Capital&Natural Capital DepletionForestsFlora & FaunaBiodiversitypressureBiodiversityAvailable landYield efficiencyDegradation,desertificationAgricultureRenewablefreshwaterNot renewablefreshwaterAgricultureWaterEnergy resourcesMineral resourcesResourcedepletionResourcesPollution of waterPollution ofbiodiversityAir pollutionPollution
  16. 16. Table of contentsWorld MapNatural CapitalThe Sustainable Competitiveness Index 2013Page 16Biodiversity, water and raw materials determine natural capital competitivenessThe potential for sustaining natural capital as a basis for sustained competitiveness is composed of two mainfactors: the characteristics of geography and climate, combined with the extend of human activities thathave or will affect the ability of natural factors to sustain the population and the economy.Because the natural capital is a given value – it is as it is – there are limitations to improve or change theavailable natural capital. While it takes little to impair or exploit the natural capital, rebuilding or improvingnatural capital factors is difficult, and requires significant time and resources.The natural capital sustainability map below indicates a certain correlation with the level of human activitiesand population density. Large countries with a comparably small population density and rich biodiversityare on top of the Natural Capital ranking (North America, Scandinavia, Brazil). A large number of countrieslocated in tropical areas (at the intersection of Central and South America, West Africa, South-East Asia)also seem to have the potential to achieve sustainable development based on their respective naturalcapital. Both of these observations underline the overarching importance of the availability of water forhumanity.The top ten according to natural capital indicators contains some surprising and not well known countrieslike Papua New Guinea, Suriname, Guyana, and Laos - whereas the OECD’s representation in the toptwenty is limited to Canada, Ne Zealand, Denmark and Norway. The ranking of China (149) and India (126)are affected by a combination of arid climate, high population density, and depletion levels, raising someconcerns to these countries ability to sustain their large populations.The Natural Capital World map: dark colour indicates high, light colour limited availability (or high depletion) of Natural Capital
  17. 17. Table of contentsRegional RankingsNatural CapitalRegional spreadNorth America, Scandinavia and Australia &New Zealand come out on top of the regionalnatural capital ranking – all regions withcomparable low population density (one ofthe factors affecting the level of depletion ofthe natural capital), coupled with sufficientavailability of renewable freshwater resourcesand a rich biodiversity. South America andWestern Africa are following the top threeregions thanks to a rich biodiversity andfavorable climatic circumstance. The sameapplies for South-East Asia. However, higherdepletion levels somewhat lowers the naturalcapital sustainability level of this region.Eastern Africa, Southern Europe, Central Asiaand the Middle East (despite rich fossilresources) are forming the bottom of theNatural Capital ranking. Common to all ofthese regions is the arid climate, underliningthe fundamental - and until recently grosslyunderestimated and neglected importanceof sufficient and renewable water resourcesand the stable supply of clean water for allpurposes (irrigation, human, industrial). Wateravailability is also strongly correlated to thelevel and richness of the local biodiversity.Average deviationOnly 39% of all countries are above theabsolute World average (i.e. 61% are belowaverage). The unequal spread betweenabove and below average indicates that acomparable small number of countries reacha relative high score, while the majority of thecountries are somewhere in the middle. Somecountries at the very bottom, affected by thecombination of arid climate, high populationdensity, and absence of other naturalresources possess very little natural capitallevels even compared to the average.17Natural capital: the importance of water330 10 20 30 40 50 60Middle EastCentral AsiaSouthern EuropeEastern AfricaNorthern AfricaNorth-east AsiaCentral AmericaNorth-western EuropeSouthern AfricaSouth-east AsiaEastern EuropeWestern AfricaSouth AmericaAustralia & New ZealandScandinaviaNorth AmericaNatural capital and depletion indicators19 data pointsIndicator Relative toRenewable freshwater resources PopulationInland water PopulationPopulation density AreaArable land PopulationPotentially arable land PopulationCereal yield AbsoluteLand degradation AreaDesertification & desertification risks AreaForest area & forest loss AreaBiodiversity potential AbsoluteExtreme weather events TimeEndangered species AbsoluteFossil resources Population, GDPMineral resources Population, GDPEnergy self-sufficiency AbsoluteResource depletion AbsolutePollution levels AbsoluteSO2 emissions PopulationHazardous waste PopulationThe Sustainable Competitiveness Index 2013
  18. 18. Table of contentsNatural Capital Rankings1-88Country Rank ScorePapua New Guinea 1 63.8Suriname 2 63.8Guyana 3 62.1Laos 4 61.5Canada 5 60.6Colombia 6 59.9Brazil 7 59.7New Zealand 8 58.6Peru 9 57.3Venezuela 10 57.0Democratic Republic ofCongo11 56.2Denmark 12 55.3Guinea-Bissau 13 55.2Zambia 14 55.0Paraguay 15 54.9Norway 16 54.0Latvia 17 53.9Cote dIvoire 18 53.2Belarus 19 53.1Bhutan 20 52.9Burma 21 52.7USA 22 52.6Russia 23 52.4Republic of Congo 23 52.4Argentina 25 52.2Madagascar 26 52.1Tanzania 27 52.0Ireland 28 51.8Indonesia 29 51.5Sweden 30 51.5Australia 31 51.4Sierra Leone 32 51.4Uruguay 33 51.2Bolivia 34 51.1Zimbabwe 35 51.0Finland 36 50.8Mozambique 37 50.7Belize 38 50.4Estonia 39 50.2Cameroon 40 49.3Sudan 41 49.2France 42 49.2Angola 43 49.0Gabon 44 47.2The Sustainable Competitiveness Index 2013Page 18Country Rank ScoreLithuania 45 46.6Mali 46 46.4Liberia 47 46.1Cambodia 48 45.9Uzbekistan 49 45.1Guinea 50 45.0Central African Republic 51 44.9Dominican Republic 52 44.9Netherlands 53 44.8Lesotho 54 44.6Egypt 55 44.4Trinidad and Tobago 56 44.4Qatar 57 44.3Ethiopia 58 44.2Rwanda 59 43.8Ghana 60 43.7Ecuador 61 43.4Gambia 62 43.2Panama 63 42.9Iceland 64 42.9Nicaragua 65 42.7Malaysia 66 42.7Luxembourg 67 42.7Burkina Faso 68 42.0Germany 69 41.9Bahamas 70 41.8Czech Republic 71 41.8South Africa 72 41.7Equatorial Guinea 73 41.6Malawi 74 41.4Vietnam 75 41.4Uganda 76 41.3Costa Rica 77 40.9Bangladesh 78 40.6Timor-Leste 79 40.5North Korea 80 40.5Hungary 81 40.4Switzerland 82 40.4Croatia 83 40.1Japan 84 40.1Tajikistan 85 40.0Slovenia 86 39.8Swaziland 87 39.7Italy 88 39.7
  19. 19. Table of contentsNatural Capital Rankings89-176The Sustainable Competitiveness Index 2013 Page 19Country Rank ScoreKuwait 89 39.5Mauritius 90 39.5Bosnia and Herzegovina 91 39.5Chad 92 39.4Fiji 93 39.4Togo 94 39.2Niger 95 39.1Philippines 96 38.7Oman 97 38.4Benin 98 38.4Bulgaria 99 38.4Greece 100 38.3Kyrgistan 101 38.2Chile 102 38.1Seychelles 103 38.0Portugal 104 38.0Romania 105 37.8Belgium 106 37.5Mexico 107 37.4Kazakhstan 108 37.4Saudi Arabia 109 37.4Turkmenistan 110 37.4Mauritania 111 37.3Serbia 112 37.2Austria 113 36.9Albania 114 36.8Syria 115 36.6Moldova 116 36.3Sri Lanka 117 36.2Montenegro 118 36.1Burundi 119 36.0Mongolia 120 35.7Malta 121 35.6Poland 122 35.6Algeria 123 35.4Thailand 124 35.2El Salvador 125 35.0Senegal 126 35.0Honduras 127 34.9South Korea 128 34.9Georgia 129 34.8Spain 130 34.7Slovakia 131 34.6Djibouti 132 34.2Country Rank ScoreBotswana 133 34.0Morocco 134 33.8United Arab Emirates 135 33.8Guatemala 136 33.6Dominica 137 33.3Eritrea 138 32.9Cuba 139 32.8Tunisia 140 32.7Nigeria 141 32.6China 142 32.5Macedonia 143 32.4India 144 32.2Bahrain 145 31.9Iraq 146 31.8United Kingdom 147 31.8Somalia 148 31.7Ukraine 149 31.6Libya 150 31.5Azerbaijan 151 31.1Afghanistan 152 30.8Comoros 153 30.0Yemen 154 30.0Nepal 155 29.7Kenya 156 29.0Armenia 157 28.9Namibia 158 28.7Brunei 159 28.3West Bank and Gaza 160 28.3Israel 161 28.0South Sudan 162 28.0Jamaica 163 27.8Haiti 164 27.5Cyprus 165 26.9Greenland 166 26.2Iran 167 26.0Turkey 168 25.8Pakistan 169 25.4Kosovo 170 24.8Lebanon 171 24.7Maldives 172 22.5Singapore 173 21.7Hong Kong 174 21.0Jordan 175 19.2
  20. 20. The Global Sustainable Competitiveness IndexResource Intensity & efficiency20
  21. 21. Table of contentsNational Resource EfficiencyLower cost & dependency on resource importsOne element of sustainability is having resources at ones disposal. Another element is howefficient the available resources are used. Whether a country does or does not posses naturalresources within its boundaries, efficiency in using resources – whether domestic or imported - is acost factor, affecting the competitiveness and thus wealth of nations. In addition, non-renewableresources that are used today will not be available tomorrow, affecting competitiveness, wealthand quality of life in the future.A number of factors are pointing to rising cost of resources in the future: scarcity and depletion ofenergy, water, and mineral resources, increasing consumption (particular in non-OECDcountries), financial speculation on raw materials, and possibly geo-political influences. The keyobjective of the resource efficiency element is therefore to evaluate a countries’ ability to dealwith rising cost and sustain economic growth in the face of rising prices in the global commoditymarkets as expected.IndicatorsVital resources include water, energy, and raw materials. Most of the resources used today arenon-renewable, or only partly renewable: fossil-based energy, and minerals. Water aquifers andother natural products (e.g. wood) are renewable, as long as their capacity is not overused andthe replacement patterns are not drastically altered, e.g. trough depletion, biodiversity loss,pollution, or climate changeResource efficiency indicators are evaluated both in terms of intensity (per capita) and efficiency(relative to wealth, GDP). The availability of accurate global data to measure resource intensityand efficiency is not as wide as in other criteria, particularly in terms of usage of raw materials.Other than steel & minerals usage, reliable raw material usage statistics are not available on aglobal level. The focus is therefore on energy, energy sources, water, steel usage, as well as GHGemission intensity and productivity.For a the full list of indicators, refer to the methodology section.The Sustainable Competitiveness Index 2013 21Resource efficiencyResource intensityWater per capitaWater per GDPResource replenishmentWaterEnergy per GDPEnergy sourcesEnergyResources / capitaResources / GDPResource balanceRaw materialsEnergy per capita
  22. 22. Table of contentsWorld MapResource IntensityThe resource intensity pillar is composed of indicators scored relative to population (e.g. GHGmeasured per capita) as well as relative to economic output (e.g. energy consumptionmeasured per GDP) in order to incorporate both absolute intensity and relative intensity (i.e.economic resource efficiency). While the indicators measured against population (per capita)clearly favour countries with low resource and raw material consumption, which are mostly equalto less developed countries), the indicators scored relative to GDP measure economic efficiency.The resource intensity ranking is topped by less developed countries, with no OECD nation in thetop 20 – Switzerland, the highest ranking of the developed economies, coming in on rank 31. TheWorld’s economic powerhouses score comparable low - Germany in rank 86, Japan at 107, andthe USA at 133. Brazil (rank 43) is positioned the highest among the large emerging economies,while India at 120, China (141) and Russia (151) have a distinctive potential for improving theirresource intensity.The resource intensity map shows that the resource intensity of less developed countries seems tobe lower than that of higher developed countries - despite the weighting (as calculated byrelevance) for scores measured against economic output (GDP) being significantly higher thanfor absolute intensity scores (measured against capita).The main implication of the rankings are related to stability of economic growth: should globalprices for raw materials and energy rise significantly in the future (as the majority of availableresearch suggests), the countries in the lower ranks will face substantial higher challenges tomaintain their growth compared to countries with higher efficiency and intensity scores.The Sustainable Competitiveness Index 2013Page 22Resource intensity World mapThe Resource Intensity World map: dark colour indicates low, light colour high resource intensity
  23. 23. Table of contentsRegional SpreadResource IntensityRegional spreadCentral America and Western Africa top theresource intensity ranking, a small marginahead of South America. The first two regionsconsist mainly of less developed nations ineconomic terms or GDP, while South Americaconsists of economies in different stages ofdevelopment. Western Europe (excludingScandinavia and Southern Europe) made thefourth spot – indicating that the methodologyapplied indeed is capable of incorporatingboth absolute and economic relativeresource intensity. If only absolute intensity (i.e.per capita consumption of resources) wasincorporated, Westerns Europe most likelywould be found on the bottom of the ranking.Scandinavia is amongst the lower ranks,possibly due to the abundant availability ofdomestic energy (hydro-energy, oil) thatallowed for efficiency management to beconsidered a somewhat marginalconsideration in the past.Average Deviation53% of all countries are above the Worldaverage (i.e. 47% are below average),representing a fairly even distribution.However, the lowest negative deviation isclose to -70%, whereas the highest deviation isless than +40%. The equal spread and thediverse allotment of countries of similar naturalcharacteristics and regions indicate thatthere is no direct correlation betweengeography, location and climate to resourceintensity, or economic development level tonatural resource intensity and efficiency. Theonly manifestation of a visible correlationseems to be a correlation of abundant localavailability of resources with low efficiency(i.e. where resources are cheap, efficiency islow). In the absence of rich local resources,efficiency and intensity are the result ofeconomic activities, policies, and investments.23410 10 20 30 40 50 60Middle EastNorth-east AsiaAustralia & New ZealandScandinaviaNorth AmericaNorthern AfricaEastern EuropeSouth-east AsiaSouthern EuropeCentral AsiaEastern AfricaSouthern AfricaNorth-western EuropeSouth AmericaWestern AfricaCentral AmericaResource efficiency indicators14 data points0Indicator Relative toEnergy consumption PopulationEnergy consumption GDPWater consumption PopulationWater productivity GDPSteel & metal usage PopulationSteel & metal usage GDPEcological footprint AbsoluteElectricity consumptions PopulationElectricity consumption GDPRenewable electricity generation %Coal electricity generation %Transmission losses TimeGHG emissions PopulationGHG emissions GDPThe Sustainable Competitiveness Index 2013
  24. 24. Table of contentsResource Intensity Rankings1-88Country Rank ScoreRepublic of Congo 1 70.0Lesotho 2 68.6Gambia 3 66.8Ghana 4 66.6Nicaragua 5 66.2Dominica 6 65.3Sudan 7 65.3Bhutan 8 64.9Costa Rica 9 64.3Guinea-Bissau 10 64.3Comoros 11 64.2Nepal 12 64.2Nigeria 13 64.1El Salvador 14 64.1Albania 15 63.8Timor-Leste 16 63.7Togo 17 63.0Angola 18 62.9Zambia 19 62.7Sri Lanka 20 62.7Djibouti 21 62.6Lithuania 22 62.0Burundi 23 62.0Liberia 24 61.9Ethiopia 25 61.8Cameroon 26 61.7Tajikistan 27 61.5Tanzania 28 61.5Belize 29 60.1Cambodia 30 59.8Switzerland 31 59.7Madagascar 32 59.7Rwanda 33 59.5Azerbaijan 34 59.5Malawi 35 59.2Eritrea 36 58.5Guinea 37 58.2Spain 38 58.2Chad 39 58.2Central African Republic 40 58.1Democratic Republic ofCongo41 57.6Burma 42 57.6Brazil 43 57.5Italy 44 57.5The Sustainable Competitiveness Index 2013Page 24Country Rank ScorePhilippines 45 57.5Mozambique 46 57.2Paraguay 47 56.9Mali 48 56.3Sierra Leone 49 56.3United Kingdom 50 56.1Haiti 51 56.0Namibia 52 56.0Burkina Faso 53 55.7Uganda 54 55.6Sweden 55 55.3Colombia 56 55.2Georgia 57 55.1Kenya 58 54.8Somalia 59 54.7Swaziland 60 54.6Ecuador 61 54.2Romania 62 53.9Afghanistan 63 53.8Guatemala 64 53.5Dominican Republic 65 53.3Armenia 66 53.3South Sudan 67 53.2Panama 68 53.0Croatia 69 53.0Zimbabwe 70 52.9Austria 71 52.8Slovakia 72 52.7Hungary 73 52.2Indonesia 74 51.9Niger 75 51.8Morocco 76 51.8Portugal 77 51.7Uzbekistan 78 51.5Pakistan 79 51.3Cote dIvoire 80 51.2Denmark 81 51.2Luxembourg 82 51.0Honduras 83 51.0Kyrgistan 84 50.8Finland 85 50.8Germany 86 50.7Botswana 87 50.7Peru 88 50.7
  25. 25. Table of contentsResource Intensity Rankings89-176The Sustainable Competitiveness Index 2013 Page 25Country Rank ScoreMauritania 89 50.4Argentina 90 50.4Cuba 91 50.0Guyana 92 49.8Ireland 93 49.7Papua New Guinea 94 49.5Tunisia 95 49.4Montenegro 96 49.1Syria 97 48.9New Zealand 98 48.9Uruguay 99 48.8Bangladesh 100 48.6Mauritius 101 48.3Moldova 102 48.3Senegal 103 48.1West Bank and Gaza 104 47.5Chile 105 47.4Gabon 106 47.4Japan 107 47.3Greece 108 47.2France 109 47.1Belgium 110 46.9Poland 111 46.3Bolivia 112 46.3Yemen 113 46.1Benin 114 45.7Laos 115 45.6North Korea 116 45.5Suriname 117 45.0Belarus 118 45.0Malta 119 45.0India 120 44.9Fiji 121 44.9Australia 122 44.7Venezuela 123 44.6Canada 124 44.5Jamaica 125 44.5Lebanon 126 44.1Macedonia 127 44.1Latvia 128 43.9Netherlands 129 43.7Egypt 130 43.6Bulgaria 131 43.6Kosovo 132 42.9Country Rank ScoreCzech Republic 133 42.5USA 134 41.9Seychelles 135 41.6Slovenia 136 41.1Hong Kong 137 41.0Turkey 138 40.8Cyprus 139 40.5Malaysia 140 40.5Iraq 141 40.3Israel 142 40.2China 143 40.0Serbia 144 39.5Mexico 145 39.5Bahamas 146 39.5Ukraine 147 39.5Norway 148 39.2Algeria 149 38.3Jordan 150 37.5Macao 151 36.7Russia 152 36.6Vietnam 153 36.1Qatar 154 35.2Turkmenistan 155 35.2Singapore 156 35.1Maldives 157 35.1Iceland 158 34.7Equatorial Guinea 159 34.5Libya 160 34.3Thailand 161 33.4Bosnia and Herzegovina 162 32.3South Africa 163 31.2South Korea 164 31.2Estonia 165 30.0Greenland 166 28.4Mongolia 167 26.5Iran 168 26.3Brunei 169 24.7United Arab Emirates 170 22.5Bahrain 171 19.8Trinidad and Tobago 172 19.3Kazakhstan 173 18.3Oman 174 17.9Saudi Arabia 175 17.1Kuwait 176 13.6
  26. 26. The Global Sustainable Competitiveness IndexSustainable innovationsustainable innovation & the economy
  27. 27. Table of contentsInnovation & CompetitivenessSustaining Wealth through Adding ValueIn order to create and sustain wealth, nations need to provide jobs and income to theirpopulations. Providing jobs requires producing goods and providing services that people orbusinesses – domestically or abroad – are willing to buy. This in turn requires products andservices to be competitive in terms of quality and price against global competition. And in orderto maximise the domestic benefits, the value chain is idyllically covered within the boundaries ofa national economy (the largest share of adding value is contained in processing raw materialsto finished products).Sustainable competitiveness requires a number of elements: the basic structures (infrastructure,and the maintenance of infrastructure), business environment, and last but not least, qualityeducation and R&D capabilities.Innovation measuringQuality and availability of education in the past are an indication for today’s R&D andinnovation capabilities, and today’s education performance reflect future innovationcapabilities. Strength and depth of R&D activities is the basis for the development of value-added technologies and services. Educational performance indicators are therefore highlyimportant to predict sustained innovation and competitiveness. Additional indicators includeperformance data on R&D (employees in R&D functions, capital allocation, patentapplications), and infrastructure investments (infrastructure investments today are an indicationof the quality (and efficiency) of tomorrows infrastructure). The Gross National Income (GNI) hasbeen chosen as an economic indicator due to more appropriately reflecting the full economiccapability compared to the GDP.Further indicators relate to the actual business environment – new business registration, businesslegislation, corruption, and the health of the balance between agricultural, industrial andservice sectors of an economy.The Sustainable Competitiveness Index 2013 27Sustainable innovation & economySustainable Innovation&CompetitivenessR&D employeesR&D investmentsPatent intensityR & DSchool enrollmentSchool qualityUniversity degreesEducationGNIGDPEconomic diversityEconomicindicatorsBusiness facilitationCorruptionBusiness dynamicBusinessenvironmentInfrastructureinvestmentsInfrastructure statusInfrastructure
  28. 28. Table of contentsCompetitiveness World MapSustainable InnovationThe indicators used for assessing innovation capability and sustainability competitiveness arecomposed of data points relating to education, innovation capabilities, business environment,economic development, and infrastructure. Countries with a high score in this ranking are morelikely than others to develop successful economies through research and know-ledge drivenindustries, i.e. the high-value added industries, and therefore achieve higher growth rates. Allindicators used to assess the innovation capability and sustainable competitiveness have beenscored against size of the population or against GDP in order to gain a full picture of thecompetitiveness, independent of the size of a country.The innovation and competitiveness ranking is dominated by Asian nations and OECD countriesfrom the Northern hemisphere. The innovation and competitiveness ranking is topped by Asiancountries (Singapore, South Korea, Japan, China), with all other top-ten places (Germany,Denmark, Norway, Switzerland, Finland, Sweden, in order of ranking) and top twenty spots goingto European countries expect for Israel (12) and Canada (19). The USA is ranked 22th, the UK 31st,followed by Brazil (35th) as the highest ranked country of the Southern hemisphere. The only othernations from outside Europe or North-East Asia in the top 50 are New Zealand, Australia, Russia,Costa Rica, Oman, Uzbekistan, Thailand and Bahrain. Other than Oman, Uzbekistan andThailand, there is no representation from Africa, Central Asia or South-East Asia within the leading50 nations in terms of innovation capability and sustainable competitiveness.The Sustainable Competitiveness Index 2013Page 28The Sustainable Innovation World map: dark colour indicates high, light colour limited sustainable innovation & competitivenessAsian countries top innovation rankings
  29. 29. Table of contentsRegional SpreadSustainable Innovation & CompetitivenessRegional spreadNorth-East Asia is the leading region in termsof sustainable innovation and economicdevelopment, followed by Scandinavia andNorth-Western Europe. A significant gap isvisible between the leading countries tocountries from Southern, Eastern Europe andSouth America. Another significant gap opensto countries in Central Asia, Central Americaand Africa.Coincidently, this rankings shows a fairamount of similarity to the findings of the PISAStudy (comparison of student test levelsacross OECD countries, which could not beused for this index due to lack of coverage ofnon-OECD countries), underlying thefundamental importance of educationavailability and quality for achievingsustainable development.All African regions are on the bottom of thislist, indicating that the continent is still somedistance off to lifting itself out of the cycle ofpoverty and lack of resources for innovationand investments to eradicate poverty.Average DeviationOnly 38% of all countries are above the Worldaverage (i.e. 62% are below average),indicating a significant gap between theleading and above average nations to thelower performing countries. This notion is alsosupported by the high average deviation,both on the positive and the negative ends ofthe scale (i.e. the leading and the lastcountries in this ranking) of plus/minus 70%.29Innovation & investment lead development490 10 20 30 40 50 60 70Eastern AfricaWestern AfricaCentral AmericaSouthern AfricaNorthern AfricaCentral AsiaMiddle EastSouth-east AsiaSouth AmericaEastern EuropeSouthern EuropeAustralia & New ZealandNorth AmericaNorth-western EuropeScandinaviaNorth-east AsiaSustainable innovation indicators21 data pointsIndicator Relative toPrimary school completion %Primary school repetitions %Secondary school completion %Tertiary education completion %Mean school years %Total investments GDPRoads Area, populationRailroads Area, populationAusterity & public spending GDP growthR&D FTEs PopulationR&D expenditure GDPHigh tech exports GDPPatent registrations PopulationPatent registrations GDPTrademark registrations PopulationNew business registrations PopulationIndustry-service-sector balance %Unemployment %Obesity rate %Corruption index PopulationCorporate bribery PopulationThe Sustainable Competitiveness Index 2013
  30. 30. Table of contentsSustainable Innovation Rankings1-88The Sustainable Competitiveness Index 2013Page 30Country Rank ScoreSingapore 1 74.7South Korea 2 70.1Germany 3 68.8Japan 4 68.5Denmark 5 66.1Norway 6 65.9Switzerland 7 64.9Finland 8 64.2Estonia 9 63.7Sweden 10 63.4China 11 62.8Israel 12 62.7Luxembourg 13 62.5Iceland 14 62.1Austria 15 61.8Slovenia 16 60.4Czech Republic 17 60.2Netherlands 18 59.5Canada 19 58.1Portugal 20 57.2France 21 56.8USA 22 56.3Belgium 23 56.2Ireland 24 55.5Italy 25 55.1Australia 26 55.0Belarus 27 54.9New Zealand 28 54.1Spain 29 54.0Russia 30 53.9United Kingdom 31 53.2Poland 32 52.8Lithuania 33 51.0Hungary 34 51.0Brazil 35 50.2Romania 36 49.9Montenegro 37 48.5Cyprus 38 48.1Slovakia 39 47.7Malaysia 40 47.7Serbia 41 47.5Costa Rica 42 47.3Malta 43 47.1Oman 44 47.0Country Rank ScoreUzbekistan 45 46.9Latvia 46 46.0Thailand 47 45.9Bulgaria 48 45.4Turkey 49 45.2Bahrain 50 45.1Hong Kong 51 45.0Iran 52 45.0Greenland 53 44.8Argentina 54 44.3Greece 55 44.1Uruguay 56 44.0Saudi Arabia 57 44.0Peru 58 43.4Croatia 59 43.4Dominica 60 43.2Kosovo 61 42.6Sri Lanka 62 42.4Tunisia 63 42.3Indonesia 64 42.3Kazakhstan 65 42.0Georgia 66 41.9Moldova 67 41.8Timor-Leste 68 41.6Albania 69 41.5Kuwait 70 41.3Mauritius 71 41.2Cuba 72 40.8Armenia 73 40.6Colombia 74 40.1Mongolia 75 40.0Ukraine 76 39.8Brunei 77 39.8Lebanon 78 39.7Ecuador 79 39.5Qatar 80 39.5Seychelles 81 39.3Dominican Republic 82 39.1Libya 83 39.0Niger 84 38.9Tanzania 85 38.6Zimbabwe 86 38.6Turkmenistan 87 38.6Ghana 88 38.0
  31. 31. Table of contentsSustainable Innovation Rankings89-175The Sustainable Competitiveness Index 2013 Page 31Country Rank ScoreChile 89 37.9Bhutan 90 37.9Kyrgistan 91 37.8Guyana 92 37.8Republic of Congo 93 37.7Algeria 94 37.6Zambia 95 37.5Tajikistan 96 37.4Bosnia and Herzegovina 97 37.3Senegal 98 37.3Uganda 99 37.1Liberia 100 37.1Cameroon 101 37.0Cote dIvoire 102 36.9Jordan 103 36.7Venezuela 104 36.5Mozambique 105 36.5Djibouti 106 36.3South Africa 107 36.2Jamaica 108 36.1Benin 109 36.0India 110 35.9Kenya 111 35.5El Salvador 112 35.3Mauritania 113 35.3Democratic Republic ofCongo114 35.3Mexico 115 35.3Rwanda 116 35.2Central African Republic 117 35.2Angola 118 34.5Botswana 119 34.5Eritrea 120 34.4Pakistan 121 34.2Mali 122 34.2Gambia 123 34.1Macedonia 124 34.0Azerbaijan 125 33.9Malawi 126 33.9Nepal 127 33.7Sierra Leone 128 33.6Chad 129 33.5Nigeria 130 33.5Burkina Faso 131 33.4Guinea 132 33.4Country Rank ScoreSudan 133 33.4Ethiopia 134 33.4Vietnam 135 33.1Morocco 136 33.0Togo 137 32.8Panama 138 32.6Swaziland 139 32.3Philippines 140 32.2Lesotho 141 32.1Iraq 142 31.9Belize 143 31.8Cambodia 144 31.7Suriname 145 31.7Guinea-Bissau 146 31.6Syria 147 31.2Afghanistan 148 31.2Paraguay 149 31.0United Arab Emirates 150 31.0Maldives 151 31.0Guatemala 152 30.8Egypt 153 30.8North Korea 154 30.2Laos 155 30.2Bahamas 156 29.8Burundi 157 29.8Comoros 158 29.6Bolivia 159 29.1Trinidad and Tobago 160 28.9Madagascar 161 28.9South Sudan 162 28.7Bangladesh 163 28.3Namibia 164 27.8Somalia 165 27.8Honduras 166 27.7Gabon 167 27.5Nicaragua 168 27.3Burma 169 26.5Equatorial Guinea 170 26.1Haiti 171 24.6Papua New Guinea 172 24.3Fiji 173 22.9West Bank and Gaza 174 21.4Yemen 175 15.6
  32. 32. The Global Sustainable Competitiveness Index32Social cohesion
  33. 33. Table of contentsFoundation of stable development Social CohesionEqual OpportunitiesElements of Social CohesionSocial Cohesion is not a tangible value and therefore hard to measure and evaluate in numericvalues. In addition to historical and cultural influences, the social consensus in a society isinfluenced by several factors: health care systems and their universal availability/affordability tomeasure physical health; income and asset equality, which are correlated to crime levels;demographic structure to assess the future balance within a society; and freedom of expression,freedom from fear and the absence of violent conflicts.While a direct connection of social cohesion to creating wealth and sustain economicdevelopment might be difficult to establish scientifically, a certain degree of equality, adequatehealth systems, freedom from fear and equal opportunities (whiteout which no American Dreamwould have ever been possible) are pre-requisites to achieve the same. The absence ordeterioration of social cohesion in turn leads to lower productivity (health), rising crime rates, andpotentially social unrest, paralysing economic development and growth.The Sustainable Competitiveness Index 2013 33Social cohesion are the basis for smooth economic activitiesSocial CohesionIncome equalityResource equalityGender equalityEqualityHealth careavailabilityChild mortalityFamily planningHealthTheftViolent crimePrison populationCrimePress freedomHuman rightsHappinessFreedomDemographicsBirth rateAge structureIndicatorsThe indicators selected to measure social cohesion have been selected from the 5 themesabove (health, equality, crime, freedom and age structure). Some of these indicators (e.g.“happiness”) are qualitative, i.e. not based on performance data that can be measured.Instead, qualitative indicators from surveys and other sources compiled by recognisedorganisations were used to measure the qualitative aspects of social cohesion, including singleindicators from the Happy Planet Index (New Economics Foundation), the Press Freedom Index(Reporters Without Borders), and the Global Peace Index (Institute for Economics and Peace).
  34. 34. Table of contentsWorld MapSocial CohesionA certain level of social balance or social consensus is required to maintain a stable environmentin which economic activities can take place. The higher the social consensus, the higher themotivation of individuals to contribute to the wider good, i.e. the sustainable development of thenation. The indicators used to calculate the social cohesion score of countries is composed ofhealth and health care factors (availability and affordability), the quantitative equality withinsocieties (income, assets, and gender equality), freedom indicators (political freedom, freedomfrom fear, individual happiness), crime levels, and demographic indicators.The four Scandinavian countries occupy the top 4 spots of the Social Cohesion ranking, withother Central and Northern European countries (Iceland, Austria, Switzerland, the Netherlands,Ireland, and Germany,) filling the top ten. The first non-European countries in the Social Cohesionranking are Canada (13), followed by new Zealand (32). The highest ranked non-OECD country isQatar (24th), Japan (35) in Asia, Uruguay (67) in South America, while the first African Nation isTunisia (72). Of the emerging economies, China is ranked 65, India 77, and Russia 114, and Brazil125. The USA , due to comparable high crime rates and low availability of health services, isranked 59th.Most African nations, particular below in and South of the Sahel zone, are at the bottom of thislist, due to a combination of low availability of health care services and child mortality, limitedfreedom of expression and unstable human rights situation.The Sustainable Competitiveness Index 2013Page 34Scandinavia showing the wayThe Social Cohesion World map: dark colour indicates high, light colour limited social cohesion.
  35. 35. Table of contentsRegional SpreadSocial CohesionThe Sustainable Competitiveness Index 2013 Page 350 10 20 30 40 50 60 70 80Eastern AfricaSouthern AfricaWestern AfricaCentral AmericaSouth AmericaNorthern AfricaSouth-east AsiaMiddle EastCentral AsiaEastern EuropeNorth AmericaSouthern EuropeNorth-east AsiaAustralia & New ZealandNorth-western EuropeScandinaviaRegional spreadScandinavia tops the social cohesion rankingby a considerable margin, followed by North-Western Europe. Both are regions with highaverage GDP per capita. The high ranking ofregions with medium or high GDP seems toindicate a certain correlation of income levelsand social consensus. Central America andall African regions are found at the bottom ofthis regional ranking, while Eastern Europe,Central Asia and the Middle East occupy themiddle ranks. The only ranking not fitting intothis pattern is North America’s classificationbelow Southern Europe due to higher crimelevels. There is also a distinct differentiationbetween North and South visible here,whereby the Northern hemisphere makes thetop of the list, while the Southern hemisphereis located at the bottom (expect Australia &New Zealand, which, depending on thedefinition, are often included in the definitionof the North).Average DeviationOnly 42% of countries are above the absoluteaverage of all countries (i.e. 58% are belowaverage), representing an unevendistribution. The high positive deviationamongst the top ten countries of between70-90% also indicates significant gapsbetween the countries on the top of theranking (i.e. between the top ten and the toptwenty countries, for example). On the otherend of the scale, the deviation is 70% belowthe average. The high deviation at the topand bottom end indicate a big spreadbetween leading and trailing countries. Inother words, the countries at the bottom ofthe ranking are facing an significant barriersto improve social cohesion and catch upwith currently higher ranked countries.Social cohesion indicators19 data pointsIndicator Relative toChild mortality %Doctor availability PopulationNurse availability PopulationHospital bed availability PopulationBirth rate Per womanTeenage pregnancy %Population over 65 %GINI coefficient AbsoluteIncome quintile ratio AbsolutePoverty index PopulationGender equality indexPublic service quality perceptionLife satisfactionPress freedom indexPeace indexTheft PopulationConflict with laws PopulationPrison population PopulationHomicide rate Population
  36. 36. Table of contentsSocial Cohesion Rankings1-88The Sustainable Competitiveness Index 2013Page 36Country Rank ScoreNorway 1 77.2Denmark 2 74.6Sweden 3 74.0Finland 4 73.9Iceland 5 72.9Austria 6 71.8Switzerland 7 71.5Netherlands 8 71.4Ireland 9 71.3Germany 10 70.3Slovenia 11 68.5United Kingdom 12 64.9Canada 13 64.2Luxembourg 14 64.1Spain 15 63.0Poland 16 62.6Belgium 17 61.7Greenland 18 61.5France 19 61.4Czech Republic 20 61.3Croatia 21 60.3Cyprus 22 60.2Slovakia 23 60.2Qatar 24 60.0Serbia 25 59.6Malta 26 59.5Portugal 27 58.7Kosovo 28 58.5Hungary 29 58.1Bulgaria 30 57.9Romania 31 57.2New Zealand 32 57.0Estonia 33 55.8Jordan 34 55.3Japan 35 55.3Montenegro 36 55.0Italy 37 54.7Armenia 38 54.6Bosnia and Herzegovina 39 54.5Kuwait 40 54.2United Arab Emirates 41 53.9Ukraine 42 53.7Egypt 43 53.7Bhutan 44 53.2Country Rank ScoreTajikistan 45 53.0Lebanon 46 52.8Belarus 47 52.6Australia 48 52.6Greece 49 52.5Moldova 50 52.0Oman 51 51.6Macao 52 51.0Vietnam 53 50.7Singapore 54 50.3Latvia 55 50.1Lithuania 56 50.0Kazakhstan 57 49.7Albania 58 49.4USA 59 49.2Uzbekistan 60 49.2South Korea 61 49.1Mongolia 62 48.4Timor-Leste 63 47.6Bangladesh 64 47.2China 65 47.1Indonesia 66 47.0Uruguay 67 47.0Nepal 68 46.9Argentina 69 46.8Malaysia 70 46.3Laos 71 45.9Tunisia 72 45.9Maldives 73 45.8Azerbaijan 74 45.8Kyrgistan 75 45.8Jamaica 76 45.6India 77 45.5Israel 78 44.9Saudi Arabia 79 44.1Afghanistan 80 43.8Bahrain 81 43.5Macedonia 82 43.3Syria 83 42.8Thailand 84 41.8Ethiopia 85 41.7Sri Lanka 86 41.3Morocco 87 41.2Turkey 88 41.2
  37. 37. Table of contentsSocial Cohesion Rankings89-176The Sustainable Competitiveness Index 2013 Page 37Country Rank ScoreGuatemala 133 35.0Benin 134 35.0El Salvador 135 34.9Madagascar 136 34.8Cuba 137 34.6Sierra Leone 138 34.4Burma 139 34.2Republic of Congo 140 33.5Uganda 141 33.5Belize 142 33.5South Sudan 143 33.4Iran 144 33.3Bahamas 145 33.2Gambia 146 32.9Kenya 147 32.8Trinidad and Tobago 148 32.4South Africa 149 32.0Seychelles 150 31.9Fiji 151 31.8Botswana 152 31.8Chad 153 31.7Guyana 154 31.3Namibia 155 31.2West Bank and Gaza 156 30.9Zambia 157 30.9Sudan 158 30.3Honduras 159 29.6Comoros 160 29.5Bolivia 161 29.5Zimbabwe 162 29.2Nigeria 163 29.1Colombia 164 29.0Eritrea 165 28.3Democratic Republic ofCongo166 26.3Somalia 167 26.2Lesotho 168 25.2Hong Kong 169 25.1Haiti 170 24.8Central African Republic 171 23.0Swaziland 172 22.4Yemen 173 22.1Rwanda 174 22.1Angola 175 21.2Equatorial Guinea 176 13.7Country Rank ScorePapua New Guinea 89 40.9Pakistan 90 40.9Malawi 91 40.7Niger 92 40.6Turkmenistan 93 40.3Mexico 94 40.3Ghana 95 40.0Dominica 96 39.8Senegal 97 39.7Costa Rica 98 39.6Nicaragua 99 39.5Cambodia 100 39.1Burkina Faso 101 39.1Gabon 102 39.1Ecuador 103 38.7Venezuela 104 38.5Liberia 105 38.4Libya 106 38.4Philippines 107 38.3Togo 108 37.9Algeria 109 37.9Peru 110 37.8Iraq 111 37.7Mali 112 37.7Dominican Republic 113 37.7Russia 114 37.5Chile 115 37.4Panama 116 37.4Cameroon 117 37.4Tanzania 118 37.3Paraguay 119 37.3Mozambique 120 37.2Suriname 121 37.0Brunei 122 36.6Guinea 123 36.6Georgia 124 36.4Brazil 125 36.3Mauritania 126 35.9Burundi 127 35.9Guinea-Bissau 128 35.8Mauritius 129 35.8North Korea 130 35.7Djibouti 131 35.5Cote dIvoire 132 35.0
  38. 38. The Global Sustainable Competitiveness Index38Measuring Sustainable Competitiveness
  39. 39. Table of contents The Sustainable Competitiveness Index 2013Sustainable Competitiveness Index 2013MethodologyThe Sustainable Development Index was first developed and published in 2012.20 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 themes andissues. In addition, many of the issues are dependent on each other and inter-acting. Factorsdetermining the development level of a country can and should to be viewed from a long-term(sustainable) perspective in order to achieve a comprehensive view-point of competitiveness.Given the complexity – the number of issues, inter- relationships and changes over time - it mightbe argued that “sustainability” is better described in qualitative than quantitative terms.However, a qualitative description is always subject to the values, believes and background ofthe describer. Numeric values (single data points), in contrast, are not subjective. The datacollected by various global institutions across all countries contain numerous single indicators(quantitative indicators) that are an expression of the current sustainability level of a certainaspect of sustainability. In order to exclude subjectivity, this Index has been calculated purelybased on quantitative indicators. The quantitative indicators are carefully chosen as expressionsof relevant aspects of sustainable development, based on a sustainability model that ensuresinclusion of all relevant aspects of sustainability that can be measured in numbers. The sum of allthese indicators together reflect the overall sustainability and sustainable competitiveness level ofa country.The initial approach consisted of adapting corporate sustainability evaluation methodologybased on the 3 pillars of sustainability – economic, environment, social (often referred to as“ESG”) – to evaluate the sustainability of a nation rather than a corporation. While the origins arefound in corporate ESG evaluation, it is clear that the resulting methodology applied to evaluatesustainable competitiveness of countries is entirely different from the corporate sustainability ESGmethodologies.Certain improvements have been applied in for the 2013 edition. Due to better data availability,three more indicators have been included. In addition, the methodology to generate scores fromperformance data and the methodology to calculate weightings of indicators have beenreviewed and improved where necessary. The changes do not materially affect scorings andrankings, but allow for a better differentiation between countries within the same or comparabledevelopment levels or stages. Because of the changes in methodology, scoring and weightcalculation, it is nevertheless not completely plausible to directly compare 2012 and 2013rankings. For this reasons, the direct comparison of 2012 and 2013 rankings have been omittedfrom this report other than for overall rankings.While we believe that the methodology underlying the Sustainable Competitiveness Index is anaccurate mirror of the sustainable competitiveness of a country, data availability is constantlyimproving and the concept of sustainability is still evolving. The methodology therefore remainswork in progress. At the same time, we believe that a comprehensive evaluation of countriesintegrating both financial and “non-financial” aspects is a helpful tool to provide an inclusivepicture of a country, its current sustainable development level, and potential to increase orsustain the current development and wealth levels.In this context, we hope that this Index can contribute to the on-going discussion of what drivessuccess for countries and their populations.39Changes to the Sustainable Competitiveness Index methodology
  40. 40. Table of contentsThe Sustainable Competitiveness Index 2013The Sustainability of a NationMethodologyThe 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.However, corporations are entities thatoperate in very different boundaries and withdifferent goals than states and nation-economies. The elements of the modeltherefore have to be adapted to thecharacteristics of nations and their fundamentof sustained prosperity.While corporate or economic entities(depending on the nature of their business)are working with natural capital, they do notdepend on the location of the capital, andtherefore can move any given moment towhere the external conditions are mostfavorable, both in terms of physical location(offices/factories) and markets, as well as interms of business fields. Transport andinternational trade have made countries andpeople less dependent on their immediateenvironment through international trade ofresources, including water. However,countries and population cannot simply moveon should fundamental resources (water,agricultural output) become scarce or thecountry inhabitable due to climate change.At the end of the day people rely on, and liveoff, the natural capital of their environment forbetter or worse.For the purpose of evaluating thesustainability and sustainable developmentlevel of a country (which is equal to sustainedeconomic development), a fourth element –the natural capital – has therefore beenadded to the three elements of innovationcompetitiveness, resource efficiency andsocial sustainability.4017Sustainability model usually applied in corporatesustainability evaluationSustainability model of nations: an additional element isadded: natural capital as the basis for a countries ability forself-sustaining existenceSustainability models
  41. 41. Table of contents The Sustainable Competitiveness Index 2013Sustainable Competitiveness FactorsMethodologyIt is now widely accepted that economic activities have adverse impacts or side-effects on thenon-financial assets of a country. The negative impacts of economic activities - includingnegative impacts on the social fabric and cohabitation within a society - can undermine oreven reverse future growth and wealth creation. Due to the omission of key non-financialindicators and performance that are fundamental to sustain economic activities,conventionally used measurements to measure wealth of nations such as the GDP have limitedinformative value for the future development of a country.Sustainable competitiveness means the ability of a country to meet the needs and basicrequirements of current generations while sustaining or growing the national and individualwealth into the future without depleting natural and social capital.The Sustainable Competitiveness Index is built and calculated based on the sustainablecompetitiveness model that covers 73 data indicators grouped in 4 pillars:• Natural Capital is the based to sustain a society and economic activities: the given naturalenvironment within the frontiers of a country, including availability of resources, and the levelof the depletion of those resources.• Resource Intensity is a measurement of efficiency, and thus an element of competitiveness:the efficiency of using available resources(domestic or imported) as a measurement ofoperational competitiveness in a resource-constraint World.• Sustainable Innovation is key to sustain economic development in the globalised market: thecapability of a country to generate wealth and jobs through innovation and value-addedindustries in the globalised markets• Social Cohesion is the fundamental stability required to maintain interruption-free economicactivities: t he health of populations, equality, security and freedom within a country4118National sustainability & competitiveness
  42. 42. Table of contentsThe Sustainable Competitiveness Index 2013Natural Capital & Resource Efficiency:IndicatorsNatural CapitalThe natural capital of a nation or country isdefined by the characteristics of the naturalenvironment, which consists of a mixture ofsize, population, geography, climate,biodiversity and availability of naturalresources (renewable and non-renewable),as well as the depletion of those resources.The combination of these factors and thelevel of depletion of the natural resources dueto human activity and climate changerepresents the future potential of sustaining aprosperous livelihood for the population andthe economy of a nation.Indicators used encompass forests andbiodiversity indicator, agricultural indicators,land degradation and desertification, waterresources, minerals and energy resources,pollution indicators and depletion indicators.Resource IntensityThe more efficient a nation is using resources,the smaller the negative impacts of apotential supply scarcity of resources (food,energy, water, and minerals). Higherefficiency is also equal to lower cost perproduction unit in agriculture, industrialproduction, and to a lesser extend also in theservice sector. Efficient use of resources andenergy is an indicator for a nation’s ability tomaintain or improve living standard levelsboth under a future business-as-usual scenarioas well as under changing external economicor geo-political circumstances and influencesthat might affect raw material and resourceprices.Indicators used cover water usage andintwnsity, energy usage, energy intensity andenergy sources, climate change emissionsand intensity as well as certain raw materialusage. However, global data availability forraw materials consumption other than steel islimited and therefore could not be included.Page 42Natural capital and depletion indicators19 data pointsIndicator Relative toRenewable freshwater resources PopulationInland water PopulationPopulation density AreaArable land PopulationPotentially arable land PopulationCereal yield AbsoluteLand degradation AreaDesertification & desertification risks AreaForest area & forest loss AreaBiodiversity potential AbsoluteExtreme weather events TimeEndangered species AbsoluteFossil resources Population, GDPMineral resources Population, GDPEnergy self-sufficiency AbsoluteResource depletion AbsolutePollution levels AbsoluteSO2 emissions PopulationHazardous waste PopulationResource efficiency indicators14 data pointsIndicator Relative toEnergy consumption PopulationEnergy consumption GDPWater consumption PopulationWater productivity GDPSteel & metal usage PopulationSteel & metal usage GDPEcological footprint AbsoluteElectricity consumptions PopulationElectricity consumption GDPRenewable electricity generation %Coal electricity generation %Transmission losses TimeGHG emissions PopulationGHG emissions GDP
  43. 43. Table of contents The Sustainable Competitiveness Index 2013Sustainable Innovation& Social Cohesion:Indicators43Sustaining Innovation & CompetitivenessThe backbone of sustained economicsuccess is the ability to continuously improveand innovate on all levels, and throughout allinstitutions (not limited to industrial ortechnology R&D). Sustaining competitivenessalso requires a long-term view beyondmomentary individual or political interests andopinions, and long-term investments in crucialareas (education, infrastructure) are needed.Economies that are being deprived frominvestments sooner or later face decline, assome nations of the formerly “leading” Westare currently learning the hard way.Indicators used cover educational levels, R&Dperformance indictors, infrastructureinvestment levels, employment indexes, thebalance of the agricultural-industrial-servicesectors, business environment indicators,obesity (as a measurement of workerefficiency), and business indicators, includingcorruption levels affecting businessdevelopment.Social CohesionLast but not least, nations and societies needsome minimum level of social cohesion,coherence, and solidarity between differentregions, between authorities and the people,between interest groups, between incomelevels, between generations, and betweenindividuals. A lack of social cohesion in any ofthe above aspects can seriously underminethe long-term stability which an economyrequires as a basis to thrive in the long run.Indictors used cover health performanceindicators, birth statistics, income differences,equal opportunities (gender, economic),freedom of press, human rightsconsiderations, and the level of crime againstboth possession and humans.Sustainable innovation indicators21 data pointsIndicator Relative toPrimary school completion %Primary school repetitions %Secondary school completion %Tertiary education completion %Mean school yearsTotal investments GDPRailroad Area, populationRoads Area, populationAusterity & public spending GDP growthR&D FTEs PopulationR&D expenditure GDPHigh tech exports GDPPatent registrations PopulationPatent registrations GDPTrademark registrations PopulationNew business registrations PopulationIndustry-service-sector balance %Unemployment %Obesity rate %Corruption indexCorporate bribery %Social cohesion indicators19 data pointsIndicator Relative toChild mortality %Doctor availability PopulationNurse availability PopulationHospital bed availability PopulationBirth rate Per womanTeenage pregnancy %Population over 65 %GINI coefficient AbsoluteIncome quintile ratio AbsolutePoverty index PopulationGender equality indexPublic service quality perceptionLife satisfactionPress freedom indexPeace indexTheft PopulationConflict with laws PopulationPrison population PopulationHomicide rate Population
  44. 44. Table of contentsThe Sustainable Competitiveness Index 2013ScoringMethodologyPage 44Data sourcesData sources were chosen according to theirreputation and reliability (as well as availabilityof global data). The largest percentage ofindicators was derived from the immense wealthof the World Bank’s indicator database,followed by data sets and indicators providedby various UN agencies.Converting data to scoresThe raw data as provided by the variousdatabases consist of numerical values. Whilevalues can be ranked against each other, theycannot be compared or added to other values(two apples plus three oranges are not equal tofive pineapples). It is therefore necessary toextract a scalable and comparable score fromthe raw data as a first step. In the second step,the relative importance of the indicator isassessed against other indicators to calculatethe sustainability performance.Inclusion of trends: analysis over timeCurrent or recent data on its own limits theperspective to a momentary picture in time.However, the momentary status is not sufficientto gain a true picture of the sustainablecompetitiveness, which is, by definition, forward-looking. Of equal importance are therefore thedevelopment and recent trends of theindicators and their performance. Analysingtrends and developments allows forunderstanding of where a country is comingfrom – and, more importantly - indicates thedirection of future developments. Increasingagricultural efficiency, for example, indicates acountrys capability to feed an increasingpopulation in the future, or the opposite if thetrends are decreasing. Where sufficient dataseries are available, the trend was calculatedfor the latest 5 years available and scored toevaluate the current level as well as the futureoutlook and sustainability potential of a countrybased on recent developments.WorldBankUNDPFAOUNEPWHOIMFOthers2000 2005 2010 2015Integrating trend analysis: while the momentarypicture of the two series might be equal in 2010, thegrey series is likely to improve in the future, whereasthe blue line is likely to decreaseData sources used for the SustainableCompetitiveness Index
  45. 45. Table of contents The Sustainable Competitiveness Index 2013Index CalculationScoring the IndicatorsScoring data indicatorsWhen comparing raw data of variables ofdifferent countries, an “absolute best” cannotbe defined. Scores therefore cannot becalculated against a real or calculated bestpractice score, as is usually the practiced incorporate sustainability performanceevaluation. For the purpose of this index, theraw data was analysed and then ranked foreach indicator individually.In addition, data has to be analysed inperspective: 500 ha of forest might be a largearea for a country like Andorra, but it is a smallarea for China. Depending on the indicator,the denominator might be the land area, thesize of the population, or for intensitymeasurements, GDP. For certain indicators,(e.g. energy efficiency, but also innovationindicators), the performance is evaluatedagainst two denominators (normallypopulation size and GDP) in order to gain amore altruistic picture of the nationalsustainability performance that incorporateseconomic and human efficiency.Trough calculation of the average deviation,the best performing 5% is attached thehighest possible, and the lowest 5% receivesthe lowest possible score, where themaximum score is 100, while the lowest scoreis 0. Scores between the highest and thelowest 5% are linearly assigned according tothe respective country’s performance relativeto the best 5% and the worst 5%.In addition to the scoring indicators based onthe latest available data, a trend analysis forthe period of the most recent 5 years of datais conducted and scored in the same way asdescribed above. The latest availableperformance score accounts for between 60an 80% and the trend for 40-60% of the totalscore for each indicator, depending on thebarriers to change (time and assets requiredto improve intensity performance).4522Raw data is evaluated in relation to country specificsIndicator scores are calculated based on averages acrossall countries
  46. 46. Table of contentsThe Sustainable Competitiveness Index 2013Index CalculationWeightingsPage 46WeightingsThe simplest mathematical methodology tocalculate the sustainability performance fromindividual scores would be to average allindicators. However, some indicators have ahigher importance to the long-termdevelopment and competitiveness of acountry than others. For some indicators, thedata is accurate, for other less accurate. Yetother indicators can be influenced troughgovernment policies or other measurements(provided sufficient political will or economicincentives), while the performance of otherindicators are beyond the influence andmanageability of current human powers. It istherefore necessary to define a formula forcalculating the sustainable competitivenesstaking into account the relevance of eachindicator.The sustainability relevance (weighting) ofindividual indicators are calculated based onthree criteria:• relevance to economic development andsustaining eco-systems• data accuracy• human ability and resources (time,financial) to influence the variable troughpolicies (targeted investment, regulation,and other policy measurements, etc.)The application of this formula leads to anindividual relevance weighting for eachscore. Scores are added according to theirrelevance, which leads to the score in eachof the four identified sustainablecompetitiveness pillars.The application of this methodology led tothe weightings of the four sustainability criteriaas presented in the graph to the left.22.5203522.51000255075100NaturalCapitalResourceIntensityInnovation&CompetitivenessSocialCohesionTotalFrom raw data to weighted sustainability scores criteria tocalculate indicator weightingsWeightings of the four pillars of sustainable competitiveness
  47. 47. Table of contents The Sustainable Competitiveness Index 2013LimitationsReliance on Quantitative DataData 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 accuracy of the index relies on the accuracy of the underlying data. Given the manyindividual and agencies involved in data collected around the World, it cannot be excludedthat some of the data is not completely accurate. Data sources chosen for this Index (WorldBank, UN agencies) are considered reasonably reliable. Raw data from the various databaseswas used as a basis for calculation as-is, i.e. without verifying the 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 and actual levelsof quality. High spending on health care for example does not necessarily guarantee highquality health care system available for the average citizen. Equally, the percentage of schoolenrollment(on all levels, form primary levels to college and universities) is not necessarily anexpression of the quality of the education. However, for some indicators, quality is equallyimportant to quantity from a sustainability viewpoint. For such indicators, quantitative indicatorshave limited informative value and serve as a proxy.While explanatory power of quantitative indicators is limited, conducting a qualitativeevaluation of the 73 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. In order to integrate some qualitative aspects, resultsof global surveys have ben included, e.g. for the quality of public services, or perceived lifesatisfaction.Time frameThe Sustainable Competitiveness Index 2013 is based on the latest available data. For most dataseries, the latest data available (March 2013) is 2011 data. Where 2012 data was available, 2012data has been used. Where 2012 or 2011 data was not available, 2010 data was used, and in afew cases 2009 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 non-available data points would be converted to a 0 (zero) score,the rankings would be distorted. In order to present a balanced overall picture, the missing datapoints from those countries have been replaced with calculated values, extrapolated based onregional averages, income and development levels, as well as geographical features andclimatic averages.4723
  48. 48. The Global Sustainable Competitiveness IndexDavos Man Competitiveness vs. Sustainable Competitiveness48
  49. 49. Table of contents The Sustainable Competitiveness Index 2013Intro“Sustainable Competitiveness” vs. “Competitiveness”Why a sustainable competitiveness Index? There are many different “indexes”, published bydifferent organisations, ranking nations against each other in all possible (and, sometimes,impossible) different criteria. Amongst them are several indexes that in some way or another referto “competitiveness” - in other words, indexes that rank countries according to their ability tocreate wealth, and the outlook for sustaining or increasing current wealth. However, the definitionof competitiveness in a conventional approach tends to focus on economic an financial aspectsof any given economy, and are based on momentary pictures in time. This approach has twomain limitations:• The focus on economic/financial performance aspects assumes that an economy works withinan air-tight space independent of its physical environment (i.e. independent of the actual landit is built on)• Does not take into account the ramifications of current economic activities on the futureeconomic development and wealth creation capabilitiesThrough the inclusion of the so-called “non-financial” characteristics of national economies (theland that an economy is built upon, resource efficiency, and the way societies ensure equalopportunities, and distribute wealth and services amongst its citizens), the SustainableCompetitiveness Index aims at developing a broader picture of competitiveness that incorporatesthe normally omitted factors, which are essential pillars of an economy that is not built onborrowed time but is able to sustain growth and wealth into the future.Different interpretations of different data sets or surveys analysed and put into indexes or rankingscan open interesting new perspectives, regardless of the accuracy and real-life relevance of theindex. However, real-life relevance and correlations to actual success factors depend on a) thesource and reliability of the raw data, and b) - maybe more importantly - the definition of“competitiveness” that underlies a specific index. The definition or understanding of the term“competitiveness” guides the selection of competitiveness indicators and their analysis, i.e. theaspects of an economy that define the competitiveness of a nation according the point of viewof the publishing organisation or the individuals behind the index. It is therefore not really surprisingthat different “competitiveness” rankings come up with very different results.Probably the most famous “competitiveness” index is the “Global Competitiveness Report”,annually published by and at the World Economic Forum (WEF). The WEF, and its annual forumheld in Davos, enjoy a very good reputation amongst business executives and high-rankingpoliticians (the “Davos Man”) whose jets clog the runways of Zurich Airport each January.The WEF Report aims to “help understand of the key factors that determine economic growth,helps to explain why some countries are more successful than others in raising income levels, (…),and offers an important tool in the formulation of improved economic policies and institutionalreforms”. These are very noble intentions, indeed. The interesting question is whether this holds true- in particular whether the competitiveness index correlates to actual wealth creation capabilities.The WEF’s Global Competitiveness Report shall therefore be compared by methodology andresults to the Sustainable Competitiveness Index on the following pages.49Competitiveness indexes: different competitiveness definitions = different results
  50. 50. Table of contentsThe Sustainable Competitiveness Index 2013The Global Competitiveness ReportWEF MethodologyThe WEF (in the Global Competitiveness Report) defines competitiveness “as the set of institutions,policies, and factors that determine the level of productivity of a country”. It is further argues thatthe level of productivity sets the level of prosperity that can be earned by an economy, as well asthe rates of return obtained by investments in an economy. Productivity and returns of investmentsof an economy are considered “the fundamental drivers of its growth rates”, leading to “a morecompetitive economy which is likely to sustain growth.” Based on this definition, the WEF definest 3main criteria, subdivided in 12 pillars of competitiveness, representing a total of 115 indicators. Thethree main criteria are “basic requirements” (institutions and infrastructure), “efficiency enhancers”(education levels, market mechanism and size, labor flexibility, financial market liberalization,technology adaption), and “innovation and sophistication (market maturity, R&D). The indicatorsare described in detail on the next page.The index is computed based on indicator performance. The indicators within a category seem tobe equally weighted, as are categories within a pillar. However, the weightings of the 3 maincriteria differs depending on the level of development of a country (defined as GDP per capita).The weightings of the “basic requirements” indicators is higher for a poor countries (“factor-driveneconomies” according to the WEF terminology), and decreasing over 5 stages of development(GDP per capita) to mature "innovation-driven” economies. The weightings for the last criteria,“Innovation and sophistication”, is highest for the richest countries.The Sustainable Competitiveness Index does not weight indicators or pillar according to the levelof income of a country, but computes each indicator weighting according to its relevance inachieving and sustaining sustainable wealth e.50The Davos Man Global Competitiveness Report: 3 main criteria, 12 pillarsComposition of the WEF’s Competitiveness Index
  51. 51. Table of contents The Sustainable Competitiveness Index 2013Measuring Davos Men CompetitivenessIndicatorsPillar Category Indicators Data SourceInstitutions Public Property rights 2 WEF executive opinion surveyEthics and corruption 3 WEF executive opinion surveyUndue influence 2 WEF executive opinion surveyGovernment efficiency 6 WEF executive opinion surveySecurity 4 WEF executive opinion surveyPrivate Corporate ethics 1 WEF executive opinion surveyAccountability 4 WEF executive opinion surveyInfrastructure Transport infrastructure Roads, ports, railways, air5WEF executive opinion survey,International Air Transport AssociationElectricity and telephonyinfrastructureElectricity supply, mobile/fixed lineavailability 3WEF executive opinion survey,International Telecommunication UnionMacroeconomicenvironmentBudget balance, savings, inflation,debt, credit rating5IMF, Institutional InvestorHealth and primaryeducationHealth Malaria, tuberculosis, HIV, lifeexpectancy, child mortality rate8WEF executive opinion survey, WorldBankPrimary education Quality and enrolment 2 WEF executive opinion survey, UNESCOHigher education andtrainingQuantity of education Secondary and tertiary enrolment 2 UNESCOQuality of education Quality of schools and teaching,internet access in schools4WEF executive opinion surveyOn-the-job training Training and availability of training 2 WEF executive opinion survey, UNESCOGoods marketefficiencyCompetition Domestic competition (competition,taxation, business barriers) 8WEF executive opinion survey, WorldBankForeign competition (trade tariffs,custom proceedings, FDI, imports)6WEF executive opinion survey,International Trade Centre, WTOQuality of demand conditions Customer orientation, buyersophistication2WEF executive opinion surveyLabour marketefficiencyFlexibility Management-labour relations,hiring/firing freedom, redundancycost, taxation5WEF executive opinion survey, WorldBankEfficient use of talent Pay & productivity, brain drain,female participation4WEF executive opinion survey, ILOFinancial marketdevelopmentEfficiency Availability and affordability ofcapital and venture capital5WEF executive opinion surveyTrustworthiness andconfidenceSoundness of banking systems,security market regulation3WEF executive opinion survey, WorldBankTechnological readiness Technological adoption Technology availability, technologytransfers3WEF executive opinion surveyICT use Availability and speed ofcommunication infrastructure6International Telecommunication UnionMarket size Domestic market size Domestic market size index 1 WEF calculationForeign market size Foreign market size index 1 WEF calculationBusiness sophistication Supply, production, valuechain utilisation, marketingSupplier quantity and quality,production sophistication, valuechain depth, marketing capabilities10WEF executive opinion surveyR&D Innovation Research availability andspendingResearcher availability & quality,research institutions and capabilities,R&D expenditure, governmentprocurement, patent applications8WEF executive opinion survey (7), OECDTotal115WEF executive opinion survey: 79,others: 3651The 115 WEF indicators determining competitiveness