Main Indexes of Global Control of Competitiveness, Entrepreneurship and Development

At the moment there are many indexes, which more or less objectively measure the economy. These should include:

(a) World Economy Forum's Global Competitiveness Index—GCI. It includes over 100 different indexes in 148 world economies within 12 competitiveness pillars (Table 5.2),

Table 5.2 Pillars of the global competitiveness index

Pillar No.

Pillar name

Description

Basic requirements subindex—specific factors driving the economy

1.

Institutions

Create legal and administrative framework for creating welfare by individuals, enterprises and governmental agencies. The quality of both public and private institutions is key factor for the given state.

2.

Infrastructure

Is key factor in efficient functioning of economy, makes access to services and economic measures possible

3.

Macroeconomic environment

Emphasises the fact, that overly indebted state cannot effectively provide services and economy cannot permanently develop without microeconomic stability.

4.

Health and primary education

Competitiveness and productivity of state depends from healthy work force. Education similarly—increases efficiency of individual employees.

Subindex increasing performance—increase of performance drives economy

5.

Higher education and training

As the basis of constant improvement, increasing competences, qualifications and in consequence adjusting to needs of production of services system.

6.

Efficiency of market of goods

To a large extent depends from lack of excessive interference in market actions and demand conditions in the market.

7.

Labour market efficiency

Associated mainly with its flexibility and ability of transferring employees among sectors of economy and attractiveness of labour market to skilled people.

8.

Efficiency of financial market

As sources of support of economy development, financing investment projects within healthy risk assessment. It requires credibility of both banking and the entire financial sector.

9.

Technological preparation

On the basis of the use of technology (especially ICT) in the economy evaluation of the efficiency and productivity of economy is possible.

10.

Market size

Associated with market performance—where the scale effect can be used. Economic growth can be strongly associated with trade, especially in states with smaller internal market.

Subindex of innovativeness and knowledge—economic growth driven with innovations

11.

Business advancement level

Especially in quality of state's business networks and quality of operations and strategies of individual companies.

12.

Innovations

Formed on the basis of general knowledge, especially development of new technologies. Constant improvement of R&D expenditures is important, which will be the key to sustainable growth in future.

Source: K. Schwab 2013, The Global Competitiveness Report 2013–2013, World Economic Forum, Geneva, pp. 4–9

(b) The Bertelsmann Stiftung's Transformation Index—BTI) regards the quality of democracy and economic transformation (Status Index) and political management in the process of transformation (Management Index). In 2014

it covered 129 developing states and states in phase of transformation (Bertelsmann 2014).

(c) The Index of Economic Freedom—IEF—shared report of Heritage Foundation and “The Wall Street Journal”. It covers 186 states and 99 % of world's population. Analyses degree of law obedience, range of authority coercion, markets' openness and performance regulators (Miller et al. 2014),

(d) ranking of friendliness of tax systems (Paying Taxes—PT) conducted under the World Bank's Doing Business project. Compares tax systems of 189 world economies enabling monitoring of tax reforms, strengthening discussion between government and business in the degree of business taxation and mutual advantages (Paying Taxes 2014),

(e) World Competitiveness Yearbook—WCY analyses how nations and enterprises achieve higher welfare through appropriate management of their own competences. Believed to be one of the most accurate in the world and covers 60 states (World Competitive Yearbook 2014),

Corruption Perceptions Index—CPI (Corruption Perceptions Index 2014) should also be added here, which can show to which degree the state's authority is focused at tolerating committing acts prohibited by law, and to which degree it accepts illegal activities as a subjective form of processes of governance and management control. The research covers 177 states and its results can be particularly helpful in external assessment of economic turnover, which should be applied in the state.

World Economic Forum prepares each year The Competitiveness Index according to Michael Porter's methodology. Competitiveness of this index depends from performance of the nation in using own human, natural and financial (capital) resources. In this sense competitiveness is understood as a game of positive sum, which raises the bar for performance (Porter 2006).

In the index for 2013–2014 148 states were grouped according to three levels of development and two transition states between levels:

(a) first level—where 38 states are classified (according to development factor),

(b) transition level—between level 1 and 2, where 20 states are classified,

(c) second level—31 states (according to efficiency factor)

(d) transition level—between level 2 and 3, with 22 states, including Poland,

(e) third level—37 state economies (according to innovativeness factor) (Schwab 2013).

In 2013–2014 the top ten states in competitiveness ranking (in order) were: Switzerland, Singapore, Finland, Germany, the United States, Sweden, Hong Kong (formerly Special Administrative Region of China), the Netherlands, Japan and the United Kingdom. Poland in relation to 2013 fell three positions down, taking 42nd place (between Malta and Bahrain) (Schwab 2013).

Another indicator that can be indirectly applied to measure the management in the country is the Global Entrepreneurship and Development Index—GEDI. It includes qualitative and quantitative measures of 79 world's most important states. It contextually refers to entrepreneurial attitudes—ATT), entrepreneurial action— ACT) and entrepreneurial aspirations—AST) (Acs and Szerb 2012). The index enlists 14 entrepreneurship pillars, which include:

(a) pillar of entrepreneurship

– perceptions of opportunities,

– initial skills (which allow carrying business, the skills are closely associated with education as a way out of poverty),

– lack of fear of failure (people cannot be afraid of risk of undertaking business activity),

– network cooperation (businessman's personal knowledge about principles and possibilities of use of the Internet for business purposes).

– cultural support (how businessmen see possibility of career in private sector; in which percentage in the state there is corruption, which destroys entrepreneurship and makes its legal operation impossible),

(b) pillar of action:

– initial chances (which can be lowered by legal restrictions),

– high technology sector (what is in the country and to which degree is prepared to absorb and use new technologies),

– human resources quality (particularly important in highly innovative enterprises, which need most of all educated and experienced employees.

– competition (in the branch, sector or market, which enables or blocks ways of entering the market and sets particular competitive requirements for its participants),

(c) pillar of aspirations:

– product innovations (which play key role in every economy resulting in the acquisition or licensing of both products and complete lines),

– high growth (which means ability of the company to employ at least 10 people and increase employment by at least 50 % in subsequent five years),

– internationalisation (internationalisation of activity, which is an important and sometimes main growth factor; internationalisation may mean exporting),

– risk capital (both informal investments, as well as mediumand longterm investment capital—the ability to obtain) (Acs and Szerb 2012).

In Global Entrepreneurship and Development Index it was indicated, that in 2012 the leading states included (in order): United States, Sweden, Australia, Iceland, Denmark (which in 2011 was the leader), Canada, Switzerland, Belgium, Norway, the Netherlands and Taiwan (Poland among the 79 countries was on 31st position) (Acs and Szerb 2012). The essence of the index is indication of weak and strong sides of entrepreneurship in the economy of the state.

 
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