Irish economic growth triggers jump in competitiveness rankings
Irish economic growth in 2015 has triggered a jump in the 2016 World Competitiveness Yearbook rankings produced by the IMD business school in Lausanne, Switzerland. Challenging economic conditions in Asian countries have seen most country rankings in the region dip.
The 2016 edition ranks China's Hong Kong first, Switzerland second and the USA third, with Singapore, Sweden, Denmark, Ireland, the Netherlands, Norway and Canada completing the top 10.
Ireland rose from a ranking of 16 in 2015 to 7th place of 61 countries. Last October the World Economic Forum gave Ireland a ranking of 24 of 140 countries.
The Netherlands rose from a 15 rank in 2015 to a ranking of 8 in 2016 while Germany slipped from 10 to 12 — it's not that the Dutch had implemented big economic changes in 12 months.
In Ireland the foreign-owned sector has a strong influence on the statistics and some of them including productivity, are massively distorted by tax avoidance.
Each ranking is based on analysis of over 340 criteria derived from four principal factors: economic performance, government efficiency, business efficiency and infrastructure.
Ireland got a 6 rank for economic performance and a 23 rank for infrastructure.
Responses from an in-depth survey of more than 5,400 business executives, who are asked to assess the situation in their own countries, are also taken into consideration.
Professor Arturo Bris, director of the IMD World Competitiveness Center, said:
One important fact that the ranking makes clear year after year is that current economic growth is by no means a guarantee of future competitiveness. Nations as different as China Mainland and Qatar fare very well in terms of economic performance, but they remain weak in other pillars such as government efficiency and infrastructure.
Ireland's 2016 ranking hasn't been as low since 2001 and is a useful bragging point for IDA Ireland, the inward investment agency. However, a rise in standards of living for all is dependent on addressing the sustained underperformance of the indigenous sector.
Methodology in a nutshell:
- The World Competitiveness Yearbook ranks and analyzes the ability of nations to create and maintain an environment in which enterprises can compete.
- It means that we assume that wealth creation takes place primarily at enterprise level (whether private or state owned) - this field of research is called: "competitiveness of enterprises."
- However, enterprises operate in a national environment which enhances or hinders their ability to compete domestically or internationally - this field of research is called: "competitiveness of nations" and is covered in our research.
Based on analysis made by leading scholars and by our own research and experience, our methodology thus divides the national environment into four main factors:<
- In turn, each of these factors is divided into 5 sub-factors which highlight every facet of the areas analyzed. Altogether, the World Competitiveness Yearbook features 20 such sub-factors.
- These 20 sub-factors comprise more than 340 criteria, although each sub-factor does not necessarily have the same number of criteria (for example, it takes more criteria to assess Education than to evaluate Prices).
- Each sub-factor, independently of the number of criteria it contains, has the same weight in the overall consolidation of results, which is 5% (20x5 =100).
- Criteria can be hard data, which analyzes competitiveness as it can be measured (e.g. GDP) or soft data, which analyzes competitiveness as it can be perceived (e.g. Availability of competent managers). Hard criteria represent a weight of 2/3 in the overall ranking, whereas the survey data represent a weight of 1/3.
- In addition, some criteria are for background information only, which means that they are not used in calculating the overall competitiveness ranking (e.g. Population under 15).
- Finally, aggregating the results of the 20 sub-factors makes the total consolidation, which leads to the overall ranking of the World Competitiveness Yearbook.
The rankings are based on two types of data:
Hard data (2/3): statistics are taken from international organizations (IMF, World Bank, OECD, ILO, etc.), private institutions (Cushmam & Wakefield, Mercer HR Consulting, PriceWaterhouseCoopers. etc) and national sources through our network of Partner Institutes.
Survey data (1/3): Each year we conduct a survey; business executives in top or middle management are asked to assess the situation in their own country in responding to a questionnaire.