Sources of data for an EESE Snapshot

The purpose of an EESE Snapshot

An EESE Snapshot is prepared to help the Employers' Organization gain a quick overview of the national EESE using existing data and past assessments. It provides the Employers' Organization with a summary of the main issues affecting the EESE and can be used to identify knowledge gaps where further investigation is required.

Components of an EESE Snapshot

An EESE Snapshot is framed by the 17 pillars of a sustainable enterprise promotion, as outlined in the Toolkit Introduction as well as in Part 3, Policy Briefs. These pillars are divided into four elements of the EESE: (1) Political elements, (2) Economic and enterprise elements, (3) Social elements, and (4) Environmental elements.

Thus, the components of an EESE Snapshot are organized as shown in Box 1, below.

Box 1: EESE Snapshot Components
1. Political elements

1.1 Peace and political stability (Sustainable Enterprise Pillar 1)

1.2 Good governance (Sustainable Enterprise Pillar 2)

1.3 Social dialogue (Sustainable Enterprise Pillar 3)

1.4 Respect for universal human rights and international labour standards (Sustainable Enterprise Pillar 4)

2. Economic and enterprise elements

2.1 Sound and stable macroeconomic policy and good management of the economy (Sustainable Enterprise Pillar 6)

2.2 Trade and sustainable economic integration (Sustainable Enterprise Pillar 7)

2.3 Enabling legal and regulatory environment (Sustainable Enterprise Pillar 8)

2.4 Rule of law and secure property rights (Sustainable Enterprise Pillar 9)

2.5 Fair competition (Sustainable Enterprise Pillar 10)

2.6 Access to financial services (Sustainable Enterprise Pillar 11)

2.7 Physical infrastructure (Sustainable Enterprise Pillar 12)

2.8 Information and communication technologies (Sustainable Enterprise Pillar 13)

3. Social elements

3.1 Entrepreneurial culture (Sustainable Enterprise Pillar 5)

3.2 Education, training, and lifelong learning (Sustainable Enterprise Pillar 14)

3.3 Social justice and social inclusion (Sustainable Enterprise Pillar 15)

3.4 Adequate social protection (Sustainable Enterprise Pillar 16)

4. Environmental elements

4.1 Responsible stewardship of the environment (Sustainable Enterprise Pillar 17)

Sources of data for an EESE Snapshot

The main rule of thumb for an Employers' Organization is "Do not reinvent the wheel" –existing research can be used to make arguments effectively. There are a number of sources of data that Employers' Organizations can access when preparing an EESE Snapshot.

Assessment Tool 9 Research Strategies provides further information on identifying and collecting domestic sources of research and data.

Box 2, below, provides an outline of a range of data sources that can be used to assess the 17 pillars of sustainable enterprise promotion in your country.

Box 2: Sources of data by Sustainable Enterprise Pillars
S.E PILLARSINTERNATIONAL INDICATORDETAILSLANGUAGES AVAILABLE

1, 2

FREEDOM HOUSE INDEX

Annual survey contains reports on 195 countries.

Areas covered: population, capital, political rights (numerical rating), civil liberties (numerical rating), status (Free, Partly Free, or Not Free), and a ten-year rating timeline.

Separate annual survey of media independence in 195 countries.

English

Spanish

Arabic, Russian

Korean

Farsi

http://www.freedomhouse.org/report/freedom-world/freedom-world-2013

1, 2, 5, 6, 7 & 9

THE HERITAGE FOUNDATION, INDEX OF ECONOMIC FREEDOM

Ten benchmarks that gauge the economic success of 185 countries. Benchmarks cover: Business Freedom | Trade Freedom | Fiscal Freedom | Government Spending | Monetary Freedom | Investment Freedom | Financial Freedom | Property rights | Freedom from Corruption | Labour Freedom

English

http://www.heritage.org/index/ranking

1, 2

THE ECONOMIST INTELLIGENCE UNIT DEMOCRACY INDEX

Index provides a snapshot of the current state of democracy worldwide for 167 independent States

Index is based on five categories: electoral process and pluralism, civil liberties, the functioning of government, political participation, and political culture.

Countries are placed within one of four types of regimes: full democracies; flawed democracies; hybrid regimes; and authoritarian regimes.

English

https://www.eiu.com/public/topical_report.aspx?campaignid=DemocracyIndex2011

2

WORLD BANK WORLDWIDE GOVERNANCE INDICATORS

Annually updated index of governance structures and corruption in 215 countries.

The six dimensions used are: Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption.

English

French

Spanish

Chinese

Arabic

Russian

Japanese

http://info.worldbank.org/governance/wgi/pdf_country.asp

6

EIU

Analysis and forecasts on more than 200 countries

Subscription only

English

http://www.eiu.com

2

TRANSPARENCY INTERNATIONAL (TI)

CORRUPTION PERCEPTIONS INDEX (CPI)

The annual Index

Ranks more than 176 countries in terms of perceived levels of corruption, as determined by expert assessments and opinion surveys.

English

French

Spanish

http://www.transparency.org/research/cpi/; http://cpi.transparency.org/cpi2012/results/

7

WORLD BANK COUNTRY BRIEFS AND TRADE-AT-A-GLACE (TAAG) TABLES

Briefs provide an analysis of a country’s latest trade policy and performance, as well as the institutional environment and incorporate insights from regional economists and experts. Briefs further contain a broad set of trade indicators for 211 countries and territories.

TAAG Tables provide a snapshot of a country’s trade policy and performance, as well as external market access and the institutional environment.

English

French

Spanish

Chinese

Arabic

Russian

http://info.worldbank.org/etools/wti/docs/Briefstaags.htm

6

IMF

WORLD ECONOMIC AND FINANCIAL SURVEYS

Contains selected macroeconomic data series from the IMF’s staff's analyses and projections of economic developments.

The World Economic Outlook (WEO) is released in April and September each year.

Use this database to find data on national accounts, inflation, unemployment rates, balance of payments, fiscal indicators, trade for countries and country groups (aggregates), and commodity prices.

English

French

Spanish

Chinese

Arabic

Russian

Japanese

http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/index.aspx

14,15,16

WORLD BANK

DEVELOPMENT INDICATORS

Updated four times a year, covers 214 economies across a wide range of development indicators, from fertility rates to military spending. Also has comparative data on male and female labour force participation rates and women’s share of the labour force.

English

French

Spanish

Chinese

Arabic

Russian

http://data.worldbank.org/data-catalog/world-development-indicators

5

GLOBAL ENTREPRENEURSHIP MONITOR (GEM)

ANNUAL REPORT

Annual report

69 countries covered in 2012

GEM reports have been a key source of comparable data across a large variety of countries on attitudes towards entrepreneurship. 

National reports are available for a number of countries.

GEM data also reports on entrepreneurial activity rates of men and women and draws comparison of gender gaps across countries.

English

http://www.gemconsortium.org/

5

WORLD BANK GROUP ENTREPRENEURSHIP SURVEY (WBGES)

The World Bank Group Entrepreneurship Survey measures trends in business creation in 112 developing and industrial countries and has trend data covering the 2000 -2009 period.

The database includes cross-country, time-series data on the number of total and newly registered businesses, collected directly from the Registrars of Companies around the world.

English

French

Spanish

Chinese

Arabic

Russian

http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTPROGRAMS/EXTFINRES/0,,contentMDK:21454009~pagePK:64168182~piPK:64168060~theSitePK:478060,00.html

15, 16,

UNDP’s HUMAN DEVELOPEMNNT REPORT

UNDP’s Human Development reports describe a wide range of indicators across the development spectrum, from migration, to education and income levels.

Annual

187 countries

National Reports

English

Spanish

French

http://hdr.undp.org/en/data/profiles/; http://hdr.undp.org/en/statistics/

10

IMD WORLD COMPETITIVENESS YEARBOOK

The IMD World Competitiveness Yearbook (WCY) is an annual report on the competitiveness of nations, ranking and analyzing how a nation’s environment creates and sustains the competitiveness of enterprises.

Measures 59 countries on the basis of 329 criteria.

Annual

English

http://www.imd.org/research/publications/wcy/World-Competitiveness-Yearbook-Results/#/wcc-products/

13

International Telecommunication Union (ITU)

WORLD TELECOMMUNICATION/ICT INDICATORS

Data available for over 200 countries, covering 140 telecommunication/ICT statistics. Basic indicators: Population, GDP, ratio of mobile cellular subscriptions to fixed telephone lines. , ICT access and use by households and individuals, etc.

Main (fixed) telephone lines per 100 people

Mobile (cellular) subscriptions per 100 people

Internet indicators: subscribers, users, and broadband subscribers.

English

Spanish

French

http://www.itu.int/ITU-D/ict/index.html

13

World Economic Forum (WEF) GLOBAL INFORMATION TECHNOLOGY REPORT

Benchmarking tool to determine national ICT strengths and weaknesses, and to evaluate preparedness of economies to leverage the networked economy and progress. It also highlights the continuing importance of ICT application and development for economic growth.

142 economies

Annual

English

French

Spanish

http://www.weforum.org/reports/global-information-technology-report-2012

10

WORLD ECONOMIC FORUM’S GLOBAL COMPETITIVENESS REPORTS

The GCI is based on 12 pillars of competitiveness, providing a comprehensive picture of the competitiveness landscape in countries around the world at all stages of development. The pillars include: Institutions, Infrastructure, Macroeconomic Stability, Health and Primary Education, Higher Education and Training, Goods Market Efficiency, Labour Market Efficiency, Financial Market Sophistication, Technological Readiness, Market Size, Business Sophistication, and Innovation.

Annual

144 economies

English

Spanish,

French

Arabic,

German,

Chinese

Russian

Portuguese

Japanese

http://www.weforum.org/issues/global-competitiveness

2, 6, 7, 8, 9, 11, 15

WORLD BANK

ENTERPRISE SURVEYS

135 countries as of 2012.

Company-level data on over 130,000 firms in merging markets and developing economies is used to create indicators that benchmark quality of the business and investment climate across countries. The surveys cover a range of business environment topics including firm characteristics, women’s participation, access to finance, annual sales, costs of inputs/labour, workforce composition, bribery, licensing, infrastructure, trade, crime, competition, capacity utilisation, land and permits, taxation, informality, business-government relations, innovation and technology, and performance measures. The surveys also collect opinions on obstacles to firm growth and performance.

Annual

English

French

Spanish

Chinese

Arabic

Russian

http://www.enterprisesurveys.org/Data

8,9

WORLD BANK IFC DOING BUSINESS

185 economies

The regulations affecting 10 stages of the life of a business are measured: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business/resolving insolvency.

Annual

English

Spanish

French

Arabic,

Portuguese

Chinese

http://www.doingbusiness.org/rankingshttp://www.doingbusiness.org/data

7

ENABLING TRADE INDEX (ETI),

WORLD ECONOMIC FORUM

The ETI is a comprehensive index intended to capture the full range of issues that contribute to impeding trade, ranking nations according to factors that facilitate the free flow of goods across national borders and to destinations. 

It focuses on measuring whether economies have in place the necessary attributes for enabling trade and where improvements are most needed.

Annual

132 economies

English

French

Spanish

http://www.weforum.org/reports/global-enabling-trade-report-2012

14, 15 UNDP’S HUMAN DEVELOPMENT REPORT,GLOBAL INEQUALITY INDEX

The Gender Inequality Index (GII) is a composite measure reflecting inequality in achievements between women and men on three dimensions: reproductive health, empowerment and the labor market across countries.  The GII is designed to reveal the extent to which national achievements in these aspects of human development are eroded by gender inequality, and to provide empirical foundations for policy analysis and advocacy efforts. The empowerment dimension is also measured by two indicators: the share of parliamentary seats held by each sex and by secondary and higher education attainment levels. The labor dimension is measured by women’s participation in the work force.
The index shows the loss in human development due to inequality between female and male achievements in these dimensions.
Annual (GII tables in the Human Development Report)

Covers 146 countries

Arabic

Chinese

English

Danish

Finish

French

German

Italian

Japanese

Norwegian

Spanish

Polish

Portuguese

Russian

Swedish

Turkish

Vietnamese

http://hdr.undp.org/en/statistics/gii/

5, 9, 11, 14, 15

ECONOMIST INTELLIGENCE UNIT WOMEN’S ECONOMIC OPPORTUNITY INDEX (WEOI)

Index focuses on laws, regulations, practices and attitudes that affect women’s economic participation as workers and entrepreneurs. Covers five dimensions that are potential drivers of women’s economic opportunity using 29 indicators covering five dimensions: (1) labor policy and practice; (2) women’s economic opportunity; (3) access to finance, education and training: (4) women’s legal and social status, and (5) general business environment. Each category or sub-category has four to five indicators. The WEOI aids understanding of the underlying causes of gender inequalities in economic participation.

The 2012 report measures 128 countries on the basis of 29 indicators; country profiles featured
Annual

English

http://www.eiu.com/site_info.asp?info_name=womens_economic_opportunity&page=noads; http://www.eiu.com/sponsor/WEO

14, 15 WORLD ECONOMIC FORUM GLOBAL GENDER GAP INDEX (GGGI)

The GGGI that assesses countries on how well they divide resources and opportunities amongst male and female populations. Measures the size of the gender inequality gap in four areas: (1) Economic participation and opportunity – outcomes on salaries, participation levels and access to high-skilled employment; (2) Educational attainment – outcomes on access to basic and higher level education; (3) Health and survival – outcomes on life expectancy and sex ratio; and (4) Political empowerment – outcomes on representation in decision-making structures.

The 2012 report has GGGI indicators for 135 countries; country profiles included. Annual reports since 2006 enable countries to track their progress over time.
English

http://www.weforum.org/issues/global-gender-gap

5, 8, 9, 11, 15 WORLD BANK/IFC WOMEN, BUSINESS AND THE LAW REPORT

Focuses on gender differentiations in legal treatment that can affect women’s economic opportunities. Objectively measures how regulations and institutions differentiate between women and men in ways that may affect women’s incentives or capacity to work or to start and operate a business. Covers legal differentiations covering six areas: (1) accessing institutions (explores women’s legal ability to interact with public authorities and the private sector in the same ways as men), (2) own, manage and control property, (3) being able to get a job (restrictions on working at night or in certain industries, wage equality legislation), (4) providing incentives to work (gender differences in tax treatment, child care availability), (5) building credit, and (6) going to court. Examines legal differentiations for unmarried women and married women covering aspects such as being able to get a job, sign a contract, register a business, open a bank account, own property, have labor freedom and retire at the same age as men. Provides a basic understanding of the prevalence of gender based legal differences in each economy and a basis for improving regulations.

Covered 141 economies in 2012
English

http://wbl.worldbank.org/

11, 15 OECD SOCIAL INSTITUTIONS AND GENDER INDEX (SIGI)

The SIGI is based on qualitative and quantitative data on discriminatory social institutions that underlie discrimination against women for over 100 countries and economies. Focuses on how discriminatory social institutions (i.e. formal and informal laws, social norms and practices that influence the decisions, choices and behaviours of groups, communities and individuals) restrict or exclude women and girls, curtailing their access to opportunities, resources and power. A detailed profile for each country and economy compiles information on laws, social norms and practices related to the five SIGI sub-indices: (1) discriminatory family code (e.g. inheritance), (2) restricted physical integrity, (3) son bias, (4) restricted resources and entitlements (access to land, credit, property), and (5) restricted civil liberties (political voice and participation, access to public space).

Data for over 100 countries
English

http://genderindex.org/data

15 WORLD BANK GENDER DATA PORTAL Portal accumulating gender data from a variety of sources, covering population, health, education, work, and political decision-making. Can search for indicators by region and country; obtain country dash-boards. English

http://data.worldbank.org/topic/gender

How to use this data

The data found in the abovementioned reports and web sites provide a wide range of information for Employers' Organizations. Sifting through these reports and identifying the key pieces of information relevant to the Employers' Organizations is a detailed exercise.

Some key selected documents are examined below in terms of their use for Employers' Organizations and how they can be used.

Measuring the cost of doing business

The World Bank 'Doing Business Database' provides indicators of the cost of doing business by identifying specific regulations that enhance or constrain business investment, productivity, and growth. The data set covers 183 countries. The indicators are organized into ten categories.

1 Starting a business

This survey counts all procedures required to register a firm. The following indicators are used: number of procedures; average time spent during each procedure (in calendar days); official cost of each procedure (as a per centage of income per capita); paid-in minimum capital (as a per centage of income per capita).

2 Dealing with construction permits

This survey records all procedures required for a business in the construction industry to build a standardized warehouse. These procedures include submitting all relevant project-specific documents to the authorities (e.g., building plans and site maps); obtaining all necessary clearances, licenses, permits and certificates; completing all required notifications; and receiving all necessary inspections. It also records procedures for obtaining connections for electricity, water, sewerage and a fixed telephone landline. Procedures necessary to register the property so that it can be used as collateral or transferred to another entity are also taken into account.

3 Getting electricity

This survey measures the procedures, time and cost for a small to medium-size business to get a new electricity connection for a warehouse.

4 Registering property

This survey measures the ease/difficulty of registering property. The following indicators are used: number of procedures; time (in calendar days); official costs (as a percentage of the property value).

5 Getting credit

This database covers two sets of issues, credit information registries and the effectiveness of collateral and bankruptcy laws in facilitating lending. The following indicators are used: cost to create and register collateral (as a per centage of income per capita); index of legal rights of borrowers and lenders; index of credit information availability; coverage of public registries (number of individuals and/or firms that have a record in the registry, scaled to the adult population size); coverage of private bureaus (number of individuals and/or firms that have a record in the bureau, scaled to the adult population size).

6 Protecting investors

A disclosure of ownership index is available based on the following measures: information on family; indirect ownership; beneficial ownership; voting agreements between shareholders; audits of financial data; ownership; financial information.

7 Enforcing a contract

This survey measures contract enforcement. Indicators on enforcing contracts measure the efficiency of the judicial system in resolving a commercial dispute. The data are built by following the step-by-step evolution of a commercial contract dispute between two domestic businesses before the local courts. The following indicators are used: number of procedures; time (in calendar days); and official costs (as a percentage of the value of the claim).

8 Closing a business

This survey covers the step-by-step procedures on filing for bankruptcy. The following indicators are used: time (in years); cost (as a per centage of the estate); and recovery rate (number of cents on the dollar).

9 Paying taxes

This survey records the taxes and mandatory contributions that a medium-size company must pay in a given year, as well as measures of the administrative burden of paying taxes and contributions. Taxes and contributions measured include the profit or corporate income tax, social contributions and labour taxes paid by the employer, property taxes, property transfer taxes, dividend tax, capital gains tax, financial transactions tax, waste collection taxes, and vehicle and road taxes. It measures all taxes and contributions that are government-mandated (at any level – federal, state, or local), and that apply to standardized businesses.

10 Trading across borders

This survey compiles procedural requirements for exporting and importing a standardized cargo of goods by ocean transport. Every official procedure for exporting and importing the goods is recorded – from the contractual agreement between the two parties, to the delivery of goods, along with the time and cost necessary for completion. All documents needed by the trader to export or import the goods across the border are also recorded. For exporting goods, procedures range from packing the goods at the warehouse to their departure from the port of exit. For importing goods, procedures range from the vessel's arrival at the port of entry to the cargo's delivery at the warehouse. The time and cost for ocean transport are not included. Payment is made by letter of credit, and the time, cost and documents required for the issuance or advising of a letter of credit are taken into account.

How to use it

The database can generate a snapshot of the business climate in a given country and that identifies specific regulations and policies which encourage or discourage investment, productivity, and growth. The business climate of that country can then be compared with that of any of the other 185 countries surveyed (by each individual indicator). For example, on the "number of days to open a new business" indicator, a quick analysis will reveal that it takes one day in the best-ranking country and 694 days in the worst-ranking.

For further information go to: http://www.doingbusiness.org/about-us

Also see Box 3: Uses and abuses of the Doing Business indicators.

 

Box 3: Uses and abuses of the Doing Business indicators

The World Bank's Doing Business reports are one of the most exciting developments in years for business environment reforms. By providing clear and transparent information about the state of business regulation in the countries of the world, policy-makers can compete more effectively to improve the business environment and attract investment. Although the rankings can be controversial, they are, in the end, effective at inspiring and prioritizing needed reforms.

However, the use of the indicators is often beset by a poor understanding of them, leading to their misuse. Doing Business numbers reflect symptoms of underlying problems, but do not diagnose the actual problems, nor the cure. Because of this, reformers sometimes opt for the wrong responses; these include:

  • Addressing only the symptom, not the underlying cause.
  • Changing the Doing Business ranking without improving the business environment.
  • Mistaking low scores for a lack of problems.

Better understanding of the role of the indicators – and the nature of business, permits more effective reforms. Businesses succeed when their revenues are sufficient to cover their costs and risks. The substantive areas covered by Doing Business: Starting a Business, Enforcing Contracts – all deal with the costs and risks of doing business in a country. Therefore, they point to places where reformers can reduce unnecessary costs and risks caused by improper regulation.

Once this is understood, the Doing Business indicators are an invaluable resource. They point out areas that are in need of reform and allow for a deeper analysis of the causes of the underlying problems. With this analysis, policy-makers can more effectively reduce the costs and risks of business and thereby improve the business and investment climate.

The reforms generated are important, but expectations need to be tempered. Reforms can take time, which means they may not be reflected immediately in the annual Doing Business reports. Moreover, the rankings are competitive, so that if neighbours also make changes, the relative rankings may stay the same, even though all of them have improved their business climates. Finally, reformers should not expect that better scores will immediately attract foreign investment, but should instead understand that a better business climate leads to better domestic investment and prosperity, both key elements for eventually attracting foreign business interest.

Source: W. Channell (2007), "Uses and Abuses of Doing Business Indicators": http://www.businessenvironment.org/dyn/be/docs/149/Channell.pdf

How to make investment climate cross-country comparisons

The World Bank Investment Climate Survey database contains data on the investment climate in 125 countries, based on enterprise surveys of more than 130,000 firms and other related data. The enterprise surveys measure entrepreneurs’ perceptions of the investment climate in their country, and provide indicators of firm productivity and performance. The surveys cover the following areas: regulation and taxation; permits and licences; corruption; crime; informality; gender; finance; infrastructure; innovation and technology; trade; and the workforce.
The surveys provide an Employers’ Organization with useful cross-country comparisons for each indicator listed. By customizing your enquiry for each variable you can develop information sets that benchmark topics against other countries. For instance, utilizing the ‘corruption’ topic, the Employers’ Organization can ask how serious a problem security is by measuring the amount firms pay for private security. The resulting enquiry will provide that information (per centage of firms paying for private security) and then benchmark that against any group of countries).

For further information go to: http://www.enterprisesurveys.org/CustomQuery

Measuring national competitiveness

The World Economic Forum produces a number of reports that identify impediments to growth. The flagship report is The Global Competitiveness Report (GCR). The WEF also produces regional and topical reports such as the Africa Competitiveness Report and The Global Information Technology Report. The GCR contains information on 133 economies. The report combines publicly available data along with survey data of perceptions, and observations of business leaders in a given country.

The Global Competitiveness Report assesses national economies according to "12 pillars of economic competitiveness":(1)

Pillar 1: Institutions

The institutional environment forms the framework within which individuals, firms, and governments interact to generate income and wealth in the economy. The institutional framework plays a central role in the ways in which societies distribute the benefits and bear the costs of development strategies and policies, it also influences investment decisions and the organization of production. Although the economic literature has mainly focused on public institutions, private institutions are also an important element in the process of creation of wealth. An economy is well-served by businesses that are run honestly and where managers abide by strong ethical practices in their dealings with the government, other firms, and the public. Private-sector transparency is indispensable to business, and can be brought about through the use of standards, as well as auditing and accounting practices that ensure access to information in a timely manner.

Pillar 2: Infrastructure

Extensive and efficient infrastructure is an essential driver of competitiveness. It is critical for ensuring the effective functioning of the economy, as it is an important factor determining the location of economic activity and the kinds of activities or sectors that can develop in a particular economy. Well-developed infrastructure reduces the effect of distance between regions, with the result of truly integrating the national market and connecting it to markets in other countries and regions. In addition, the quality and extensiveness of infrastructure networks significantly impact economic growth and reduce income inequalities and poverty in a variety of ways.

Pillar 3: Macroeconomic stability

The stability of the macroeconomic environment is important for business and, therefore, is important for the overall competitiveness of a country; macroeconomic disarray harms the economy. Firms cannot make informed decisions when inflation is raging out of control. The government cannot provide services efficiently if it has to make high interest payments on its past debts. In summary, the economy cannot grow unless the macroeconomic environment is stable.

Pillar 4: Health and primary education

A healthy workforce is vital to a country's competitiveness and productivity. Workers who are ill cannot function to their full potential, and will be less productive. Poor health leads to significant costs to business, as sick workers are often absent or operate at lower levels of efficiency. Investment in the provision of health services is critical for clear economic, as well as moral, considerations. In addition to health, this pillar takes into account the quantity and quality of basic education received by the population. This is increasingly important in today's economy. Basic education increases the efficiency of each individual worker.

Pillar 5: Higher education and training

Quality higher education and training is crucial for economies that want to move up the value chain beyond simple production processes and products. In particular, today's globalizing economy requires economies to nurture pools of well-educated workers who are able to adapt rapidly to their changing environment. This pillar measures secondary and tertiary enrolment rates, as well as the quality of education as assessed by the business community. The extent of staff training is also taken into consideration because of the importance of vocational and continuous on-the-job training, which is neglected in many economies, for ensuring a constant upgrading of workers' skills to the changing needs of the evolving economy.

Pillar 6: Goods market efficiency

Countries with efficient goods markets are well-positioned to produce the right mix of products and services given supply and demand conditions, as well as to ensure that these goods can be most effectively traded in the economy. Healthy market competition, both domestic and foreign, is important in driving market efficiency and thus business productivity, by ensuring that the most efficient firms, producing goods demanded by the market, are the ones that thrive. The best possible environment for the exchange of goods requires the minimum number of impediments to business activity through government intervention. Market efficiency also depends on demand conditions such as customer orientation and buyer sophistication. For cultural reasons, customers in some countries may be more demanding than in other countries. This can create an important competitive advantage, as it forces companies to be more innovative and customer-oriented and thus imposes the discipline necessary for efficiency to be achieved in the market.

Pillar 7: Labour market efficiency

The efficiency and flexibility of the labour market are critical for ensuring that workers are allocated to their most efficient use in the economy, and provided with incentives to give their best efforts in their jobs. Labour markets must therefore have the flexibility to shift workers from one economic activity to another, rapidly and at low cost, and to allow for wage fluctuations without significant social disruption. Efficient labour markets must also ensure a clear relationship between worker incentives and their efforts, as well as the best use of available talent — which includes equity in the business environment between women and men.

Pillar 8: Financial market sophistication

The present global financial crisis has highlighted the critical importance of financial markets for the functioning of national economies. An efficient financial sector is necessary to allocate the resources saved by a nation's citizens, as well as those entering the economy from abroad, to their most productive uses. It channels resources to the entrepreneurial and investment projects with the highest expected rates of return, rather than to the politically connected ones. A thorough assessment of risk is therefore a key component as business investment is critical to productivity. Economies therefore require sophisticated financial markets that can make capital available for private sector investment from such sources as loans from a financially-sound banking sector, well-regulated securities exchanges, venture capital, and other financial products. An efficient financial sector also ensures that innovators with good ideas have the financial resources to turn those ideas into commercially viable products and services.

Pillar 9: Technological readiness

This pillar measures the agility with which an economy adopts existing technologies to enhance the productivity of its industries. In today's globalized world, technology has increasingly become an important element for firms to compete and prosper. In particular, information and communication technologies (ICT) have evolved into the "general purpose technology" of our time – given the critical spillovers to other economic sectors and their role as efficient infrastructure for commercial transactions. Therefore, ICT access and usage (including the presence of an ICT-friendly regulatory framework) are included in the pillar as essential components of the economy's overall level of technological readiness. The level of technology available to firms in a country needs to be distinguished from the country's ability to innovate and expand the frontiers of knowledge. That is why the index separates technological readiness from innovation, which is captured in the 12th pillar listed below.

Pillar 10: Market size

The size of the market affects productivity because large markets allow firms to exploit economies of scale. Traditionally, the markets available to firms have been constrained by national borders. In the era of globalization, international markets have become a substitute for domestic markets, especially for small countries. There is vast empirical evidence that shows that trade openness is positively associated with growth. Thus, exports can be thought of as a substitute for domestic demand in determining the size of the market for the firms of a country. By including both domestic and foreign markets in our measure of market size, the index gives credit to export-driven economies and geographic areas (such as the European Union) that are broken into many countries but have one common market.

Pillar 11: Business sophistication

Business sophistication is conducive to higher efficiency in the production of goods and services. This leads, in turn, to increased productivity, thus enhancing a nation's competitiveness. Business sophistication concerns the quality of a country's overall business networks, as well as the quality of individual firms' operations and strategies. The quality of a country's business networks and supporting industries, which is captured by using variables on the quantity and quality of local suppliers and on the extent of their interaction, is important for a variety of reasons. When companies and suppliers from a particular sector are interconnected in geographically proximate groups (also known as "clusters"), efficiency is heightened, greater opportunities for innovation are created, and barriers to the entry of new firms are reduced.

Pillar 12: Innovation

In the long run, standards of living can be expanded only with technological innovation. Innovation is particularly important for economies as they approach the frontiers of knowledge, and the possibility of integrating and adapting exogenous technologies tends to disappear. Although less-advanced countries can still improve their productivity by adopting existing technologies or making incremental improvements in other areas, for countries that have reached the innovation stage of development, this alone is no longer sufficient to increase productivity. Firms in these countries must design and develop cutting-edge products and processes to maintain a competitive edge. This requires an environment that is conducive to innovative activity, supported by both the public and the private sectors. In particular, this means sufficient investment in research and development (R&D), especially by the private sector, the presence of high-quality scientific research institutions, extensive collaboration in research between universities and industry, and the protection of intellectual property.

 

Although the 12 pillars of competitiveness are described separately, this should not obscure the fact that they are not independent; not only are they interrelated, but they also tend to reinforce one another. Although the construction of the index involves the aggregation of the 12 pillars into a single index, measures are reported for the 12 pillars separately. This is because offering a more disaggregated analysis can be useful to countries and practitioners, as such an analysis gets closer to the actual areas in which a particular country needs to improve upon.

How to use it

The Global Competitiveness Report's competitiveness ranking is based on the Global Competitiveness Index (GCI). The GCI is based on the 12 pillars of competitiveness, providing a comprehensive picture of the competitiveness landscape in countries around the world, at all stages of development. The pillars include Institutions, Infrastructure, Macroeconomic Stability, Health and Primary Education, Higher Education and Training, Goods Market Efficiency, Labour Market Efficiency, Financial Market Sophistication, Technological Readiness, Market Size, Business Sophistication, and Innovation. An Employers' Organization can develop a customized picture of every economy and track its strengths and weaknesses.

For further information go to: http://www.weforum.org/issues/competitiveness-0/gci2012-data-platform/

Index of Economic Freedom(2)

The 2013 Index of Economic Freedom covers 185 countries across ten specific freedoms. The Heritage Foundation and the Wall Street Journal created the Index of Economic Freedom in 1995 based on economic theories like that of Adam Smith's The Wealth of Nations, explaining that "basic institutions that protect the liberty of individuals to pursue their own economic interests result in greater prosperity for the larger society".

The Index's definition of economic freedom is:

"the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state. In economically free societies, governments allow labor, capital and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself."(3)

The index scores nations on ten broad factors of economic freedom using statistics from organizations like the World Bank, the IMF, and the Economist Intelligence Unit:

  • Business Freedom (measures the ability to start, operate, and close a business without interference from the state and assesses the overall burden of regulation and efficiency in the regulatory process; uses indicators from the World Bank Doing Business)
  • Trade Freedom (measures the openness of an economy to imports and the ability of citizens to interact freely as buyers and sellers in the international marketplace; looks at tariff rates and non-tariff barriers)
  • Monetary Freedom (measurement of price stability and assessment of market-determined prices as opposed to price controls)
  • Freedom from Government (measure of the size of government spending, including consumption and transfers; countries with high government expenditures relative to GDP receive lower scores)
  • Fiscal Freedom (measure of the burden of government, particularly from taxation, and the freedom that individuals and businesses have to keep and control their income and wealth; penalizes countries with higher tax rates)
  • Property Rights (measure of the degree to which a country's laws protect property rights and the enforcement of those laws)
  • Investment Freedom (measure of the overall investment climate - policies towards the free flow of foreign and domestic investment capital)
  • Financial Freedom (measure of banking security and independence from government control)
  • Freedom from Corruption (measure of the level of corruption in the country)
  • Labour Freedom (measure of aspects of the legal and regulatory framework that restrict a country's labour market, such as regulations on minimum wage, working hours, severance requirements, laws inhibiting lay-offs, regulatory burden on hiring, etc.)

 

Box 4: The ten economic freedoms

BUSINESS FREEDOM

Business freedom measures how free entrepreneurs are to start businesses, how easy it is to obtain licenses, and the ease of closing a business. Impediments to any of these three activities are deterrents to business and therefore to job creation. Globally, starting a business takes an average of 43 days, while getting necessary licenses takes an average of 19 procedures and 234 days. Bankruptcy proceedings take an average of three years.

TRADE FREEDOM

Tariffs are the primary obstacle to free trade among nations, but non-tariff barriers (NTBs) such as quotas and bureaucratic delays are also significant impediments. The overall trade freedom score is composed of these two elements. The first component is a score calculated from each country's weighted average tariff rate, and ranges from 0 to 100 per cent. The higher the score, the lower the tariff rate. The mean worldwide tariff rate is 11.1 per cent, so a country with that rate would receive a score of 80 per cent. Depending upon the severity of a country's NTB barriers, a penalty of 5, 10, 15, or 20 per centage points is subtracted from the weighted average tariff rate score in order to to arrive at each country's overall trade freedom score. The global average trade freedom score for 2008 is 72 per cent.

FISCAL FREEDOM

The top tax rate on individual income averages 31 per cent, and the top tax rate on corporate income averages 26 per cent. There are also many other types of taxes that governments use to raise revenue, and total tax revenue from all forms of taxation averages 21 per cent of countries' GDP. Mixing the three scores together is the basis of the fiscal freedom score. Using a quadratic cost function that penalizes higher taxes with a higher penalty, the average score is 74.9 per cent.

GOVERNMENT SIZE

Government size is defined to include all government expenditures, including consumption and transfers. Ideally, the State will provide only true public goods with an absolute minimum of expenditure. The average level of government spending as a proportion of GDP is slightly over 30 per cent.

MONETARY FREEDOM

The worldwide average of the weighted average inflation rates per country from 2004 to 2006 is 10.6 per cent, an increase over last year's weighted average of 7.9 reflects in part Zimbabwe's hyperinflation, which climbed to over 1,000 per cent. Price stability explains most of the monetary freedom score, although there is a penalty of up to 20 percentage points for countries that use price controls. The average price control penalty was 10.3 points this year.

INVESTMENT FREEDOM

Only 17 countries enjoy high investment freedom with scores of 80 per cent or higher. These countries impose few or no restrictions on foreign investment, which in turn promotes economic expansion and enhances overall economic freedom. Meanwhile, more than one-third of countries significantly lack investment freedom with scores of less than 50 per cent.

FINANCIAL FREEDOM

The more that banks are controlled by the government, the less free they are to engage in essential financial activities that facilitate private-sector-led economic growth. Regrettably, most countries continue to impose a heavy burden of bank regulation on the private sector, reducing opportunities and restricting economic freedom. About 80 countries' financial freedom scores are between 50 and 70 per cent.

PROPERTY RIGHTS

Progress toward stronger property rights is still gradual and slow-moving. With scores above 80, many Western economies (along with Hong Kong and Singapore) benefit from secure protection of property rights, but more than half of the world's countries score below 50 per cent.

FREEDOM FROM CORRUPTION

Little progress has been made since last year, and corruption is still perceived as widespread in many countries. Scores for only 16 countries are 80 per cent or higher, while 114 countries' scores are below 50 per cent.

LABOR FREEDOM

Labour market flexibility is essential to enhancing employment opportunities and overall productivity growth. The rigidity of hiring and firing a worker creates a risk aversion for companies that would otherwise employ more people and grow in size. The world average of labour freedom is 62.1 per cent, reflecting wage, hour, and other restrictions. Only 25 countries have notably flexible labour market policies with scores above 80 per cent, while 35 countries score below 50 per cent as a result of their rigid labour market regulations.

Source: 2008 Index of Economic Freedom
http://www.heritage.org/research/features/index/chapters/pdf/index2008_execsum.pdf

The ten factors are averaged equally into a total score. Each one of the ten freedoms is graded using a scale from 0 to 100, where 100 represents the maximum freedom. A score of 100 signifies an economic environment or set of policies that is most conducive to economic freedom.

The Heritage Foundation

The Heritage Foundation reports that the top 20 per cent on the index have twice the per capita income of those in the second quintile, and five times that of the bottom 20 per cent. The index is considered important because higher economic freedom promotes participation and collaboration. It is also claimed that higher economic freedom is extremely significant in preventing wars – freedom is around 54 times more effective than democracy (as measured by the Democracy Score) in diminishing violent conflict.

Since 1995, the world's Economic Freedom has increased 2.0 percentage points using the 2013 index methodology. There was a very slight increase in economic freedom in 2013, with the largest positive change in

Georgia, which saw its score rise 2.8 points, giving it an overall score of 72.2 out of 100 and a place among the world’s “mostly free” economies. Since the Index was created in 1995, Hong Kong has always been the top performing economy.

The Millennium Challenge Account, a United States' government foreign aid programme, has used the Trade Freedom indicator in determining which countries will receive their performance-based contracts.

Measuring corruption

The Transparency International Corruption Perceptions Index (CPI) ranks countries in terms of the perceived levels of public sector corruption. It is a composite index, drawing on corruption-related data in expert surveys carried out by a variety of reputable institutions. It reflects the views of business people and analysts from around the world, including experts who are nationals of the countries evaluated. The CPI ranks 176 countries.

How to use it

The interactive map will provide an Employers' Organization with immediate information on the perception of corruption in the 176 countries. The scale is from zero (perceived to be highly corrupt) to 100 (perceived to be free from corruption).

For further information go to: http://cpi.transparency.org/cpi2012/

Global Entrepreneurship Monitor (GEM)(4)

The Global Entrepreneurship Monitor (GEM) is a not-for-profit academic research consortium the goal of which is producing high quality international research data on entrepreneurial activity readily available to as wide an audience as possible. GEM is the largest single study of global entrepreneurial activity in the world.

Initiated in 1999 with ten countries, GEM teams in 2012 conducted research in 69 countries.

The annual GEM assessment involves four major types of data collection:

  1. Surveys of the adult population (18-64 years of age) are completed in each country. This involves locating a representative sample of the adult population to determine which are active in entrepreneurship, either by being in the process of trying to get a business started, owning a young business that is less than 24 months old, or owning an established business that is more than 42 months old.
  2. In-depth questioning of the entrepreneurially-active adults to gather information about the nature of their nascent/existing businesses in terms of sector activity, job creation, perceived innovativeness of the enterprises, growth expectations, etc.
  3. Interviews with national experts, including the completion of a ten-page questionnaire by experts to provide a standard measure of the perceptions of the strength of the country's Entrepreneurial Framework Conditions.
  4. Existing data on national features assembled by a variety of international research organizations (e.g., World Bank, International Monetary Fund, United Nations, International Labour Organization).

The primary focus of the GEM is on understanding the impact of entrepreneurship, broadly defined, on national economic growth. Given the value of having a reliable empirical base for this assessment, data collection is harmonized across national measures of entrepreneurial activity, the national consequences of entrepreneurship, those factors which distinguish countries that are more or less entrepreneurial, and the implications for public policy.

GEM is a collaborative effort, both in terms of financial resources and intellectual advancements, as well as in the design and analysis. A GEM consortium assessment and planning meeting is held early in January of each year. The coordination team is assisted by over 150 scholars from the various national teams.

The focus on a broadly-defined approach to entrepreneurship is a unique aspect of the GEM, in addition to its use of a range of information sources, including from nascent entrepreneurs who are trying to get a business started, and owners of operating businesses. GEM also produces a report on women’s entrepreneurship (Global Entrepreneurship Monitor 2010 Women’s Report) that reports differences in the frequency and nature of women’s entrepreneurship across 59 countries and makes comparisons with men. The goal of the report is to help policy makers, practitioners and educators recognize the value women entrepreneurs bring to their societies and to provide guidance for efforts aimed toward equipping women with the capabilities they need to start and run their own businesses and creating environments within which their ventures can thrive. The report can be downloaded from: http://www.gemconsortium.org/docs/download/768

Business Environment Survey(5)

The Commonwealth Business Council (CBC) conducts the Business Environment Survey, prepared to help governments of the Commonwealth countries identify the factors that are critical for a good business environment in partnership with the private sector.

There is no "naming and shaming" in the survey. The purpose of the survey is to help bring to the government's notice matters that the private sector would like to discuss in an open and cooperative manner, which has helped countries make policy decisions and attract investment. The survey provides a good basis for dialogue with governments on strengthening the investment climate.

The sixth survey was completed in 2009. By polling private sector views on the investment climate in 33 Commonwealth countries, the 2009 survey highlighted a number of common concerns within the business sector.

There are two main information sources used in the Business Environment Surveys:

  1. Enterprise surveys; and
  2. In-depth interviews carried out with businesses' representatives.

The interviews complement survey questionnaires in order to produce a fuller understanding of the perspectives of the private sector as a basis for dialogue with governments on the policy framework for business and investment.

The CBC encourages private-public dialogue on trade and investment issues in order to build a shared understanding of the challenges facing both businesses and governments, and contribute to better policy formulation and more private sector investment activity.

It is intended that the survey analysis will provide an information base for the future development of national action plans through the CBC's COM-PAC 16 Point Investment Programme, which was endorsed by the Commonwealth Heads of Government at their 2002 Summit. The COM-PAC provides an action-oriented programme for governments and businesses to jointly address key areas and to strengthen the investment climate. Work on the COM-PAC has commenced in three countries in Africa, with ambitious plans to extend this to other Commonwealth countries.

The survey also provides a valuable resource for dialogue with governments at the Commonwealth Business Forum and the CBC's series of national investment conferences. Through these activities the CBC will continue its work to help mobilize investment in Commonwealth countries and to strengthen the role of the private sector in that process.

Through its Commonwealth Business Women’s Network initiative, the CBC also champions policy reforms with a view to facilitating changes on major policies affecting women, such as access to finance for women entrepreneurs.

Tools to assist trade polices

The International Trade Centre (ITC) has a number of information sources for international trade and business development, and tools such as practical guides, methodologies, and approaches which can be adapted to local requirements.

For more information go to: http://www.intracen.org

Trade Map provides users with indicators on export performance, international demand, alternative markets, and the role of competitors. Trade Map covers 220 countries and territories and 5300 products of the Harmonized System. Trade data is also available at the tariff line level for more than 100 countries and on a quarterly and monthly basis for more than 50 countries. It is available free to developing countries by registering at: http://mas-admintools.intracen.org/accounts/Registration.aspx?l=t.

For more information contact via e-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Measuring gender inequality

There may be gender inequalities in the country which affect women's participation in the labour force and their active economic participation. This could impact on the supply of workers for private enterprises as well as on growth of the SME sector. Factors affecting the participation of women in the economy may be related to cultural factors and also to the legal and regulatory framework. Several sources of data can be sourced for comparative information to assess the degree of gender inequality at the country level.

The World Economic Forum Global Gender Gap Index (GGGI) is a framework for capturing the magnitude and scope of gender-based disparities and tracking their progress. The Index benchmarks national gender gaps on economic, political, education- and health-based criteria, and provides country rankings that allow for effective comparisons across regions and income groups. It can be used to pinpoint inequalities in economic participation and political decision-making, in particular. Annual reports since 2006 enable countries to track their progress over time.

For more information go to: http://www.weforum.org/issues/global-gender-gap

The World Bank/IFC Women, Business and the Law report measures legal gender parity for entrepreneurs and workers in 141 economies across six topics. It presents indicators based on laws and regulations affecting women's prospects as entrepreneurs and employees, in part drawing on laws contained in the Gender Law Library. This can be accessed at: http://wbl.worldbank.org/WBLLibrary/elibrary.aspx?libid=17. Both resources can inform research and policy discussions on how to improve women's economic opportunities and outcomes and used to identify areas for regulatory improvement.

For more information go to: http://wbl.worldbank.org


(1) Sala-I-Martin, X; Blanke, J;, Hanouz, M.D., Geiger, T., Mia, I. & Paua, F.: 'The global competitiveness index: Prioritizing the economic policy agenda', in Schwab, K. & Porter, M.E. The Global Competitiveness Report 2008-2009 (World Economic Forum, Geneva, 2008), pp. 4-6.

(2) http://ww.heritage.org/index/

(3) http://www.heritage.org/index/about

(4) For more information: http://www.gemconsortium.org

(5) Available from: http://www.cbcglobal.org; the 2009 report is available for a small charge.