Wednesday, September 28, 2005

Useless "Competitiveness Report"

Today the "World Economic Forum" issued a report on "competitiveness". It ranks the United States as well as the Nordic countries as the most competitive. But what the heck do they mean by "competitive". After looking through the report I see that they define it as "that collection of factors, policies and institutions which determine the level of productivity of a country and that, therefore, determine the level of prosperity that can be attained by an economy". Which is to say, the factors that determine growth.

But what evidence do they have that the factors and their weighting of them does determine growth? None, as far as I can see. In fact their ranking just shows how useless their index is. Any index which puts slow-growing countries like the Nordic countries, Switzerland, Japan, Britain, Holland and Germany high on the ranking while ranking the world's fastest growing country, China, as only the 49th most competitive can really be dismissed out of hand. India, Vietnam, Latvia and other fast growing countries are also ranked very low, further undermining the credibility of this report. Why anyone takes such a obviously useless report seriously is a great mystery to me. A dart-throwing monkey would almost certainly achieve a better correlation between "competitiveness" and growth than the World Economic Forum.


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