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You Can’t Eat Scenery: Economic Progress, the Environment & Indicators

| Monday November 5th, 2007 | 0 Comments

Well, it may not be as beloved or popular as The Year’s Ten Best Films or Ten Worst-Dressed Academy Awards attendees, but from its lofty seat on the shores of Lake Geneva, the august World Economic Forum has issued its Global Competitiveness Report 2007-2008, ranking 131 national economies based on a survey of 11,000 business leaders and according to factors grouped into 12 categories.
The United States comes out on top in the overall ranking of economic competitiveness, followed by Switzerland, Denmark, Sweden, Germany, Finland and Singapore, respectively. According to the World Economic Forum’s calculus, “The United States confirms its position as the most competitive economy in the world. The efficiency of the country’s markets, the sophistication of its business community, the impressive capacity for technological innovation that exists within a first-rate system of universities and research centres, all contribute to making the United States a highly competitive economy. However, some weaknesses, particularly related to macroeconomic imbalances, continue to present a risk to the country’s overall competitiveness potential, and to the global economy as a whole.”
The Report draws attention to our reliance on hordes of statistical indicators and rankings not only to define and assess fundamental concepts such as economic competitiveness, progress and quality of life, but how they are ingrained in political, economic, social and, by their inclusion or exclusion, environmental decision-making processes of the highest order and largest magnitude.


The Search for Better Economic Indicators
WEF-2004salaimartin1.jpg
The Global Competitiveness Report’s overall competitiveness ranking is the Global Competitiveness Index, or GCI, a statistic developed by Columbia University professor Xavier Sala-i-Martin (at left) and introduced in 2004.

The Global Competitiveness Index 2007 Top 10

1 United States 5.67
2 Switzerland 5.62
3 Denmark 5.55
4 Sweden 5.54
5 Germany 5.51
6 Finland 5.49
7 Singapore 5.45
8 Japan 5.43
9 United Kingdom 5.41
10 Netherlands 5.40
Source: World Economic Forum, The Global Competitiveness Report 2007-2008

Refined based on testing and expert feedback, the GCI is based on “12 pillars of competitiveness” designed to provide “a comprehensive picture of the competitiveness landscape in countries around the world at all stages of development,” according to the WEF. These are: Institutions, Infrastructure, Macroeconomic Stability, Health and Primary Education, Higher Education and Training, Goods Market Efficiency, Labor Market Efficiency, Financial Market Sophistication, Technological Readiness, Market Size, Business Sophistication and Innovation.
Interestingly, even in this latest generation economic statistic, consideration of a nation’s natural resource base and environmental quality seem to be absent. True, the GCI, like GDP, is meant to be a measure and guide for economic progress and development, but, as has been pointed out many times before, measures such as these predominate in the political and economic dialogues and processes that will result in the hatching of policies, strategies and plans that will have the greatest impact on the physical environment, our own quality of life and the biodiversity of the planet.
The significance that is placed on traditional, narrowly defined economic indicators and the tremendous import they have for critical factors that they ignore, such as natural resources and environmental health and quality, is what led researchers from a variety of fields to toil in relative obscurity for the past few decades to come up with better indicators of a nation’s economic potential, progress and viability.
The number of such initiatives and researchers working on these indices of economic progress and sustainable development has increased rapidly since the 1970s and ‘80s as ominous signs of environmental degradation and climate change have become more frequent and clear. I hope to delve a bit into these in the next couple or few postings.
(Photos – Prof. Micheal E. Porter, developer of the WEF Business Competitive Index. Source: World Economic Forum)


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