christos cabolis chief economist, imd world ... · chief economist, imd world competitiveness...
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IMD World Competitiveness Center
Measuring Competitiveness: The case of Hungary
Christos Cabolis
Chief Economist, IMD World Competitiveness Center
IMD Definition of Competitiveness
“the ability of a country to facilitate an environment in which enterprises can generate sustainable value,”
…sustainable value creation is the long term capacity of enterprises to remain profitable, create fulfilling jobs, while minimizing the environmental impact of their activities
Competitiveness Ranking 2017Top 10 (overall) and Top 5 per factor
Economic Performance
Government Efficiency
Business Efficiency
Infrastructure
Overall
The Competitiveness Puzzle:Where does Growth Come From?
1.00
1.20
1.40
1.60
1.80
2.00
2.20
2.40
Top 10 Top 30 Bottom 30 Bottom 10
GD
P p
er
Cap
ita G
row
th 2
013
IMD WORLD COMPETITIVENESS RANKINGS 2012
COMPETITIVENESS AND ECONOMIC GROWTH
Most Competitive Economies Outperform Less Competitive ones by about 0.6% per year!!!
The Competitiveness Puzzle:Competitiveness, Growth, & Profitability
COMPETITIVENESS AND STOCK MARKET RETURNS
Most Competitive Economies Outperform Less Competitive ones by about 19% per year!!!
0
5
10
15
20
25
Top 10 Top 30 Bottom 30 Bottom 10
Sto
ck M
ark
et
Retu
rn 2
013
IMD WORLD COMPETITIVENESS RANKINGS 2012
Transparency is a key driver of competitiveness
GDP Growth and Transparency Survey Question
Competitiveness and “Openness”
Openness is correlated
with competitiveness.
We argue it is a key driver.
Economic Performance
GovernmentEfficiency
BusinessEfficiency
Infrastructure
Domestic Economy
International Trade
International Investment
Employment
Prices
Public Finance
Tax Policy
Institutional Framework
Business Legislation
Societal Framework
Productivity
Labor Market
Finance
Management Practices
Attitudes and Values
Basic
Technological
Scientific
Health & Environment
Education
OVERALLRANKING
36th
41st
60th
54th
57
9
62
21
16
51
58
43
42
45
57
59
54
61
62
38
45
35
39
42
2/3s Statistics
Competitiveness that can be measured!
The emphasis on HARD FACTS
ensures objectivity and transparency
342 Criteria 20 Sub-Factors 4 Factors Overall Ranking
52ndOut of 63
1/3 Survey
Competitiveness as it is perceived!
Over 6,000 respondents
Competitiveness BreakdownHungary: Methodology / Overall Ranking
Competitiveness Landscape: Hungary2016 & 2017
-13
+2
-28
+20
-7
-1
-1
--
-4
-12
-2
-2
-6
-3
-1
-5
-
+4
-6
Do
mest
ic E
cono
my
Inte
rnatio
nal
Tra
de
Inte
rnatio
nal
Inve
stm
ent
Em
plo
yment
Pri
ces
Public
Fin
ance
Fis
cal Po
licy
Inst
ituti
onal Fr
amew
ork
Busi
ness
Legi
slat
ion
Soci
eta
l Fr
amew
ork
Pro
duct
ivity &
Effic
iency
Lab
or
Mar
ket
Fin
ance
Man
age
men
t Pra
ctic
es
Att
itudes
and V
alues
Bas
ic I
nfr
ast
ruct
ure
Tech
no
logi
cal In
fras
tructu
re
Scie
nti
fic Infr
astr
uct
ure
Hea
lth a
nd E
nvi
ronm
ent
Educa
tio
n
Economic Performance Government Efficiency InfrastructureBusiness Efficiency
Overall
3941
5660
5454
2636
4652
Hungary
2017
Hungary
2017
Hungary
2017
Hungary
2017
Hungary
2017
Hungary
2016
Hungary
2016
Hungary
2016
Hungary
2016
Hungary
2016
2017 2017 2017 2017
Overall and Factor Rankings Hungary: 2015 - 2017
What makes Hungary competitive? Executive Perceptions (2015-2017)
From a list of 15 indicators, respondents of the Executive Opinion Survey select the five that they perceived as the key attractiveness factors of their economy. The chart shows the percentage of responses for the top choices over three years.
2015 20172016
77%
60%
47% 47%
65%
40%40%
35%
45%
32%
Skilled workforce
Effective labor relations
Cost competitiveness
Reliable infrastructure
High educational level
Management PracticesStrengths and weaknesses
Entrepreneurship
[Survey]
Auditing and
accounting practices
[Survey]
Use of big data and
analytics [Survey]
Changing market
conditions [Survey]
Credibility of managers
[Survey]
Social responsibility
[Survey]
of managers is widespread in
business
are adequately implemented
in business
by companies to support
decision-making
Companies are generally
aware ofin society is strong of business leaders is high
Management PracticesStrengths and weaknesses
Entrepreneurship
[Survey]
Auditing and
accounting practices
[Survey]
Use of big data and
analytics [Survey]
Changing market
conditions [Survey]
Credibility of managers
[Survey]
Social responsibility
[Survey]
of managers is widespread in
business
are adequately implemented
in business
by companies to support
decision-making
Companies are generally
aware ofin society is strong of business leaders is high
Czech Republic
Hungary
Poland
Romania
Slovak Republic
International TradeStrengths and weaknesses
Export of goods -
growth rateTrade to GDP ratio
Balance of commercial
services
Import of goods and
commercial services
Exports of commercial
services - growth rate
Exchange rates
[Survey]
% change base on US$
values(Export + Import) / (2*GDP) % of GDP % of GDP
% change base on US$
values
support the competitiveness
of enterprises
International TradeStrengths and weaknesses
Czech Republic
Hungary
Poland
Romania
Slovak Republic
Export of goods -
growth rateTrade to GDP ratio
Balance of commercial
services
Import of goods and
commercial services
Exports of commercial
services - growth rate
Exchange rates
[Survey]
% change base on US$
values(Export + Import) / (2*GDP) % of GDP % of GDP
% change base on US$
values
support the competitiveness
of enterprises
Scientific InfrastructureStrengths and weaknesses
Business expenditure
on R&D
Total R&D personnel in
business
Value added of KTI
industries
Innovative capacity
[Survey]Science degrees
Knowledge transfer
[Survey]
% of GDPFull-time workers per 1000
people% of GDP
Innovative capacity of firms is
high
% university degrees in
science and engineering
between companies and
university is developed
Scientific InfrastructureStrengths and weaknesses
Czech Republic
Hungary
Poland
Romania
Slovak Republic
Business expenditure
on R&D
Total R&D personnel in
business
Value added of KTI
industries
Innovative capacity
[Survey]Science degrees
Knowledge transfer
[Survey]
% of GDPFull-time workers per 1000
people% of GDP
Innovative capacity of firms is
high
% university degrees in
science and engineering
between companies and
university is developed
Business Competitiveness
Governance
InnovationTalent
• Growth Champions display significantly better governance
metrics than Non-Growth Champions
• Coping with the challenges today requires a focus on
talent, according to Growth Champions
• Growth Champions innovate more and better
Science & Technology innovation and Competitiveness
y = 0.7322x + 8.3016
0
10
20
30
40
50
60
70
0 10 20 30 40 50 60 70
Relation between Competitiveness and Scientific Infrastructure
y = 0.8717x + 3.977
0
10
20
30
40
50
60
70
0 10 20 30 40 50 60 70
Relation between Competitiveness and Technological Infrastructure
• Competitiveness analyses how countries or enterprises manage the totality of their competencies to achieve long-term value creation
• The innovative capacity of a country or region is heavily rooted in areas such as the intensity of scientists and engineers in the workforce, the degree of protection of intellectual property, and the depth of clusters
• The Scientific and Technological Infrastructure sub-factors provide a proxy for S&T Innovation.
• However, the S&T sub-factors are not able to capture all the innovative and technological aspects affecting competitiveness
World Digital Competitiveness Ranking:Definition
The IMD World Digital
Competitiveness Ranking
assesses the capacity of an economy to adopt and explore digital technologies leading to transformation in government practices, business models and
society in general.
Knowledge: the “infrastructure” that underlines the process of discovery, understanding and
learning of new digital technologies.
Technology:the overall context through which
the development of digital technologies is enabled. Future Readiness:
the level of preparedness of an economy to assume its digital transformation.
Digital Competitiveness Ranking 2017Top 10 (overall) and Top 5 per factor
Knowledge
Technology
Future readiness Overall
World Digital Competitiveness Ranking:Structure
World Digital Competitiveness Ranking:Hungary
World Digital Competitiveness rankingHungary: Knowledge
u Overall top strengths
w Overall top weaknesses
Subfactors 2013 2014 2015 2016 2017
39 38 46 43 46
39 43 46 41 43
47 49 48 46 46
Talent Rank Rank Rank
Educational assessment PISA - Math 34 56 27
International experience 40 33 32
Foreign highly-skilled personnel 56 38 37
Management of cities 47 29 44
w Digital/Technological skills 61 43 33
u Net flow of international students 19 u 11 35
Pupil-teacher ratio (tertiary education) R&D productivity by publication
Graduates in Sciences Scientific and technical employment
Women with degrees High-tech patent grants
Employee training Total expenditure on R&D (%)
Total public expenditure on education Total R&D personnel per capita
Higher education achievement Female researchers
KNOWLEDGE
Scientific concentration
Training & education Scientific concentration
Talent
Training & education
World Digital Competitiveness rankingHungary: Technology
u Overall top strengths
w Overall top weaknesses
Subfactors 2013 2014 2015 2016 2017
25 23 32 30 29
45 50 49 47 44
27 36 44 44 45
Regulatory framework Rank Rank Rank
Starting a business 39 30 47
u Enforcing contracts 8 45 49
Immigration laws 28 51 w 59
Technological regulation 43 53 35
Scientific research legislation 33 48 26
Intellectual property rights 35 u 15 27
Regulatory framework
Capital
IT & media stock market capitalization Communications technology
TECHNOLOGY
Technological framework
Capital Technological framework
Funding for technological development Mobile Broadband subscribers
Banking and financial services Wireless broadband
Investment risk Internet users
Venture capital Internet bandwidth speed
Investment in Telecommunications High-tech exports (%)
World Digital Competitiveness rankingHungary: Future readiness
u Overall top strengths
w Overall top weaknesses
Subfactors 2013 2014 2015 2016 2017
40 39 51 50 57
50 47 51 50 58
35 33 36 35 38
Adaptive attitudes Rank Rank Rank
w E-Participation 58 w 61 39
Internet retailing 35 39 47
Tablet possession 51 57 52
u Smartphone possession 23 51 27
w Attitudes toward globalization 63 41
Knowledge transfer
Innovative firms Public-private partnerships
Agility of companies Cyber security
Use of big data and analytics Sofware piracy
Adaptive attitudes
Business agility
Opportunities and threats E-Government
Business agility IT integration
FUTURE READINESS
IT integration
World Digital Competitiveness rankingHungary: Factors’ trends 2013-2017
World Digital Competitiveness RankingHungary: Digital – Competitiveness performances
More Information?
IMD
www.imd.org
IMD World Competitiveness Center
www.imd.org/wcc