An alternative index to the global competitiveness index

Abstract

This paper reviews the methodology used by the World Economic Forum (WEF) to create the Global Competitiveness Index (WEF-GCI). We propose an alternative competitiveness index that only includes the objective data (hard data) from the WEF-GCI and is created by applying a multivariate statistical procedure (Exploratory Factor Analysis) that allows us to determine the weights from the implicit data structure. The rankings obtained from this index have a high degree of association with those provided by the WEF. The main benefit of this index over the WEF index is that it does not include valuations from opinion surveys given to business executives and/or entrepreneurs of the countries included in the index (soft data). Consequently, the rankings from this alternative index are not affected by political biases or individual interests as it is elaborated only including officially published objective data.