Composite Indexes Economic and Social Performance: Do they provide Valuable Information?

Abstract

This paper examines the information content of the selected composite indexes, namely the Global Competitiveness Report Index, the Human Development Index, the Knowledge Economy Index, the Innovation Union Scoreboard, and the like. These indexes are examined from the viewpoint of country rankings. It is argued that these indexes provide highly similar information, which brings to question the usefulness of such a variety of approaches. This paper also explores the drawbacks of composite indexes, and questions whether these indexes can adequately serve as policy-setting mechanisms.