Visualizing Competitiveness

Visualizing Competitiveness

For many years "national competitiveness" has been measured in terms of a country's economic growth and long-term prosperity — in other words, metrics of productivity.

Along these lines, the World Economic Forum bases its competitiveness analysis on the Global Competitiveness Index (GCI), which includes more than 110 indicators that determine a more — or less — competitive economy. The components of the CGI are grouped into 12 pillars, each measuring a different aspect of competitiveness. Ranging from things like 'macroeconomic environment' to 'labor market efficiency' these pillars have become a well-known tool for policy and business leaders.

There are, however, other critical things to think about when it comes to determining a country’s economic competitiveness. Among the most basic is population — both total size and rate of growth. Another is its biocapacity: How much productive area (i.e., land and water) is nationally available to generate its resources and absorb its waste? The flipside is its ecological footprint: how much area, on a global scale, is it actually using up to sustain its activities? Finally, there are myriad sociological factors like income, life expectancy, and education to consider. All of these behave as constraints to economic growth.

Thus, the idea behind this visualization is very simple: In order to stimulate a new discussion about competitiveness in a resource constrained world, we've done a global comparison of competitiveness and sustainability — the former as indexed by the CGI, and the latter as measured by biocapacity and national ecological footprints measures. (While biocapacity offers a clear idea of the resources available to any given nation, the ecological footprint suggests the global environmental impact of national resource consumption.) We've also incorporated other well-known measures and indicators such as the World Bank's country classification by income group and the UNDP Human Development Index (HDI). [For more details on data sets, see the endnotes].

As you can see here, this doughnut-shape diagram organizes data by country and by indicator. This diagram allows assessing the competitiveness level of a country as well as comparing a single indicator across countries.


National competitiveness assessment when looking by ‘portions’


Cross country comparison when looking at a single ‘ring’

Each indicator values are specified in the chart's legends.

The GCI and the 12 Pillars are plotted in the diagram in the most external ring of the circle. According to the GCI value, economies compete in different ways and thus, at different stages of a country's development. Those stages are represented in the first inner ring of the diagram in blue.


Human population and its density is plotted at the inner-most space of the diagram. Bubbles and color ranges provide a clear idea of the total population and its density in each of the countries considered.


The World Bank's country classification by income group and the UNDP Human Development Index (HDI) are represented in the second and third inner rings of the diagram. HDI gives a multidimensional idea of the country's situation in terms of health, education and income. The World Bank data, which divides economies according to their 2009 Gross National Income (GNI) per capita, gives a more precise idea of national income than other indicators (e.g., Gross Domestic Product) because it reduces the impact of exchange rate fluctuations, thereby allowing for better cross-country comparisons.


Biocapacity and ecological footprint are represented in the diagram as lines and bubbles. Lines indicate the level of biocapacity and footprint consumption, while bubbles show a country's footprint accounting balance — i.e., a deficit or reserve.

INSIGHTS

Competitiveness results (based on the 12 pillars and CGI) seem to be in line with the results at the inner-rings (HDI, GNI, stage of development). However, they reveal a different dimension — the environmental threat — when compared to population and ecological measures. For some reason, it seems that competitiveness is not ecological sustainable. Such a concern, however, is not unexpected given the emphasis on economic growth without taking into account its limits in a resource-constrained world.

Although boosting consumption is often considered critical to revitalizing the global economy, it also implies a need for more resources — for the materials and energy (water, food, wood, fossil fuels, etc.) to fuel ever increasing industrial and agricultural growth. Meanwhile, population growth has two-fold effects. It increases consumption and results in a decline of space — which especially in urban areas, often translates into a deterioration of the average quality of life. Quality of life, in turn, has important consequences in terms of competitiveness, and it can make or break prosperity in the long run.

Our visualization reveals how closely interrelated the demographics and environmental settings of a country are. On the one hand, the higher the growth rate of a country's population, the larger is that country's human ecological footprint. On the other hand, the larger a country's human ecological footprint, the less sustainable its population is.

It has been proven that there is no better solution for poverty alleviation than economic growth. However, infinite economic growth in a finite world is impossible. Sustainable growth needs to be based on the sustainable use of resources. We therefore need new development pathways that reduce the common negative environmental impacts of a country's development process. Our collective challenge is to achieve high levels of prosperity — economies with high GCI, HDI, GNI, etc. — while ensuring resource sustainability (i.e., lower footprint, ecological reserve, etc.)

We should note that there are interesting examples of new indicators that measure actual improvements of a country's welfare, such as the Index of Sustainable Economic Welfare and the Genuine Progress Indicators. These indicators complement many other economic measurements and especially those of national income (e.g., Gross Domestic Product). Both examples offer a more complete picture of what economic progress encompasses, including demographics and environmental features, and therefore the limits to growth.

For the most part, however, national competitiveness analyses still lack clear accounts of biocapacity and resource demands placed by different countries. They fail to consider the fundamental link between economy, human population and environment.

That is what we hoped to accomplish with this visualization. It was not an attempt to make any predictions, but to present the status of a combination of economic, demographic and environmental factors for chosen countries, and explore the complex links among them. As a whole, we've documented the competitive situation of selected nations and illustrated their constraints to growth. Population and ecological debt provide a clear idea of the country's long-term potential to improve or maintain its competitiveness level.

This is just the start of the conversation, but we believe that it is possible to envisage how limits to material growth will shape each nation and our world in the future.


Want to drill down further into our data? Read on.

 --About the sample: we have selected a sample of countries based on their stage of development. We have chosen a sample for each group, trying to include some of the cases that are “in vogue” because of their faster economic growth, their natural resource availability, their sources or supply of foreign investment, or any other criteria. This was, for example, the case of Brazil but no footprint data was available for it.

--About the data: we used the Ecological Footprint Atlas 2009. Just after we published our poster, the Footprint Network released the 2010 Atlas, including data for a greater number of countries such as, for example, Brazil.

--About HDI: we have included HDI in the picture because it's natural to think that higher human development would have less impact on the environment. Nations with high HDI scores, would have, for instance, better resource management and “reasonable” footprint levels, ensuring sustainability.

 --About GNI: we have included GNI in the picture because this indicator seems a good complement to the first indicator plotted at the inner ring, i.e., “stage of development.” Higher income does not guarantee higher development — and vice-versa (and this seems to be clear looking at the data plotted in the chart).

 --About population: the population plays a dual role, it’s a factor of production and it’s the market for consumer goods. Thus, growing population (as workers and as consumers) is essential for economic growth. However, the population growth should be consistent with the biocapacity. In other words, the number of people shouldn’t exceed the biocapacity of the environment where they live and thus, avoiding overpopulation.

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