IDEAS home Printed from https://ideas.repec.org/a/eee/tefoso/v196y2023ics0040162523005413.html
   My bibliography  Save this article

Exploring Global Competitiveness Index 4.0 through the lens of country risk

Author

Listed:
  • Qazi, Abroon

Abstract

The Global Competitiveness Index (GCI) 4.0 provides an annual evaluation of country-level productivity and development in the fourth industrial revolution era. The GCI 4.0 is classified into 12 pillars representing socioeconomic, financial, health, technological, and other factors of production. Country risk, which is an aggregate measure of country-level exposure to financial, political, and economic risks, can influence national development. This study explores the association between country risk and competitiveness by mapping country risk drivers to GCI and GCI pillars to country risk. Two Bayesian Belief Network models, with a minimum prediction accuracy of 81.3 %, are developed using two data-sets representing the GCI and country risk ratings of 107 countries. Sensitivity analysis reveals that low performance in information and communication technology (ICT) adoption (monetary policy) can significantly affect country risk (GCI), whereas innovation capability (financial system risk) and institutions (legal system) can considerably improve country risk (GCI). By delving into how the pillars of competitiveness interact with various risk factors such as political stability, economic volatility, and regulatory environment, decision-makers, investors, and policymakers can gain valuable insights that guide effective resource allocation, risk mitigation strategies, informed policy formulation, and sustainable development efforts.

Suggested Citation

  • Qazi, Abroon, 2023. "Exploring Global Competitiveness Index 4.0 through the lens of country risk," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
    • Handle: RePEc:eee:tefoso:v:196:y:2023:i:c:s0040162523005413
    DOI: 10.1016/j.techfore.2023.122856
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0040162523005413
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.techfore.2023.122856?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Alina Mihaela Dima & Liviu Begu & Maria Denisa Vasilescu & Maria Alexandra Maassen, 2018. "The Relationship between the Knowledge Economy and Global Competitiveness in the European Union," Sustainability, MDPI, vol. 10(6), pages 1-15, May.
    2. McAleer, Michael & da Veiga, Bernardo & Hoti, Suhejla, 2011. "Value-at-Risk for country risk ratings," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 81(7), pages 1454-1463.
    3. Tobin Im & Youngmi Choi, 2018. "Erratum to: Rethinking National Competitiveness: A Critical Assessment of Governmental Capacity Measures," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 137(2), pages 829-829, June.
    4. Ekici, Ahmet & Önsel Ekici, Şule, 2021. "Understanding and managing complexity through Bayesian network approach: The case of bribery in business transactions," Journal of Business Research, Elsevier, vol. 129(C), pages 757-773.
    5. Deligonul, Seyda Z., 2020. "Multinational country risk: Exposure to asset holding risk and operating risk in international business," Journal of World Business, Elsevier, vol. 55(2).
    6. HOSSAIN, Niamat Ullah Ibne & Amrani, Safae El & Jaradat, Raed & Marufuzzaman, Mohammad & Buchanan, Randy & Rinaudo, Christina & Hamilton, Michael, 2020. "Modeling and assessing interdependencies between critical infrastructures using Bayesian network: A case study of inland waterway port and surrounding supply chain network," Reliability Engineering and System Safety, Elsevier, vol. 198(C).
    7. Suleman, Tahir & Gupta, Rangan & Balcilar, Mehmet, 2017. "Does country risks predict stock returns and volatility? Evidence from a nonparametric approach," Research in International Business and Finance, Elsevier, vol. 42(C), pages 1173-1195.
    8. Önsel Ekici, Şule & Kabak, Özgür & Ülengin, Füsun, 2016. "Linking to compete: Logistics and global competitiveness interaction," Transport Policy, Elsevier, vol. 48(C), pages 117-128.
    9. Aven, Terje, 2017. "Improving risk characterisations in practical situations by highlighting knowledge aspects, with applications to risk matrices," Reliability Engineering and System Safety, Elsevier, vol. 167(C), pages 42-48.
    10. A. M. Hanea & G. F. Nane & B. A. Wielicki & R. M. Cooke, 2018. "Bayesian networks for identifying incorrect probabilistic intuitions in a climate trend uncertainty quantification context," Journal of Risk Research, Taylor & Francis Journals, vol. 21(9), pages 1146-1161, September.
    11. Huijuan Xiao & Yue Liu & Jingzheng Ren, 2023. "Synergies and trade‐offs across sustainable development goals: A novel method incorporating indirect interactions analysis," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(2), pages 1135-1148, April.
    12. Pal, Debdatta & Mitra, Subrata K. & Chatterjee, Somdeep, 2022. "Does “investment climate” affect GDP? Panel data evidence using reduced-form and stochastic frontier analysis," Journal of Business Research, Elsevier, vol. 138(C), pages 301-310.
    13. Aven, Terje, 2016. "Supplementing quantitative risk assessments with a stage addressing the risk understanding of the decision maker," Reliability Engineering and System Safety, Elsevier, vol. 152(C), pages 51-57.
    14. Wu, Wei-Wen & Lan, Lawrence W. & Lee, Yu-Ting, 2012. "Exploring the critical pillars and causal relations within the NRI: An innovative approach," European Journal of Operational Research, Elsevier, vol. 218(1), pages 230-238.
    15. Abroon Qazi & Mecit Can Emre Simsekler, 2022. "Prioritizing interdependent drivers of financial, economic, and political risks using a data-driven probabilistic approach," Risk Management, Palgrave Macmillan, vol. 24(2), pages 164-185, June.
    16. Kesternich, Iris & Schnitzer, Monika, 2010. "Who is afraid of political risk? Multinational firms and their choice of capital structure," Journal of International Economics, Elsevier, vol. 82(2), pages 208-218, November.
    17. Wan, Chengpeng & Yan, Xinping & Zhang, Di & Qu, Zhuohua & Yang, Zaili, 2019. "An advanced fuzzy Bayesian-based FMEA approach for assessing maritime supply chain risks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 125(C), pages 222-240.
    18. Aven, Terje, 2016. "Risk assessment and risk management: Review of recent advances on their foundation," European Journal of Operational Research, Elsevier, vol. 253(1), pages 1-13.
    19. Daniel McDowell, 2021. "Financial sanctions and political risk in the international currency system," Review of International Political Economy, Taylor & Francis Journals, vol. 28(3), pages 635-661, May.
    20. Yang, Min & Wang, Zheyuan & Cheng, Long & Chen, Enhui, 2022. "Exploring satisfaction with air-HSR intermodal services: A Bayesian network analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 156(C), pages 69-89.
    21. Tang, Ryan W. & Buckley, Peter J., 2020. "Host country risk and foreign ownership strategy: Meta-analysis and theory on the moderating role of home country institutions," International Business Review, Elsevier, vol. 29(4).
    22. Hosseini, Seyedmohsen & Ivanov, Dmitry & Dolgui, Alexandre, 2019. "Review of quantitative methods for supply chain resilience analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 125(C), pages 285-307.
    23. Esma Nur Cinicioglu & Gündüz Ulusoy & Şule Önsel Ekici & Füsun Ülengin & Burç Ülengin, 2017. "Exploring the interaction between competitiveness of a country and innovation using Bayesian networks," Innovation and Development, Taylor & Francis Journals, vol. 7(2), pages 175-209, July.
    24. Bruce G. Marcot & Anca M. Hanea, 2021. "What is an optimal value of k in k-fold cross-validation in discrete Bayesian network analysis?," Computational Statistics, Springer, vol. 36(3), pages 2009-2031, September.
    25. Gregory, Richard P., 2020. "Political risk and financial flexibility in BRICS countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 78(C), pages 166-174.
    26. Brown, Christopher L. & Cavusgil, S. Tamer & Lord, A. Wayne, 2015. "Country-risk measurement and analysis: A new conceptualization and managerial tool," International Business Review, Elsevier, vol. 24(2), pages 246-265.
    27. Chien-Chiang Lee & En-Ze Wang, 2021. "Economic Complexity and Income Inequality: Does Country Risk Matter?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 154(1), pages 35-60, February.
    28. Tamvada, Jagannadha Pawan & Narula, Sanjiv & Audretsch, David & Puppala, Harish & Kumar, Anil, 2022. "Adopting new technology is a distant dream? The risks of implementing Industry 4.0 in emerging economy SMEs," Technological Forecasting and Social Change, Elsevier, vol. 185(C).
    29. Adedipe, Tosin & Shafiee, Mahmood & Zio, Enrico, 2020. "Bayesian Network Modelling for the Wind Energy Industry: An Overview," Reliability Engineering and System Safety, Elsevier, vol. 202(C).
    30. Anna Shostya & Moshe Banai, 2017. "Cultural and Institutional Antecedents of Country Risk," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 45(3), pages 351-364, September.
    31. Kabak, Özgür & Önsel Ekici, Şule & Ülengin, Füsun, 2020. "Analyzing two-way interaction between the competitiveness and logistics performance of countries," Transport Policy, Elsevier, vol. 98(C), pages 238-246.
    32. Doumpos, Michael & Zopounidis, Constantin, 2001. "Assessing financial risks using a multicriteria sorting procedure: the case of country risk assessment," Omega, Elsevier, vol. 29(1), pages 97-109, February.
    33. Tobin Im & Youngmi Choi, 2018. "Rethinking National Competitiveness: A Critical Assessment of Governmental Capacity Measures," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 135(2), pages 515-532, January.
    34. Önsel Ekici, Şule & Kabak, Özgür & Ülengin, Füsun, 2019. "Improving logistics performance by reforming the pillars of Global Competitiveness Index," Transport Policy, Elsevier, vol. 81(C), pages 197-207.
    35. Delen, Dursun & Topuz, Kazim & Eryarsoy, Enes, 2020. "Development of a Bayesian Belief Network-based DSS for predicting and understanding freshmen student attrition," European Journal of Operational Research, Elsevier, vol. 281(3), pages 575-587.
    36. Cavusgil, S. Tamer & Deligonul, Seyda & Ghauri, Pervez N. & Bamiatzi, Vassiliki & Park, Byung Il & Mellahi, Kamel, 2020. "Risk in international business and its mitigation," Journal of World Business, Elsevier, vol. 55(2).
    37. Goldszmidt, Rafael G. Burstein & Brito, Luiz Artur Ledur & de Vasconcelos, Flávio Carvalho, 2011. "Country effect on firm performance: A multilevel approach," Journal of Business Research, Elsevier, vol. 64(3), pages 273-279, March.
    38. Seyed Alireza Athari & Komeil Shaeri & Dervis Kirikkaleli & Hasan Murat Ertugrul & Alper Ozun, 2020. "Global competitiveness and capital flows: does stage of economic development and risk rating matter?," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 27(4), pages 426-450, July.
    39. Sarabia, María & Crecente, Fernando & del Val, Maria Teresa, 2021. "Health, longevity, infrastructure and competitiveness: The Four Horsemen of COVID-19," Journal of Business Research, Elsevier, vol. 129(C), pages 244-249.
    40. Liu, Jie & Wei, Wei & Shi, Yao-Bo & Chang, Chun-Ping, 2020. "The nexus between country risk and exchange rate regimes: A global investigation," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    41. Abroon Qazi & Mecit Can Emre Simsekler, 2022. "Correction to: Prioritizing interdependent drivers of financial, economic, and political risks using a data‑driven probabilistic approach," Risk Management, Palgrave Macmillan, vol. 24(2), pages 186-186, June.
    42. Louis Anthony Cox Jr. & Douglas A. Popken & Richard X. Sun, 2018. "Causal Analytics for Applied Risk Analysis," International Series in Operations Research and Management Science, Springer, number 978-3-319-78242-3, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Abroon Qazi & Mecit Can Emre Simsekler, 2022. "Prioritizing interdependent drivers of financial, economic, and political risks using a data-driven probabilistic approach," Risk Management, Palgrave Macmillan, vol. 24(2), pages 164-185, June.
    2. Qazi, Abroon & Simsekler, Mecit Can Emre, 2023. "Nexus between drivers of COVID-19 and country risks," Socio-Economic Planning Sciences, Elsevier, vol. 85(C).
    3. Abroon Qazi & Mecit Can Emre Simsekler & Steven Formaneck, 2023. "Supply chain risk network value at risk assessment using Bayesian belief networks and Monte Carlo simulation," Annals of Operations Research, Springer, vol. 322(1), pages 241-272, March.
    4. Röell, Christiaan & Osabutey, Ellis & Rodgers, Peter & Arndt, Felix & Khan, Zaheer & Tarba, Shlomo, 2022. "Managing socio-political risk at the subnational level: Lessons from MNE subsidiaries in Indonesia," Journal of World Business, Elsevier, vol. 57(3).
    5. Kabak, Özgür & Önsel Ekici, Şule & Ülengin, Füsun, 2020. "Analyzing two-way interaction between the competitiveness and logistics performance of countries," Transport Policy, Elsevier, vol. 98(C), pages 238-246.
    6. Önsel Ekici, Şule & Kabak, Özgür & Ülengin, Füsun, 2019. "Improving logistics performance by reforming the pillars of Global Competitiveness Index," Transport Policy, Elsevier, vol. 81(C), pages 197-207.
    7. Mustafa Polat & Karahan Kara & Avni Zafer Acar, 2023. "Competitiveness based logistics performance index: An empirical analysis in Organisation for Economic Co-operation and Development countries," Competition and Regulation in Network Industries, , vol. 24(2-3), pages 97-119, June.
    8. Mangirdas Morkunas & Gintaras Cernius & Gintare Giriuniene, 2019. "Assessing Business Risks of Natural Gas Trading Companies: Evidence from GET Baltic," Energies, MDPI, vol. 12(14), pages 1-14, July.
    9. Aven, Terje, 2020. "Three influential risk foundation papers from the 80s and 90s: Are they still state-of-the-art?," Reliability Engineering and System Safety, Elsevier, vol. 193(C).
    10. Khaled El Sakty & Mohamed Abdelraouf & Samira Allam, 2023. "How Logistics Performance Reshapes The Movement Of Stocks In The Context Of Climate Change?," Business Logistics in Modern Management, Josip Juraj Strossmayer University of Osijek, Faculty of Economics, Croatia, vol. 23, pages 43-62.
    11. Jiachen Sun & Haiyan Wang & Zhimin Cui, 2023. "Alleviating the Bauxite Maritime Supply Chain Risks through Resilient Strategies: QFD-MCDM with Intuitionistic Fuzzy Decision Approach," Sustainability, MDPI, vol. 15(10), pages 1-21, May.
    12. Dui, Hongyan & Zheng, Xiaoqian & Wu, Shaomin, 2021. "Resilience analysis of maritime transportation systems based on importance measures," Reliability Engineering and System Safety, Elsevier, vol. 209(C).
    13. Aven, Terje & Kristensen, Vidar, 2019. "How the distinction between general knowledge and specific knowledge can improve the foundation and practice of risk assessment and risk-informed decision-making," Reliability Engineering and System Safety, Elsevier, vol. 191(C).
    14. Fahim, Patrick B.M. & Rezaei, Jafar & Montreuil, Benoit & Tavasszy, Lorant, 2022. "Port performance evaluation and selection in the Physical Internet," Transport Policy, Elsevier, vol. 124(C), pages 83-94.
    15. Nocera, Fabrizio & Contento, Alessandro & Gardoni, Paolo, 2024. "Risk analysis of supply chains: The role of supporting structures and infrastructure," Reliability Engineering and System Safety, Elsevier, vol. 241(C).
    16. Zarghami, Seyed Ashkan & Dumrak, Jantanee, 2021. "Unearthing vulnerability of supply provision in logistics networks to the black swan events: Applications of entropy theory and network analysis," Reliability Engineering and System Safety, Elsevier, vol. 215(C).
    17. Khan, Muhammad Salar, 2022. "Absorptive capacities and economic growth in low- and middle-income economies," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 156-188.
    18. Sarabia, María & Crecente, Fernando & del Val, Maria Teresa, 2021. "Health, longevity, infrastructure and competitiveness: The Four Horsemen of COVID-19," Journal of Business Research, Elsevier, vol. 129(C), pages 244-249.
    19. Vishal Kashav & Chandra Prakash Garg & Rupesh Kumar, 2023. "Ranking the strategies to overcome the barriers of the maritime supply chain (MSC) of containerized freight under fuzzy environment," Annals of Operations Research, Springer, vol. 324(1), pages 1223-1268, May.
    20. Singh, Deeksha & Gaur, Ajai S., 2021. "Risk mitigation strategies in international B2B relationships: Role of institutions and governance," Journal of Business Research, Elsevier, vol. 136(C), pages 1-9.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:tefoso:v:196:y:2023:i:c:s0040162523005413. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.sciencedirect.com/science/journal/00401625 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.