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What Can We Learn from Global and Regional Rankings of Countries?

Author

Listed:
  • Huseyin Aytug
  • Siong Hook Law
  • Nirvikar Singh

Abstract

We use principal component analysis (PCA) to extract the essential information contained in 10 different country rankings, measuring different country characteristics such as GDP per capita, human development, quality of governance, environmental quality and business environment. Globally, the first principal component accounts for about 82 per cent of the variation across countries, and the first three principal components account for over 92 per cent. The percentages are similar for regions such as Europe, North America and Asia, but lower for South America and Africa, but even in the last of these regions, the first three principal components account for 86 per cent of the variation. Excluding GDP per capita does not change our results appreciably. The analysis suggests that various different indices may add relatively little new information to more basic measures of development. Regional comparisons suggest that Asia’s economic structures, as implied by the rankings, may be closer to those of Europe and North America than South America and Africa. JEL Codes: C38, O1, O57

Suggested Citation

  • Huseyin Aytug & Siong Hook Law & Nirvikar Singh, 2018. "What Can We Learn from Global and Regional Rankings of Countries?," Millennial Asia, , vol. 9(2), pages 119-139, August.
  • Handle: RePEc:sae:millen:v:9:y:2018:i:2:p:119-139
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    Keywords

    Global rankings; principal component analysis; economic development; governance; environment;

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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