IDEAS home Printed from https://ideas.repec.org/p/msb/wpaper/2009-02.html
   My bibliography  Save this paper

Composite Competitiveness Indicators With Endogenous Versus Predetermined Weights : An Application to the World Economic Forum’s Global Competitiveness Index

Author

Listed:
  • Harry P. Bowen

    (McColl School of Business, Queens University of Charlotte)

  • Wim Moesen

    (Center for Economic Studies, Catholic University Leuven)

Abstract

This paper addresses an important methodological issue concerning the construction of a composite indicator, and in particular composite indicators of national competitiveness; these indicators often serve as a benchmark for policymakers and others to judge the relative success of their country. Most competitiveness indicators aggregate primitive data using predetermined fixed weight values that are applied uniformly to all countries. The use of fixed and uniform weights may bias inferences of relative performance since it ignores that countries can have different policy priorities or lack inherent capabilities on some dimensions. In addition, since the particular weight values chosen are not likely to be universally accepted, the credibility of any particular index is weakened. To address this issue, this paper proposes a procedure that allows for endogenously determined country specific weights that explicitly take account of a country’s own choices and achievement across primitive dimensions. We then illustrate our procedure by applying it to examine the widely cited Global Competitiveness Index developed by the World Economic Forum. Our resulting Revealed Competitiveness Index uses weights that allow that countries may choose different combinations of the underlying dimensions but still achieve the same level of overall performance. In general, our method will prove useful to those wishing to construct and compare indexes of performance, while minimizing objections about the “importance” of the different component dimensions that often arise when predetermined and uniformly applied weights are used.

Suggested Citation

  • Harry P. Bowen & Wim Moesen, 2009. "Composite Competitiveness Indicators With Endogenous Versus Predetermined Weights : An Application to the World Economic Forum’s Global Competitiveness Index," Discussion Paper Series 2009-02, McColl School of Business, Queens University of Charlotte.
  • Handle: RePEc:msb:wpaper:2009-02
    as

    Download full text from publisher

    File URL: ftp://ftp.drivehq.com/msbftp/repec/pdfs/wpapers/msbwp2009-02.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    2. Athanassopoulos, Antreas D. & Lambroukos, Nikos & Seiford, Lawrence, 1999. "Data envelopment scenario analysis for setting targets to electricity generating plants," European Journal of Operational Research, Elsevier, vol. 115(3), pages 413-428, June.
    3. Laurens Cherchye & Wim Moesen & Tom Van Puyenbroeck, 2004. "Legitimately Diverse, yet Comparable: On Synthesizing Social Inclusion Performance in the EU," Journal of Common Market Studies, Wiley Blackwell, vol. 42(5), pages 919-955, December.
    4. Seiford, Lawrence M. & Zhu, Joe, 1999. "An investigation of returns to scale in data envelopment analysis," Omega, Elsevier, vol. 27(1), pages 1-11, February.
    5. D K Despotis, 2005. "A reassessment of the human development index via data envelopment analysis," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(8), pages 969-980, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Giannis Karagiannis, 2017. "On aggregate composite indicators," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(7), pages 741-746, July.
    2. Ofer, Gur, 2010. "Twenty Years Later and the Socialist Heritage is still Kicking: the Case of Russia," WIDER Working Paper Series 059, World Institute for Development Economic Research (UNU-WIDER).
    3. repec:ilo:ilowps:463412 is not listed on IDEAS
    4. Kivanc Halil ARIC & Necati Alp ERILLI & Hatice ERKEKOGLU, 2014. "Testing of APEC Countries’ Competitiveness Dynamics Through Fuzzy Clustering Analysis and Some Findings," Ege Academic Review, Ege University Faculty of Economics and Administrative Sciences, vol. 14(3), pages 441-450.
    5. Olga B. Koshovets & Igor E. Frolov, 2015. "Impact Investing As A "Basic Innovation" For The Global Economy And Finance System Post-Crisis Transformation," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 9(1), pages 769-780.
    6. Abu Sadat Muhammad Ashif, 2019. "Talent Management as a Source of Competitive Advantages: A Review," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 9(4), pages 28-34, April.

    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. Tom Puyenbroeck, 2018. "On the Output Orientation of the Benefit-of-the-Doubt-Model," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 139(2), pages 415-431, September.
    2. Laurens CHERCHYE & Willem MOESEN & Nicky ROGGE & Tom VAN PUYENBROECK, 2009. "Constructing a knowledge economy composite indicator with imprecise data," Working Papers of Department of Economics, Leuven ces09.15, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    3. Gulati, Rachita & Kattumuri, Ruth & Kumar, Sunil, 2020. "A non-parametric index of corporate governance in the banking industry: An application to Indian data," Socio-Economic Planning Sciences, Elsevier, vol. 70(C).
    4. Salvatore Greco & Alessio Ishizaka & Menelaos Tasiou & Gianpiero Torrisi, 2019. "On the Methodological Framework of Composite Indices: A Review of the Issues of Weighting, Aggregation, and Robustness," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(1), pages 61-94, January.
    5. Laurens Cherchye & Willem Moesen & Nicky Rogge & Tom Puyenbroeck, 2007. "An Introduction to ‘Benefit of the Doubt’ Composite Indicators," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 82(1), pages 111-145, May.
    6. Gulati, Rachita & Charles, Vincent & Kumar, Sunil, 2024. "School education development index: A meta-frontier range directional measure benefit-of-the-doubt model," Socio-Economic Planning Sciences, Elsevier, vol. 92(C).
    7. Rachita Gulati & M. Kabir Hassan & Vincent Charles, 2024. "Developing a New Multidimensional Index of Bank Stability and Its Usage in the Design of Optimal Policy Interventions," Computational Economics, Springer;Society for Computational Economics, vol. 63(4), pages 1281-1325, April.
    8. Fusco, Elisa & Maggi, Bernardo & Rizzuto, Livia, 2022. "Alternative indicators for the evaluation of renewables in Europe: An efficiency approach," Renewable Energy, Elsevier, vol. 190(C), pages 48-65.
    9. Ajishnu Roy & Aman Basu & Xuhui Dong, 2021. "Achieving Socioeconomic Development Fuelled by Globalization: An Analysis of 146 Countries," Sustainability, MDPI, vol. 13(9), pages 1-15, April.
    10. L Cherchye & W Moesen & N Rogge & T Van Puyenbroeck & M Saisana & A Saltelli & R Liska & S Tarantola, 2008. "Creating composite indicators with DEA and robustness analysis: the case of the Technology Achievement Index," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 59(2), pages 239-251, February.
    11. Nicky Rogge, 2017. "Measuring the impact of the economic crisis on the level of change in EU social inclusion: period 2005–2012," Journal of Productivity Analysis, Springer, vol. 47(2), pages 103-116, April.
    12. Dovile Stumbriene & Ana S. Camanho & Audrone Jakaitiene, 2020. "The performance of education systems in the light of Europe 2020 strategy," Annals of Operations Research, Springer, vol. 288(2), pages 577-608, May.
    13. Pilar Murias & José Miguel & David Rodríguez, 2008. "A Composite Indicator for University Quality Assesment: The Case of Spanish Higher Education System," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 89(1), pages 129-146, October.
    14. Tziogkidis, Panagiotis & Philippas, Dionisis & Leontitsis, Alexandros & Sickles, Robin C., 2020. "A data envelopment analysis and local partial least squares approach for identifying the optimal innovation policy direction," European Journal of Operational Research, Elsevier, vol. 285(3), pages 1011-1024.
    15. Leontitsis, Alexandros & Philippas, Dionisis & Sickles, Robin C. & Tziogkidis, Panagiotis, 2018. "Evaluating countries’ innovation potential: an international perspective," Working Papers 18-011, Rice University, Department of Economics.
    16. Fusco, Elisa, 2015. "Enhancing non-compensatory composite indicators: A directional proposal," European Journal of Operational Research, Elsevier, vol. 242(2), pages 620-630.
    17. Amado, Carla A.F. & São José, José M.S. & Santos, Sérgio P., 2016. "Measuring active ageing: A Data Envelopment Analysis approach," European Journal of Operational Research, Elsevier, vol. 255(1), pages 207-223.
    18. Francesco Vidoli & Elisa Fusco & Claudio Mazziotta, 2015. "Non-compensability in Composite Indicators: A Robust Directional Frontier Method," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 122(3), pages 635-652, July.
    19. D K Despotis, 2005. "A reassessment of the human development index via data envelopment analysis," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(8), pages 969-980, August.
    20. da Silva, Aneirson Francisco & Miranda, Rafael de Carvalho & Marins, Fernando Augusto Silva & Dias, Erica Ximenes, 2024. "A new multiple criteria data envelopment analysis with variable return to scale: Applying bi-dimensional representation and super-efficiency analysis," European Journal of Operational Research, Elsevier, vol. 314(1), pages 308-322.

    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:msb:wpaper:2009-02. 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: HP Bowen (email available below). General contact details of provider: https://edirc.repec.org/data/sbqueus.html .

    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.