Economy-Related Country Rankings: Economic Systems, Socio-Economic Development and Business Environments in International Comparison

Abstract

The number of economy-related country rankings has been steadily increasing. By one account the number of global performance indices has risen from less than 50 in 1999 to over 150 only 15 years later (The Economist 2014). Most economy-related rankings take the model of free, market-based competition as a reference point and then measure how closely specific countries approach this ideal. In addition to general assessments of the quality and competitiveness of economic systems, the evaluation of business environments has gained special attention as it is seen as a major precondition for investment and economic growth. Some rankings have a developmental background and focus on socio-economic conditions. Others look at specific aspects linked to the economy, like corruption or environmental problems. Taken together, these rankings broadly examine economic systems and economic developments among the world's countries. In their methodological approach, most rankings combine statistical data and expert assessments in order to construct an index. The index is divided into several subdivisions and, for each subdivision, suitable indicators are selected. For subdivisions, which cannot fully be measured using statistical data, expert assessments are added. In the extreme, the UNDP's Human Development Index relies solely on statistical data, while the World Bank’s Worldwide Governance Indicators include only expert assessments. A special case is the World Bank's "Ease of Doing Business" ranking, which assesses the regulatory environment for the initiation and operation of a local firm (in terms of money, time and number of required administrative acts). In a similar methodological approach, the Open Budget Index offers a systematic quantitative assessment of the transparency of state budgets. It is important to note that many rankings change their results and methods retrospectively. The World Bank, for example, has changed the method of the Doing Business ranking in 2009, 2012 and again in 2014. In the following three years each ranking incorporated further changes. Each methodology expansion was recalculated for one year to provide comparable indicator values and scores for the previous year. Another important point, when working with the rankings, is that the year indicated in the ranking usually refers to the year of publication, not to the year which is being assessed. For example, the 2018 Doing Business Ranking refers to data as of June 2017.