On the methodology of the World Competitiveness Report

A nation with its natural resources, human capabilities, research and educational institutions, government organizations, financial systems, and cultural and social values provides an environment in which firms are created, organized, and managed. The competitive environment a nation provides influences the performance of its firms at home and abroad. Therefore, it is of prime importance for both governments and firms to study the competitive environment of a country in comparison with those of the others. The World Competitiveness Report (WCR), a report annually produced by the Institute for Management Development (IMD) and the World Economic Forum (WEF), both based in Switzerland, is a study that rates and ranks the competitiveness of a certain group of countries (OECD plus 15 newly industrialized countries) and is a widely quoted study in the international media. Although some essence of its methodology is given for a general understanding, details are not provided, perhaps for proprietary reasons since the report is a commercial enterprise itself. The objective of this paper is to uncover the methodology used by the WCR. For this purpose, the methodological information provided in the WCR is used to the fullest extent. However, for the steps where the information is missing or when different interpretations are possible, an approach based on mathematical programming is employed to ‘guess’ the methodology.