Under the DataTurkey series in LongViewTurkey, we have been posting comparative data of 14 emerging economies (and one developed). The aim was to focus on long-term development issues of Turkey that the financial markets tend to overlook, in line with the mission statement of the platform. In addition to governance and gender gap indicators that have been already posted, data on enterprise capability, innovation, productivity, education, human capital will be posted in the coming weeks.
Yet, there is one index, which captures most the data that we want to analyze within the longer-term perspective: World Economic Forum’s Sustainability-Adjusted Global Competitiveness Index. GCI has been announced since 2007 and it ranks economies according to how competitive they are with the accustomed macroeconomic data. Yet, in the last two years, we get to see the sustainability-adjusted competitiveness ranking as well.
In WEF’s report, the rationale for the new index is explained as:
1) Prevalent economic model is not sustainable over time under the current economic definition of sustainability
2) Economic growth is not translating into the desired results for society at large (as the growth model is not aimed at measuring both tangible and intangible necessities of life; but only the tangible ones)
3) Pressures on natural environment resulting from economic activity have grown
The question here is whether well-established ideas and models that take a narrow view of economic growth may provide adequate solutions as they ignore the use of natural resources or social concerns. The report comes up a definition of sustainable competitiveness as:
… the set of institutions, policies and factors that make a nation remain productive over the longer term while ensuring social and environmental sustainability…
BAsed on the definitions developed in the report, our observations on the index results are:
- Of the 15 countries that we analyze here, only five have higher sustainability-adjusted GCI scores than the traditional GCI score: Malaysia, Chile, Brazil, Poland and Hungary
- Turkey’s performance in both ranking and score are worse in sustainability-adjusted index compared to the conventional GCI.
- Within the sub-indices of sustainability-adjusted index, Turkey does much worse on the environmental-sustainability adjusted index compared to social-adjusted one.
- In the social-sustainability adjusted GCI, Turkey’s worst rankings are in income inequality, youth unemployment and vulnerable employment, and informal economy; pointing out to comparative disadvantage in vulnerability to shocks and social cohesion.
- Turkey’s scores and rankings in environmental-adjusted competitiveness index are much worse compared to the other two headings. Turkey does especially bad in high CO2 emissions, intensive use for agriculture, limited protected area and commitment to international environmental agreements.
- Result: WEF defines sustainable competitiveness as reflecting elements that go beyond mere economic well-being and ensure of high-quality growth. Turkey’s sustainability indicators do not point out to a higher-quality growth path yet as evidenced by the difference in GCI and sustainability-adjusted indices.
*Definitions and data tables below are brought together from the chapter on ‘Assessing the Sustainable Competitiveness of Nations’ in WEF’s Global Competitiveness Report 2013-14