Global Competitiveness Project

Russia’s Global Competitiveness: SSE Russia collaborates with the World Economic Forum on the Global Competitiveness Project to develop a better understanding of what drives a country’s global competitiveness

For about two decades The World Economic Forum has been trying to investigate the question of why some countries are able to grow on a sustained basis for long period of time, in the process pulling large segments of the population out of poverty, while others remain stagnant or, worse, actually show an erosion of living standards. The Stockholm School of Economics Russia has been one of the World Economic Forum’s partners for this initiative since 2001. Led by Dr. Carl Fey and managed by Dr. Igor Dukeov, the SSE Russia team focuses on the competitiveness of Russia. The World Economic Forum

and its partners have led the way in assessing the competitiveness of nations, and results from this research are published each year in The Global Competitiveness Report (GCR).

Using data on competitiveness collected in 125 countries The World Economic Forum’s GCR, based on modern theories on economic development and competitiveness developed by leading business scholars, including Michael Porter from Harvard Business school, presents the results on ranking the countries by The Growth Competitiveness Index, as well as The Business Competitiveness Index. These indices characterize the macro and microeconomic environment, accordingly.

Russia has seen some progress over the past five years, but still has ample room for progress when it comes to its competitiveness ranking. In 2006 Russia ranked 62nd out of 125 countries in the GCI. The GCI provides a holistic overview of factors that are critical to driving productivity and competitiveness, and groups them into nine pillars (Russia’s rankings on the sub-indexes follow:

institutions 114
infrastructure 61
macroeconomy 106
health and primary education 97
higher education and training 43
market efficiency 60
technological readiness 74
business sophistication 77
innovation 59

In 2005 Russia was ranked 75th out of 117 countries in The Growth Competitiveness Index (in macroeconomic development) and 74th out of 117 countries in The Business Competitiveness Index (in microeconomic development).

It is not only macroeconomic conditions but also microeconomic conditions which are important in determining a country’s competitiveness. Thus, the business competitiveness index which focuses more on the microeconomic factors, is also important for understanding a country’s competitiveness picture. The Business Competitiveness Index (BCI) measures the strength of the business environment and quality of business operations and strategies in a country. Russia ranked 79th out of 121 countries in 2006.

The GCR also evaluates the most problematic factors that keep business from growing fast. From a list of 14 factors, respondents were asked to select the five most problematic factors for doing business in their country and rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their ranking for Russia.

The Most Problematic Factors for Doing Business in Russia