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In recent years, increasing environmental and social concerns have started to change the way we look at economic development. Throughout the second half of the 20th century, data showed that increasing productivity and economic growth went hand in hand with better and improving living conditions. More recent data suggests that trends in economic growth no longer tell the whole story. The need to better understand the relationship between economic competitiveness and social and environmental sustainability has been revealed by events such as the “Arab Spring”, the rise of unemployment in many advanced economies – particularly among the young and less skilled population –, increasing income inequalities and social unrest in rapidly-growing economies as well as by increasing pressure on natural resources or the high levels of pollution.
For over 30 years, the World Economic Forum’s annual Global Competitiveness Report has assessed national competitiveness. Since 2011, the Forum has embarked on a major effort to deepen understanding of how sustainability relates to competitiveness and what this means for the development path of economies.
This year, further to our work on sustainable competitiveness, the Forum presents the Sustainability-Adjusted Global Competitiveness Index (GCI). This new measure aims to assess the “the set of institutions, policies and factors that make a nation remain productive over the longer term while ensuring social and environmental sustainability”. measures not only the propensity to prosper and grow, but also integrates the notion of “quality growth”, taking into account environmental stewardship and social sustainability.
This innovative approach, presented in chapter 1.2 of the Global Competitiveness Report 2012-2013, builds on the Global Competitiveness Index (GCI), highlighting the importance of competitiveness as the key indicator of prosperity. The GCI is then adjusted by two new pillars: The social sustainability pillar, which measures the “set of institutions, policies and factors that enable all members of society to experience the best possible health, participation and security; and to maximize their potential to contribute to and benefit from the economic prosperity of the country in which they live” and the environmental sustainability pillar which measures “the institutions, policies and factors that ensure an efficient management of resources to enable prosperity for present and future generations”. A conceptual representation of this framework is presented in the figure below.
One of the most important findings of this analysis suggests that there do not seem to be any necessary trade-offs between being competitive as well as socially and environmentally sustainable.
The results presented in this edition are preliminary and tentative as the work continues. The lack of high-quality available data and a more evidence-based understanding of the complex relationship between competitiveness and environmental and social sustainability prevent us from presenting more conclusive results. The World Economic Forum is committed to continuously improving our work on sustainable competitiveness to better inform policies and multistakeholder dialogue.
The current calculation methodology is explained in the technical appendix to the chapter.
Structure of the Sustainability-adjusted GCI