Minneapolis, Minnesota – January 23, 2017 – The 5th edition of the Global Sustainable Competitive Index (GSCI) was recently published, bringing renewed attention to the important topic of country governance. This index ranking is based on quantitative metrics that assess the infrastructure of a country, and aims to evaluate each country’s ability to create and sustain wealth creation based on the definition of Sustainable Development. The GSCI integrates all the aspects that can make an economy successful for the long term. It is not limited to commonly used financial factors (such as the GDP or credit ratings), or other output measurements such as expressed in the WEF’s Competitiveness Index.
At Magni, we agree that the ability of a country to be successful is heavily shaped by its infrastructure. Economists widely agree that the legal, regulatory, and economic structure of a country enables more sustainable and just wealth creation. Fundamentally, countries governed with openness, honesty and transparency have outperformed countries that are opaque and dishonest. Corruption is generally hidden and opaqueness provides cover for corruption to fester.
When looking at the ranking of countries in the GSCI, we wonder how applying only quantitative data to interpret the effectiveness of good governance is effective. Many of the eastern European countries including Russia, Qatar and U.A.E. are ranked ahead of the US. Cuba is within four countries of the US in the ranking. While the US is not high in the Magni rankings, we do rank the US significantly ahead of these countries in the good governance that comes from openness, honesty, and transparency.
There are some additional surprises. China ranks in the top 10 for its governance. Conversely, Canada and the Netherlands rank 81st and 86th respectively, while Magni ranks both countries in our top 10.
Measuring good governance is not easy. When deciding on metrics for good governance, there must be a method to determine the adherence to good governance practices in an objective and repeatable manner. This is where many tend to focus on quantitative metrics for the inherent objectiveness and repeatability. However, qualitative metrics tend to be better at determining adherence. When qualitative metrics of adherence are combined with a research process designed and operated for objectiveness and repeatability, the resulting rankings tend to be the most effective.