When Swiss analysis goes completely cuckoo

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The Independent Online
Well, there's a thing. The two Swiss organisations which used jointly to produce the only serious attempt to rank countries by their competitiveness have this year gone their own separate ways. And yes, they have come up with startlingly different findings. With the benefit of hindsight, the World Economic Forum's divorce from the Institute for International Management Development was perhaps inevitable for the two seem to have radically different views of what matters in economic success.

You could characterise their respective standpoints a Conservative world view and a Labour world-view. The WEF thinks flexibility, minimal government and openness of the economy are the most important factors in competitiveness and future growth. Much of the analysis of the UK's competitive improvement in its report today will be backed by tomorrow's survey of the British economy from the OECD.

The IMD puts its faith more heavily in investment, skills and infrastructure, just like the shadow Chancellor Gordon Brown. So Britain has gone down in the IMD league even as it has gone up in WEF rankings. If these conflicting findings mean anything at all, it is the idiocy of trying to sum up an economy's competitiveness in a single and necessarily arbitrary number. For there are several equally important dimensions to international advantage. One is the ability to export. Factors such as the level of the exchange rate, the costs of production and the absence of tariffs and other barriers to trade are what matter here.

A second is the ability to attract international investment. This is influenced by, for instance, geography and infrastructure, the tax and welfare system and the cost and quality of the workforce. Then there is the question of a country's ability to deliver rising prosperity to its citizens. Education, investment and entrepreneurship are what matter here.

There is nothing wrong with benchmarking. It has proved useful at a corporate level and there is no reason why it should not be applied constructively at the national level too. Equally it would be wrong to see the differing findings of these two competitiveness leagues as evidence of their worthlessness. If you disaggregate what lies behind them, they are not at odds with each other. It makes perfect sense to say the UK scores well on openness and competition but badly on education and skills.

The daftness comes in the headline-seeking rankings which try to summarise a country in a single ill-defined number. Up three or down four places? In front of or behind Finland? The answer is as irrelevant as it is meaningless.