Global Benchmark Report 2014
Content
For the tenth consecutive year, the Global Benchmark Report 2014
examines how the global challenge is met in the OECD countries.
The assessment is based on 87 benchmarks across five pillars comprising Level of globalisation, Productivity and innovation, Qualified
labour, Public economy and Costs. Together these pillars constitute
the foundation for creating open and prosperous nations capable of
creating and sustaining growth and balance. The report highlights
strengths and weaknesses of each OECD country in facing international competition, providing a picture of each country’s ability to develop attractive business environments and utilise opportunities presented by globalisation.
DI – Confederation of Danish Industry
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GLOBAL BENCHMARK REPORT
The conditions for doing business in the global economy are constantly changing – presenting new challenges and opportunities.
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GLOBAL
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REPORT
Including themes on global investment flows and Africa
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Global benchmark report 2014
2
GLOBAL BENCHMARK REPORT 2014
Published by the Confederation of Danish Industry
Edited by Kathrine Klitskov, Mathias Secher, Marie Gad,
Michael Meineche, Nanna Bøgesvang Olesen and Mads Dal Jørgensen
Printed by Zeuner Grafisk as
ISSN: 1901-6948
1000.3.14
GLOBAL BENCHMARK REPORT 2014 – FOREWORD
FOREWORD
Businesses across the EU are beginning to see signs that a badly needed confidence
is returning to the economy as an indication that the European economy could return
to moderate growth in 2014. But the situation remains fragile. In order for Europe to
emerge stronger from the financial crisis and restore long-term growth, we need to
do much more to strengthen the fundamental determinants of competitiveness. We
need a reduction of financial, trade and labour market imbalances in all the European
countries in order to build a strong foundation for future growth. And we must be much
better at combining national and European reforms so they become mutually reinforcing. A continued focus on fiscal consolidation and growth enhancing structural reforms
is key to improving Europe’s international competitiveness, growth and employment
prospects.
With its rich data and insightful assessments, DI’s Global Benchmark Report provides
a useful overview of the national policies that ultimately determine Europe’s overall
competitiveness. It can help each and every European member state to identify its
strengths and weaknesses in facing international competition.
BUSINESSEUROPE strongly supports this continued effort to provide facts and figures
for a fruitful dialogue on best practices. The DI Global Benchmark Report complements our own annual European Reform Barometer. We hope both publications can
inform and inspire policymakers to work on the difficult task of designing and implementing policies that will support businesses in their efforts to make the best of the opportunities presented by global markets and help return the EU economy to stronger
growth and full employment.
March 2014
Markus J. Beyrer
Director General, BUSINESSEUROPE
3
4
GLOBAL BENCHMARK REPORT 2014
GLOBAL BENCHMARK REPORT 2014 – PREFACE
PREFACE
Economic recovery in the wake of the financial crisis is slow and uneven. Forecasts predict
some acceleration of growth in 2014 and 2015, though still hesitant. However, we have yet
to realise these expectations. In the current context, governments must avoid complacency in preparing nations for the future economic landscape. Clear and credible strategies
are needed to make the growth path irreversible and sustainable. These strategies require
a strong commitment to long overdue structural reforms. It is DI’s intention that policymakers and business leaders can make use of the Global Benchmark Report to identify
strengths and weaknesses of their nations and apply these insights in the pursuit of creating open and prosperous nations capable of creating and sustaining growing economies in
balanced societies.
The Global Benchmark Report 2014 is the tenth in a series of reports presenting DI’s annual assessment of how the global challenge is met in the OECD member states. Across five
pillars comprising level of globalisation, productivity and innovation, qualified labour, public
economy and costs, each nation is benchmarked on the basis of 87 indicators that support
the common aspiration for growth and prosperity. The report provides a snapshot of each
country’s ability to develop attractive business environments and seize opportunities presented by globalisation.
The conditions for doing business in the global economy are constantly changing – presenting new challenges and opportunities. Therefore, the two theme chapters of the Global
Benchmark Report address how to make the most of these challenges and opportunities.
The first theme chapter focuses on the struggle to attract foreign direct investment, an issue
of growing concern in several OECD member states. Globalisation has increased foreign
direct investment flows and new, viable destinations for investment have emerged putting
pressure on the business and investment climates in several OECD countries. Foreign direct investment introduces new technologies and offers something unique in terms of innovation and productivity. It is vital to continually improve conditions that attract and retain
foreign companies.
The second theme chapter highlights opportunities of tapping into the vast and growing
African market and emphasises the major development results that can be achieved from
combining aid and trade promotion.
March 2014
Karsten Dybvad
CEO, Confederation of Danish Industry (DI)
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GLOBAL BENCHMARK REPORT 2014
GLOBAL BENCHMARK REPORT 2014 – CONTENT
CONTENT
9
Performance in the global arena
18 Benchmarking
20 Level of globalisation
30 Productivity and innovation
46 Qualified labour
62 Public economy
70 Costs
78
Theme chapters
80 New trends in global investment flows
96 Africa: Open for business
123
Methodology, definitions and sources
127
Description of sources
131
Summary of benchmarks
137
Index to benchmarks
7
GROWTH
Seizing opportunities presented by globalisation
Pillars
Developing high productivity and innovation
Having access to qualified and motivated labour
Sustaining a balanced and efficient public sector
Maintaining a competitive cost level
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
9
PERFORMANCE IN
THE GLOBAL ARENA
For the tenth consecutive year, the Global Benchmark Report examines how the
global challenge is met in the OECD member states. The report highlights strengths
and weaknesses of each OECD member state in facing international competition
and gives a picture of each country’s ability to develop attractive business environments and utilise the opportunities presented by globalisation. The Global Benchmark Report is an annually recurring publication intended as a benchmarking tool
for business leaders and policymakers to identify obstacles and opportunities presented in the global business arena.
This year, the report also includes two chapters on “New trends in global investment flows” and "Africa: Open for business". The first theme chapter focuses on
the struggle of attracting companies and their investment, an issue of growing concern in several OECD member states. Foreign investment introduces new technologies and offers something unique in terms of innovation and productivity. The second chapter highlights opportunities of tapping into the vast and growing African
market and emphasizes the major development results that can be achieved from
combining aid and trade promotion.
International benchmarking
The report compares the performance of 33 OECD member states and their business environments. When possible, data from Brazil, Russia, India and China is
included. The report is based upon five fundamental pillars of competitiveness. Together these five pillars constitute the foundation for creating open and prosperous
nations capable of creating and sustaining growing economies in balanced societies. Thus, the comparison is based on 87 benchmarks divided into Level of globalisation, Productivity and innovation, Qualified labour, Public economy and Costs.
Level of
globalisation
Productivity and
innovation
Qualified
labour
Public
economy
87 benchmarks
Costs
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
10
An agenda for growth
Optimism is carefully returning to the global economy creating a slow recovery in
business confidence and economic activity. However, the recovery remains precarious. Macroeconomic policies are under acute pressure in several OECD countries
that still face many challenges including low growth, high fiscal deficits, high debt
and high unemployment. For the OECD member states, success across the five pillars that form the basis of this report is a prerequisite for future growth and prosperity.
Again, Chile excels as the OECD country with the highest average GDP growth in
the period 2009-2013. The Eurozone has been especially challenged by economic
decline over the past five years. Among the BRIC nations, China and India have recorded remarkable growth in spite of the global crisis.
GDP growth, 2009-2013 (average)
EUROZONE
OECD
Chile
Turkey
Israel
South Korea
Poland
Australia
Mexico
New Zealand
Canada
Sweden
United States
Switzerland
Slovak Republic
Norway
Germany
Estonia
Austria
Japan
Belgium
France
United Kingdom
Czech Republic
Denmark
Netherlands
Finland
Hungary
Iceland
Ireland
Spain
Portugal
Italy
Slovenia
Greece
China
India
Brazil
Russia
-6
-4
Source OECD Economic Outlook No. 94 and DI calculations
Behind the benchmark
-2
0
2
4
6
8
10
Per cent
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
GDP per capita, Purchasing power parity, 2013
EUROZONE
11
OECD
Norway
United States
Switzerland
Canada
Australia
Austria
Netherlands
Ireland
Sweden
Iceland
Germany
Belgium
Denmark
United Kingdom
Japan
Finland
France
Israel
South Korea
New Zealand
Spain
Italy
Slovenia
Czech Republic
Slovak Republic
Greece
Portugal
Estonia
Poland
Hungary
Chile
Mexico
Turkey
Russia
Brazil
China
India
0
10,000
20,000
30,000
40,000
50,000
60,000 USD
Source IMF, World Economic Outlook October 2013
Behind the benchmark
The most prosperous members of the OECD continue to be Norway, United States
and Switzerland. The Norwegian first place ranking is mainly due to the country's
major oil production. Despite high growth for several years, the BRIC countries still
have low per capita GDP.
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
12
Competitiveness index of the Global Benchmark Report 2014
Based on a competitiveness index, the Global Benchmark Report provides an overview of how the OECD countries are ranked in terms of competitiveness – and
not only within the single pillars. This comprehensive index captures results from
benchmarks divided across the five pillars of national competitiveness.
Competitiveness index of the Global Benchmark Report, 2014
Average rank of OECD countries across all five pillars* in the Global Benchmark Report
Switzerland
South Korea
Sweden
Ireland
Canada
Chile
Australia
Estonia
United States
Netherlands
United Kingdom
Finland
Denmark
New Zealand
Germany
Israel
Norway
Iceland
Austria
Czech Republic
Japan
Poland
Slovak Republic
Belgium
Portugal
Hungary
Spain
France
Slovenia
Turkey
Mexico
Greece
Italy
* All pillars have equal weights
1
2
2
4
5
6
7
8
8
10
10
12
13
14
15
16
16
18
19
19
21
21
23
24
25
26
27
28
29
29
31
32
33
(1)
(2)
(3)
(8)
(4)
(7)
(5)
(13)
(9)
(6)
(15)
(12)
(10)
(17)
(11)
(19)
(18)
(14)
(16)
(21)
(20)
(23)
(22)
(26)
(24)
(28)
(24)
(30)
(28)
(27)
(31)
(32)
(33)
0
5
10
Note The numbers in the brackets indicate the countries’ ranks in the competitiveness index for 2013.
The coloured circle specifies if the country has either improved, worsened or kept its position.
15
20
25
30
The overall average ranks of countries (1-33)
Switzerland tops the competitiveness index yet again
Yet again, Switzerland wins the title as the most competitive OECD member state
based on the benchmarks in the Global Benchmark Report. Sweden and South Korea take the runner-up positions. Greece and Italy are placed at the bottom as the
least competitive OECD member states.
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
13
1. Level of globalisation
Several OECD member states are still struggling with weak domestic demand. Improved access to major international export markets can help countries tap into
global economic growth. The process of globalisation cultivates interaction between countries and increases international sales. In this first pillar, a nation's level
of globalisation is determined by the degree of global market involvement in terms
of exports, foreign direct investment, global mindset among citizens and businesses, and the extent of cultural openness, to mention a few. The members of the
OECD should strive to seize the opportunities offered by globalisation in order to
create future growth.
Ireland has the position as the OECD country with the highest Level of globalisation. The Irish lead is based on several top rankings including the largest share of
exports relative to GDP, highest freedom to trade internationally, efficient customs
authorities, highest cultural openness, and a population with the most positive attitude towards globalisation. Chile ranks second.
Ireland no. 1
in Level of globalisation
2. Productivity and innovation
The stage of development varies across the OECD, and so does the specific need
for development in productivity and innovation. The most advanced countries
strongly rely on the design and development of cutting-edge innovations in order to
maintain their competitive advantage. Countries less advanced can still reap benefits from adopting existing technologies. This pillar measures a nation's level of
productivity and innovation by addressing labour productivity, investment activity,
the institutional environment and infrastructure. The goal is for each OECD country
to develop high productivity and product quality.
Switzerland excels with the highest levels of Productivity and innovation. The country has particularly strong university/industry research collaboration and is leading
in both patent applications and innovation performance. Switzerland has been successful in attracting several businesses in sectors with high patent activity. Finally,
Switzerland has the most widespread use of fixed broadband subscriptions and is
one of the most energy efficient countries in the OECD. Sweden is the runner-up.
Switzerland no. 1
in Productivity
and innovation
3. Qualified labour
A well-educated workforce contributes significantly to a nation's economic value
creation through productivity and business innovation. It is therefore of paramount
importance that the business conditions of society support education and R&D and
that businesses have access to employees with the desired competences. In this
pillar, the availability of qualified labour in the OECD member states is determined
by measuring investment in education, levels of educational attainment, business
conditions provided by society, and labour market participation.
Canada tops the Qualified labour pillar with a highly educated population and
strong focus on tertiary education. Furthermore, Canadian senior managers assess
that the country's legislation on equal opportunities supports economic growth.
Switzerland and South Korea together rank second with a series of solid performances.
Canada no. 1
in Qualified labour
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
14
4. Public economy
Among other lessons, the financial crisis and the following European debt crisis
have taught the world the importance of monitoring the health of a country's public sector. A country's economic robustness is dependent not only on a strong and
thriving private sector but also an efficient and balanced public sector. Therefore,
among other indicators, this fourth pillar assesses budget balance, public debt,
public expenditure, and corruption levels.
Switzerland no. 1
in Public economy
Switzerland excels as the OECD member with the best average ranking in Public
economy. The country has the lowest public expenditure as a proportion of GDP.
Additionally, Switzerland is one of the only OECD member states with a structural
surplus on its public budgets, and the Swiss public sector is among the smallest in
OECD. South Korea is the runner-up.
5. Costs
The final pillar of the Global Benchmark Report is Costs. The competitiveness of
businesses in a global economy depends on whether productivity and the quality of
the product offset the costs of production. Production costs and taxes are therefore
important indicators of competitiveness. In this pillar, the level of costs in the OECD
countries is determined by benchmarks that measure taxes, consumer prices and
compensation costs. Maintaining a competitive cost level is the fifth and final component of creating growth.
Switzerland no. 1
in Costs
Switzerland is the most competitive country in terms of Costs. This rank is earned
as a result of low marginal tax rates for especially medium wage earners and low
inflation. Furthermore, Swiss businesses have easy access to capital markets, and
this minimises financial costs and helps to stimulate economic growth. Chile holds
second place.
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
15
New trends in global investment flows
For the first time ever, in 2012 less foreign direct investment (FDI) went to OECD
member states than to the world’s other countries. The distinct shift is a natural consequence of the fact that, for many years, an increasing proportion of the
world’s FDI has sidestepped the OECD. Most of the capital, however, still comes
from the OECD, and as a result, many OECD countries have developed a gap between their outward and inward FDI with outbound FDI increasingly exceeding inbound FDI.
Many OECD member states
have developed a gap in FDI
The trend is particularly evident in EU-15, where the gap has nearly tripled in the
past decade and currently constitutes 15 per cent of the countries’ overall GDP. Although many countries have experienced this development, the scope varies greatly as well as the underlying reasons for the development of the investment gap.
The situation is particularly problematic for countries experiencing a declining inflow since FDI can raise both employment and productivity wherever it occurs. It is
therefore important for all countries to be able to attract FDI.
In general, the pattern of the global FDI flows indicates that several affluent OECD
member states have difficulties attracting and maintaining businesses and jobs.
However, it is possible to reverse the trend and increase a country’s attractiveness
as a FDI destination. This involves reducing administrative burdens, better interaction between private and public investment, and enhanced direct financial incentives to invest.
The FDI gap has grown significantly in EU-15
EU-15 outward FDI stock less inward FDI stock
Per cent of GDP
18
16
14
12
10
8
6
4
2
0
Source OECD and DI
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
16
Africa: Open for business
Potential for European
companies in Africa
Over the past decade, Africa has developed from being an extremely poor continent with dark prospects for the future to becoming the region with the highest
growth rates in the world. This provides a potential for European companies, but
also affects Europe’s involvement as an aid donor and trade partner for Africa.
The high African growth rates are thanks to a strong increase in inward foreign direct investment and major demand for African raw materials from growth countries
such as China, India and Turkey.
Contributing directly to the growth and attracting FDI, the African consumer has
become a significant player. African consumers demand a wealth of new products
and services and often pay for them through their mobile telephones. This generates business opportunities that many companies have gradually spotted.
Business conditions have also improved significantly in the African countries. Some
countries are even competing to implement most business-friendly reforms in order to be attractive for FDI. It is, however, important to realise that there are major
differences across the continent. Not all countries have been able to achieve skyhigh growth rates, and a group of African countries are still dominating the bottom
of all kinds of ranking from corruption to education.
Some European countries have had strong trade relations with Africa over many
years, and the EU is still Africa’s greatest trading partner. There are, however, major
differences as to how much the individual countries trade with Africa, and it is particularly the EU-15 member states that have high trade with Africa while the new
member states are lagging behind.
At the same time, several donor countries and African partner countries have
spotted the advantages of co-thinking aid and trade cooperation and in this way
achieved synergic effects between public development aid and private investment.
Historically, as Africa’s largest donor, the EU has placed the highest priority on oth-
Africa will be world champion in economic growth in the next five years
Expected average annual GDP growth, 2013-2018
Sub-Saharan Africa
Africa
Asia
* G7 are Canada, France,
Germany, Italy, Japan,
UK and USA.
Note Africa includes Northern
Africa
Source IMF, World Economic
Outlook, Database, October 2013
Middle East
Central and Eastern Europe
G7*
0
1
2
3
4
5
6 Per cent
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
er types of aid that aid with focus on job creation and growth. There are signs,
however, that in future the EU will place greater emphasis on industrialisation and
private sector development with focus on job creation. The chapter ends with a
number of recommendations for how the development aid can be structured so
that it harmonises most efficiently with the activities of businesses with a view to
optimising both development and business effects.
17
GLOBAL BENCHMARK REPORT 2014 – X X X X
Global Benchmark Report
GLOBAL BENCHMARK REPORT 2014 – X X X
1.00 Level of globalisation
Average ranks of countries
Ireland
Chile
Switzerland
Sweden
Netherlands
Estonia
Israel
United Kingdom
Belgium
Australia
Austria
Denmark
South Korea
Germany
Hungary
United States
Canada
New Zealand
Finland
Portugal
Mexico
Iceland
Czech Republic
Norway
Turkey
Slovak Republic
Poland
Spain
Slovenia
France
Japan
Italy
Greece
1
2
3
4
5
6
7
8
9
10
11
11
13
14
15
16
17
18
19
19
21
22
23
23
25
26
27
28
29
30
31
32
33
Ireland tops the list in
terms of average ranking in
the benchmarks for Level
of globalisation.
(1)
(2)
(3)
(5)
(4)
(7)
(6)
(8)
(10)
(12)
(14)
(9)
(11)
(13)
(18)
(16)
(15)
(21)
(19)
(20)
(23)
(17)
(29)
(22)
(26)
(27)
(24)
(25)
(28)
(30)
(31)
(32)
(33)
0
5
10
15
20
25
30
The average ranks of countries
in the Level of globalisation pillar
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
21
LEVEL OF GLOBALISATION
Several OECD countries are still struggling with weak domestic demand.
Improved access to major international export markets can help countries
tap into global economic growth. The process of globalisation cultivates interaction between countries and increases international sales. In order to
take advantage of the many new opportunities presented by globalisation,
great demands are placed on the global outlook of citizens, companies and
policy makers. A positive attitude towards globalisation and openness towards foreign ideas and cultures are prerequisites for success.
The top three countries in Level of globalisation, Ireland, Chile and Switzerland, have
retained the same positions as last year.
Ireland is the OECD country with the highest rank in Level of globalisation. The Irish
lead is based on several top rankings including the largest share of exports relative to
GDP, highest degree of freedom to trade internationally, efficient customs authorities,
highest degree of cultural openness and a population with the most positive attitude
towards globalisation.
Chile is second with a series of solid performances. The country has the most positive
image abroad and excels in terms of both attracting foreign investments and investing
abroad.
Switzerland ranks third. The country has the highest share of upmarket exports to
EU15, Swiss senior managers have the highest degree of international experience and,
additionally, Switzerland is a major investor abroad.
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
22
1.01 Growth in exports, 2009-2013 (average)
EUROZONE
OECD
Estonia
South Korea
Slovak Republic
Turkey
Mexico
Poland
Australia
Czech Republic
Iceland
Spain
United States
Portugal
Hungary
Germany
New Zealand
Netherlands
Israel
Ireland
Switzerland
United Kingdom
France
Belgium
Austria
Sweden
Slovenia
Italy
Canada
Denmark
Japan
Norway
Finland
Greece
Export growth is an expression of
how successful countries are at
converting international business
opportunities into increased sales.
As a consequence of the financial
crisis, many countries have experienced major export setbacks, and
this decline is only slowly recuperated.
Estonia, South Korea and the Slovak
Republic top this benchmark.
China
India
Brazil
Behind the benchmark
Source OECD Economic Outlook No. 94 and
DI calculations
-4
-2
0
2
4
6
8
10
Average annual real growth in per cent
1.02 Exports as a percentage of GDP, 2013
OECD
EUROZONE
A country’s export percentage indicates to which degree the country
participates in the international division of labour. Small countries typically have a higher export percentage than large countries because
the domestic market is too small
to support a highly specialised production.
Ireland
Slovak Republic
Hungary
Estonia
Netherlands
Belgium
Czech Republic
Slovenia
Iceland
Austria
South Korea
Denmark
Switzerland
Germany
Poland
Sweden
Portugal
Finland
Norway
Spain
Israel
Mexico
United Kingdom
Italy
Canada
Greece
New Zealand
France
Turkey
Australia
Japan
United States
Behind the benchmark
Ireland continues to be the country with the largest export as a percentage of GDP. Ireland is followed
by the Slovak Republic and Hungary. Ireland has been able to attract
international companies that sell a
large proportion of their production
outside the Irish domestic market.
Note Exports should be viewed in relation to
total production, but in international comparisons it is often most practical to use GDP
(production adjusted for product taxes and
consumption in production).
Source OECD Economic Outlook No. 94 and
DI calculations
0
20
40
60
80
100
120
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
23
1.03 Export performance, 2009-2013 (average)
EUROZONE OECD
Poland
Israel
Slovak Republic
Iceland
Estonia
Hungary
Turkey
Mexico
Portugal
South Korea
Germany
Czech Republic
Switzerland
Spain
Slovenia
United States
Ireland
Sweden
United Kingdom
Netherlands
Chile
Denmark
Austria
New Zealand
Australia
Greece
France
Italy
Canada
Norway
Finland
Belgium
Japan
Export performance indicates
whether a country’s exports increase
more or less than the general import
growth on the export markets.
Positive values indicate that market
shares are won abroad while negative values mean loss of market
shares. If exports are parallel with
imports on the export markets, the
country’s export performance will
equal zero.
Poland is the top scorer this year
with exports in the period 20092013 that have developed significantly faster than the imports of its
export markets.
India and China stand out among
the BRIC countries. For several
years, they have both won market
shares to a much higher degree than
all the OECD countries.
India
China
Russia
Brazil
Behind the benchmark
Source OECD Economic Outlook No. 94 and
DI calculations
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
Export index divided by market index
1.04 Upmarket exports to EU15, 2008-2012 (average)
EUROZONE
OECD
Switzerland
Japan
Ireland
United States
Israel
Australia
Canada
Denmark
Austria
Mexico
Sweden
South Korea
Estonia
United Kingdom
New Zealand
Hungary
Czech Republic
Slovak Republic
Germany
Netherlands
Italy
Portugal
Belgium
Slovenia
Greece
France
Finland
Turkey
Spain
Poland
Iceland
Chile
Norway
Companies in high-cost countries
often focus on upmarket products
which, due to their quality, design
or service concept, are able to earn
a higher price than corresponding
products from other countries.
85 per cent of Swiss exports to the
EU15 are upmarket products, and
this again earns Switzerland a clear
first place, with Japan and Ireland
taking the two following rankings.
Note Upmarket exports are defined as
exported products that achieve a price at
least 15 per cent higher than the average
price for the product in the EU15 states.
India
Brazil
China
Russia
Behind the benchmark
Source Eurostat and DI calculations
0
10
20
30
40
50
60
70
80
90
Per cent of total exports of goods
to EU15
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
24
1.05 Exports to emerging markets (non-OECD countries), 2012
EUROZONE
OECD
South Korea
Japan
Australia
Turkey
Chile
New Zealand
Greece
Estonia
United States
Israel
Finland
Italy (2011)
Slovenia
France
United Kingdom
Switzerland
Germany
Spain
Hungary
Portugal
Poland
Sweden
Austria
Denmark
Belgium
Netherlands
Iceland
Czech Republic
Slovak Republic
Canada
Mexico
Ireland
Norway
Behind the benchmark
Several markets outside the OECD,
including the BRIC markets, have
a high export potential due to the
size of their populations, increasing
middle classes and economic growth
potential. A positive development is
closely linked to the ability to reach
these markets.
South Korea, Japan and Australia
are once again at the top. This
should be viewed in the light of their
proximity to high-growth markets in
Asia, particularly China.
Note Data only includes goods exports.
Source OECD.Stat and DI calculations
0
10
20
30
40
50
60
70
Per cent of total exports of goods
1.06 Foreign direct investment holdings as a percentage of GDP, 2012
OECD
EUROZONE
Belgium
Ireland
Switzerland
Iceland
Estonia
Hungary
Chile
Netherlands
Sweden
Czech Republic
Slovak Republic
Portugal
United Kingdom
New Zealand
Denmark
Poland
Spain (2011)
France
Austria
Australia
Norway
Finland (2010)
Canada (2011)
Slovenia
Israel (2011)
Mexico
United States (2011)
Turkey
Germany
Italy
Greece
South Korea
Japan (2011)
Globalisation is characterised by increasing investment across national borders. This development should
be viewed in the light of a wish to
strengthen ties with foreign customers and benefit from favourable production conditions in other parts of
the world.
The holdings of foreign direct investment indicate the attractiveness of a
country’s general business conditions
such as taxes, access to raw materials, wages and level of education.
Belgium is the OECD country where
FDI holdings take up the greatest
share of the economy. Ireland and
Switzerland come next.
Brazil
Russia
India (2009)
China
Behind the benchmark
Source UNCTAD
0
50
100
150
200
250
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
25
1.07 Direct investment holdings abroad as a percentage of GDP, 2012
OECD
EUROZONE
Belgium
Switzerland
Ireland
Netherlands
Sweden
Iceland
United Kingdom
Denmark
France
Finland
Austria
Spain
Germany
Norway
Canada
Chile
Portugal
United States
Israel
Italy
Hungary
Australia
Estonia
Japan
Slovenia
Greece
South Korea
Poland
Mexico
New Zealand
Czech Republic
Slovak Republic
Turkey
Direct investment abroad is an indication that the country is an active
participant in the international division of labour. It can also, however,
be an indication that businesses
prefer to invest in countries other
than their own.
Belgium takes the lead regarding
investment abroad.
Russia
Brazil
India
China
Behind the benchmark
Source UNCTAD
0
50
100
150
200
250
Per cent of GDP
1.08 Foreign direct investments, inflow 2008-2012 (average)
OECD
EUROZONE
Belgium
Ireland
Chile
Estonia
Hungary
Iceland
Israel
Australia
Norway
Switzerland
Sweden
Czech Republic
United Kingdom
Poland
Portugal
Canada
Slovak Republic
Spain
Mexico
Turkey
Austria
New Zealand
United States
France
Netherlands
Slovenia
South Korea
Germany
Greece
Finland
Italy
Denmark
Japan
The ability to attract foreign investment is central for domestic companies in a globalised world economy
and vital for economic growth in
society. A high investment flow indicates that foreign investors anticipate a major growth potential.
Belgium has clearly recorded the
highest average inflow of FDI in
the past 5 years corresponding to
almost 18 per cent of GDP. Ireland
and Chile take the following two
places.
Russia
Brazil
India
China
Behind the benchmark
Source UNCTAD
0
5
10
15
20
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
26
1.09 Foreign direct investments, outflow 2008-2012 (average)
OECD
EUROZONE
Belgium
Switzerland
Ireland
Chile
Sweden
Netherlands
Norway
Austria
United Kingdom
Canada
France
Hungary
Finland
South Korea
Denmark
Germany
Israel
Estonia
United States
Spain
Italy
Japan
Australia
Mexico
Portugal
Poland
Czech Republic
Slovak Republic
Slovenia
Greece
Turkey
New Zealand
Iceland
Outflow of direct investment is
a sign that a country is an active
participant in the international
division of labour and aims to take
part in growth found outside of the
country. It can, however, also be a
sign that companies prefer to invest
abroad rather than in their own
country.
Belgium has the largest outflow
of direct investment followed by
Switzerland and Ireland.
Russia
China
India
Brazil
Source UNCTAD
Behind the benchmark -10
-5
0
5
10
15
Per cent of GDP
1.10 Direct investment holding in emerging markets, 2012
EUROZONE
OECD
Mexico (2011)
Slovenia
Chile
Estonia
Greece
Korea
Hungary
Turkey
Japan
Norway
Austria
Switzerland
United States
Israel (2011)
Canada
Australia (2011)
Ireland
Poland
Portugal
United Kingdom
Spain
Italy
Czech Republic
Slovak Republic
New Zealand
Denmark
Netherlands
Germany (2011)
Belgium
France
Sweden
Finland
Iceland
Behind the benchmark
An increasing share of direct investments takes place in markets outside the OECD. Such investments
can be explained by low production
costs, but another important goal
is to get hold of a share of the high
growth in several of these markets.
Mexico has the greatest share of its
direct investment holding in emerging markets. Slovenia and Chile are
runners-up.
Note Emerging markets are markets outside
the OECD.
Source OECD.Stat and DI calculations
0
20
40
60
80
100
Per cent of total investments
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
27
1.11 Freedom to trade internationally, 2011
OECD
EUROZONE
Ireland
United Kingdom
New Zealand
Netherlands
Finland
Estonia
Denmark
Chile
Belgium
Portugal
Slovak Republic
Sweden
France
Israel
Germany
Austria
Spain
Italy
Hungary
Czech Republic
United States
Australia
Canada
South Korea
Greece
Slovenia
Poland
Norway
Turkey
Switzerland
Japan
Mexico
Iceland
Cato’s index for international freedom of trade measures the degree
to which general business conditions
in the country support internationalisation and the export and import
activities of companies. The index
focuses on aspects such as customs barriers and other trade barriers, as well as barriers to foreign
investment.
Freedom to trade creates a broader
sales potential for companies. In
addition, the freedom to trade contributes to stimulating competitiveness due to the presence of foreign
goods and services.
Ireland takes first place closely followed by the United Kingdom and
New Zealand.
Brazil
China
India
Russia
Behind the benchmark
Note High values indicate few barriers for
international trade and FDI.
Source Cato Institute, Economic Freedom
of the World, 2013
0
1
2
3
4
5
6
7
8
9
10
Index 0 -10
1.12 Efficient customs authorities, 2013
EUROZONE OECD
Sweden
Ireland
Finland
New Zealand
Norway
Denmark
Austria
Netherlands
Germany
United Kingdom
Australia
Switzerland
Belgium
Canada
United States
Chile
Estonia
Slovenia
Japan
South Korea
France
Spain
Czech Republic
Israel
Portugal
Iceland
Hungary
Turkey
Italy
Mexico
Greece
Slovak Republic
Poland
Efficient customs authorities ensure
smooth trade across national
borders and are a vital
China
India
Russia
Brazil
Note High values indicate that local senior
managers find the country’s customs authorities efficient.
Behind the benchmark
precondition for international
business activities. In a period of
increasing digitalisation and growing
numbers of IT-based reporting
systems, it is important that these
work optimally and do not constitute
a barrier for imports and exports.
Sweden has conquered the top rank
followed by Ireland and Finland.
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0 -10
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
28
1.13 Attitudes toward globalisation, 2013
OECD
EUROZONE
Ireland
Sweden
Israel
Denmark
Chile
Netherlands
Australia
Turkey
Mexico
Finland
South Korea
Norway
Switzerland
Germany
Iceland
Canada
United Kingdom
Japan
United States
Portugal
Italy
Estonia
Czech Republic
New Zealand
Belgium
Slovak Republic
Austria
Greece
Spain
Slovenia
Poland
France
Hungary
A positive attitude to globalisation in
society helps to promote the ability
of businesses to benefit from the
opportunities of globalisation and
continuously adapt to the changes
needed in international competition.
Ireland, Sweden and Israel hold the
top 3 positions in that order.
Note This benchmark indicates the degree
to which local senior managers assess that
there is a positive attitude to globalisation
in society.
India
China
Brazil
Russia
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0 -10
1.14 Cultural openness, 2013
EUROZONE
OECD
Ireland
Sweden
Israel
Netherlands
Canada
Australia
Portugal
Chile
New Zealand
United Kingdom
Denmark
Belgium
United States
Poland
Mexico
Turkey
Austria
Spain
Switzerland
Norway
Germany
Iceland
Italy
Finland
Greece
Czech Republic
South Korea
Slovak Republic
Estonia
Japan
Hungary
France
Slovenia
Globalisation gives companies access
to new partners across the globe.
Therefore, adaptation and acceptance of foreign ideas and cultures are
important in order to take an active
part in globalisation and exploit its
benefits. This applies for instance to
the ability to attract foreign investment and highly skilled workers.
Ireland is once again in first place.
China, Brazil and India have a high
degree of openness – at a level with
the best OECD countries.
Note This benchmark indicates the degree
to which local senior managers assess that
society is open to foreign ideas.
China
Brazil
India
Russia
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0 -10
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
29
1.15 International experience for senior managers, 2013
OECD
EUROZONE
Switzerland
Sweden
Poland
Netherlands
Ireland
Germany
Belgium
Finland
Mexico
Austria
Denmark
Israel
Hungary
United Kingdom
Chile
United States
Turkey
Canada
Greece
Norway
Czech Republic
Australia
France
South Korea
New Zealand
Slovak Republic
Italy
Iceland
Estonia
Portugal
Slovenia
Spain
Japan
A high degree of international experience of senior managers is vital
when strategic decisions have to be
made on global issues, and when
employees across national borders
have to be managed as efficiently as
possible.
Brazil
India
China
Russia
Note A high value indicates that senior
managers generally have major international
experience.
Behind the benchmark
Switzerland is still number one in
this benchmark. The country is
headquarters of many global corporations and organisations, and
is characterised by an attractive
business environment, including
a favourable tax system for highly
educated people.
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0 -10
1.16 Image abroad, 2013
OECD
EUROZONE
Chile
Germany
Sweden
South Korea
Switzerland
Canada
Austria
Australia
Ireland
New Zealand
Netherlands
Denmark
United States
Japan
Finland
Norway
United Kingdom
Estonia
Turkey
Iceland
Czech Republic
Slovak Republic
Israel
Belgium
Slovenia
Italy
Mexico
France
Spain
Portugal
Poland
Greece
Hungary
A positive image abroad can help to
promote exports and international
relations and contribute to attracting
investment to the country. A country's image abroad is affected by many
different factors including sports
performances, tourist attractions,
major events, business strengths and
the international commitment of the
country.
Chile, Germany and Sweden top the
benchmark this year.
Note This benchmark shows to which degree
local senior managers assess that the image
abroad of their country helps to promote
international business developments.
Brazil
China
India
Russia
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0 -10
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
30
2.00 Productivity and innovation
Average ranks of countries
Switzerland
Sweden
Netherlands
United States
Finland
Denmark
Australia
Ireland
Canada
United Kingdom
Iceland
Germany
South Korea
Norway
Japan
Belgium
New Zealand
Austria
France
Estonia
Israel
Portugal
Spain
Czech Republic
Chile
Slovenia
Poland
Hungary
Turkey
Slovak Republic
Italy
Mexico
Greece
1
2
3
3
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
25
27
28
29
30
31
32
33
Switzerland is most
successful in terms of average
ranking in benchmarks for
Productivity and innovation.
(1)
(2)
(3)
(5)
(9)
(6)
(4)
(10)
(8)
(11)
(7)
(12)
(13)
(14)
(17)
(16)
(19)
(15)
(18)
(20)
(21)
(22)
(23)
(24)
(25)
(26)
(27)
(27)
(29)
(29)
(31)
(32)
(33)
0
5
10
15
20
25
30
The average ranks of countries
in the Productivity and innovation
pillar
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
31
PRODUCTIVITY AND INNOVATION
The level of development varies across the OECD, and so does the specific
need for development in the areas of productivity and innovation. The most
advanced countries are strongly reliant on the design and development of
cutting-edge innovations in order to maintain their competitive advantage.
Countries less advanced can still reap benefits from adopting existing technologies. Developing a country's level of productivity and innovation includes prioritizing investment in research and development, taking out patents and facilitating entrepreneurship.
Switzerland excels as the country with the highest levels of Productivity and innovation. The country has particularly strong university/industry research collaboration
and is leading in both patent applications and innovation performance. Switzerland
has been successful in attracting businesses in sectors with high patent activity. Finally, Switzerland has the most widespread use of fixed broadband subscriptions and is
one of the most energy efficient countries in the OECD.
Sweden is the runner-up in Productivity and innovation, and good rankings include
high patent activity including European patent applications and triadic patent families. The country also has a high level of innovation performance.
The Netherlands earns third place as a result of the high quality of infrastructure, efficient supply of electricity, and a large number of fixed broadband subscribers.
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
32
2.01 Investments as a percentage of GDP, 2013
EUROZONE
OECD
Australia
Estonia
South Korea
Norway
Chile
Canada
Mexico
Czech Republic
Austria
Belgium
Switzerland
Japan
New Zealand
Poland
Turkey
France
United States
Finland
Sweden
Israel
Slovak Republic
Spain
Germany
Italy
Denmark
Hungary
Slovenia
Netherlands
Portugal
United Kingdom
Iceland
Greece
Ireland
Investment is an important driving
force behind productivity gains and
growth. Many factors are involved in
the level of investment in the various
countries, including economic development, access to financing and general business conditions.
Investment in new equipment, means
of transport, buildings and information technology makes production
more efficient. Investment in research
and innovation supports the development of new products while investment in infrastructure and energy supply provides more efficient conditions
for businesses.
Australia takes the lead with investments corresponding to almost a third
of the country's GDP. Far ahead of
both the OECD countries and the other BRIC countries, China has an impressive investment share of almost
50 per cent of GDP.
Note Investment covers private sector investment, public sector investment and housing
investment.
China
India
Russia
Brazil
Behind the benchmark
Source IMF, World Economic Outlook
October 2013
0
10
20
30
40
50
Per cent
2.02 Public sector investments as percentage of GDP, 2011
EUROZONE
OECD
Public sector investment can
contribute to enhancing growth in
the private sector. Investment in
infrastructure and information technology, for example, may contribute
to increased mobility, flexibility and
productivity.
Poland
South Korea
Estonia
Czech Republic
Slovenia
Sweden
Poland, South Korea and Estonia
have the highest proportions of
public investment in relation to GDP
among the OECD countries.
Netherlands
Japan
Norway
Comparisons of public sector investment across countries are influenced by the fact that some countries have developed the public
sector at a much earlier stage than
others, and currently do not need
investment at the same scale.
Furthermore, the definition of public
investment differs among the countries suggesting cautious interpretation of the figure.
Hungary
France
Spain
Portugal
Ireland
Finland
Slovak Republic
Switzerland
Denmark
Italy
Iceland
Israel
Belgium
Germany
Greece
Austria
Russia (2009)
Behind the benchmark
Source IMF, World Economic Outlook
October 2013
0
1
2
3
4
5
6
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
33
2.03 Labour productivity, 2013
EUROZONE OECD
Norway
United States
Belgium
Netherlands
France
Germany
Ireland
Australia
Sweden
Austria
Denmark
United Kingdom
Canada
Iceland
Switzerland
Spain
Japan
Finland
Italy
New Zealand
Slovenia
Israel
Slovak Republic
Greece
South Korea
Czech Republic
Portugal
Poland
Hungary
Estonia
Turkey
Mexico
Chile
Wealth creation in a society is closely connected with labour productivity.
Brazil
Source The Conference Board Total Economy
Database, January 2014
Behind the benchmark
Norway tops the list with the highest
productivity per working hour.
Norway’s considerable production
per working hour is particularly
ascribed to oil and therefore less a
reflection of labour productivity on
the Norwegian mainland. The
United States, Belgium and the
Netherlands are runners-up with
labour productivity significantly above the OECD average. This
shows that these countries are
capable of generating high pros
perity per working hour.
0
10
20
30
40
50
60
70
80
USD per working hour (PPP)
2.04 Growth in labour productivity, 2009-2013 (average)
EUROZONE
OECD
Poland
Ireland
South Korea
Estonia
Spain
Japan
Slovak Republic
New Zealand
Australia
United States
Mexico
Iceland
Denmark
Portugal
Sweden
Canada
Chile
Norway
France
Austria
Germany
Turkey
Belgium
Finland
Italy
Switzerland
Hungary
Czech Republic
Israel
Netherlands
United Kingdom
Slovenia
Greece
Countries with a low level of productivity will often develop faster than
countries with a high productivity level because the aforementioned countries can more easily improve their
productivity through imports of modern capital equipment and reorganisation of their production structure.
Brazil
Source The Conference Board Total Economy
Database, January 2014
Behind the benchmark
Poland, Ireland and South Korea win
the three top ranks and, accordingly, have recorded the highest average
growth in labour productivity over the
past five years.
-3
-2
-1
0
1
2
3
4
Average annual growth in GDP
per working hour in per cent
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
34
2.05 Total research and development expenditure as a percentage of GDP, 2011
EUROZONE
OECD
Israel
South Korea
Finland
Japan
Sweden
Iceland (2009)
Denmark
Germany
Switzerland (2008)
United States
Austria
Slovenia
Estonia
France
Australia (2010)
Belgium
Netherlands (2010)
Czech Republic
United Kingdom
Canada
Ireland
Norway
Portugal
Spain
New Zealand
Italy
Hungary
Turkey
Poland
Slovak Republic
Mexico
Chile (2010)
Investment in research and development is a vital parameter in global
competition. This applies to private
as well as public investments.
For the fourth consecutive year,
Israel captures the top position with
slightly more than four per cent of
GDP invested in research and development. Several global companies have chosen to locate research
centres in Israel.
China
Russia
Behind the benchmark
Source OECD.Stat, Main Science and
Technology Indicators
0
1
2
3
4
5
Per cent of GDP
2.06 Public expenditure on research and development as a percentage of GDP, 2011
EUROZONE OECD
Iceland (2009)
Austria
South Korea
Finland
Sweden
United States
Denmark
Germany (2010)
France (2010)
Estonia
Slovenia
Norway
Netherlands (2009)
Portugal (2010)
Czech Republic
Canada (2010)
Israel (2009)
Spain (2010)
United Kingdom
Japan
New Zealand
Italy (2010)
Ireland
Belgium (2009)
Hungary
Poland
Slovak Republic
Mexico
Turkey
Chile (2010)
In order to ensure a high level of
knowledge in society, it is vital that
public funds for research and development have high priority.
Iceland holds the first place followed
by Austria and South Korea.
Note Countries with only older available data
(2009 and 2010) may have an unfairly high
ranking compared with countries with 2011
data due to the probability of cuts in R&D
budgets as a consequence of the financial
crisis.
Russia
China
Behind the benchmark 0.0
Source OECD.Stat, Main Science and
Technology Indicators
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
35
2.07 Quality of scientific research institutions, 2012-2013 (average)
EUROZONE
OECD
Israel
Switzerland
United Kingdom
Belgium
United States
Germany
Netherlands
Australia
Japan
Finland
France
Ireland
Sweden
Canada
Denmark
New Zealand
Portugal
Hungary
Norway
Austria
South Korea
Estonia
Czech Republic
Iceland
Slovenia
Spain
Italy
Chile
Mexico
Poland
Turkey
Slovak Republic
Grækenland
High quality in scientific institutions
is central to a high level of research
and makes it easier to attract foreign
students and scientists as well as
foreign investment in R&D.
Israel has the top rank this year.
Israel’s position has to do with its
massive investment in R&D in recent
years.
Note High index values indicate that senior
managers in the country assess that the local
scientific research institutions are among the
best in the world in their specific field.
India
China
Brazil
Russia
Behind the benchmark
Source WEF 2013-2014, survey
1
2
3
4
5
6
7
Index 1-7
2.08 University/industry research collaboration, 2012-2013 (average)
OECD
EUROZONE
Switzerland
Finland
United States
United Kingdom
Belgium
Israel
Germany
Sweden
Netherlands
Ireland
Norway
Australia
Japan
Canada
New Zealand
Denmark
Austria
Iceland
South Korea
Portugal
France
Czech Republic
Estonia
Chile
Hungary
Mexico
Spain
Turkey
Slovenia
Italy
Poland
Slovak Republic
Greece
Strong research collaboration between universities and industry is
essential in order to guarantee relevant research for both businesses
and society. It is also an important
path for the transfer of new knowledge between businesses and universities.
Switzerland takes the rank as number one followed by Finland and the
United States.
According to senior managers, these
countries have the best research collaboration between universities and
industry.
Note High index values indicate that senior
managers in the country assess that research
collaboration between universities and
industry is widespread.
China
India
Brazil
Russia
Behind the benchmark
Source WEF 2013-2014, survey
1
2
3
4
5
6
7
Index 1-7
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
36
2.09 European patent applications, 2012
OECD
EUROZONE
Switzerland
Sweden
Finland
Germany
Netherlands
Denmark
Austria
Japan
Belgium
France
Iceland
Israel
Ireland
South Korea
United States
Norway
United Kingdom
Canada
Italy
Slovenia
Australia
Spain
Estonia
New Zealand
Czech Republic
Hungary
Poland
Portugal
Greece
Slovak Republic
Turkey
Chile
Mexico
The number of European patent
applications is an indicator of the
degree to which companies in the
country perceive the European countries as key markets for their innovative products and processes.
Similar to previous years, Switzerland
is in a superior position ahead of all
other OECD countries with the highest number of patent applications
per million inhabitants. Switzerland
has attracted many businesses in the
most patent-active sectors, including the pharmaceutical industry. The
appeal is mainly due to the combination of low tax rates, researcher programmes, corporate law, infrastructure and location.
Note A European patent is achieved through
application to the European Patent Office
(EPO). Following submission of application,
the patents must be designated in the individual country at the national patent authorities. The figures here only indicate submission of applications to EPO and do not say
which EU member states were designated
afterwards.
China
Russia
Brazil
India
Behind the benchmark
Source European Patent Office, IMF, and DI
calculations
0
100
200
300
400
500
600
700
800
900
Applications per million inhabitants
2.10 Triadic patent families, 2011
EUROZONE
OECD
Japan
Switzerland
Sweden
Germany
Finland
Netherlands
Denmark
United States
Israel
Austria
South Korea
France
Belgium
United Kingdom
Norway
Ireland
Canada
Italy
Australia
New Zealand
Iceland
Spain
Slovenia
Hungary
Estonia
Czech Republic
Portugal
Slovak Republic
Greece
Chile
Poland
Turkey
Mexico
A triadic patent is a patent that is
taken out at the same time in the
United States, Japan and the EU.
The triadic patents are taken out to
ensure broad international protection in three of the world’s major
markets.
It should be noted that global companies increasingly also take out
patents in one or several BRIC countries and in other emerging markets.
Similar to preceding years, Japan,
Switzerland and Sweden top the list
of this type of patent. One of the
reasons is that all three countries
are knowledge societies with focus
on sectors with frequent patenting
such as the IT and telecom industry, the pharmaceutical industry and
high technology in general.
China
Russia
Brazil
India
Behind the benchmark
Source OECD.Stat, IMF World Economic
Outlook October 2013 and DI calculations
0
10
20
30
40
50
60
70
80
90
100
110
Patents per million inhabitants
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
37
2.11 Innovation performance, 2012
OECD EUROZONE
In a world of tough international
competition, the continual innovation and development of products,
processes and services are a precondition for creating growth and prosperity in society.
Switzerland
Sweden
Germany
Denmark
Finland
The European Innovation Scoreboard
tracks 25 socio-economic and
company-specific factors that are
central to the ability of companies to be innovative. These factors
include number of patents, innovation expenditure and the launch of
new products and services by small
companies.
Netherlands
Belgium
Iceland
United Kingdom
Austria
Ireland
Switzerland takes the innovation
prize again this year.
France
Slovenia
Estonia
Norway
Italy
Spain
Portugal
Czech Republic
Greece
Slovak Republic
Hungary
Poland
Turkey
Behind the benchmark
Source European Innovation Scoreboard,
Summary Innovation Index 2012
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Index 0-1
2.12 Growth expectations among entrepreneurs, 2012
EUROZONE
OECD
Turkey
Australia (2011)
Chile (2011)
Czech Republic (2011)
Estonia
South Korea
Iceland (2010)
Japan
Slovak Republic
Hungary
Ireland
Denmark
United Kingdom
United States
Poland
Portugal
Germany
France
Slovenia
Israel
Belgium
Mexico
Finland
Netherlands
Norway
Italy
Sweden
Switzerland
Greece
Austria
Spain
The most important job creation
takes place among small and, in
particular, newly established businesses. It is vital that entrepreneurs
are able to grow and develop their
enterprises. The entrepreneurs’ own
expectations for their growth are an
indication of their future situation.
Since growth expectations often
work as a mental benchmark for
the individual entrepreneur, there
is often close correlation between
expectations and reality.
Turkey holds first place with the
highest growth expectations among
the country's entrepreneurs.
Note The share of entrepreneurs who expect
to take on at least five new employees in the
next five years. Entrepreneurs are defined as
people in the 18-64 age group who are either
in the process of starting a business or are
actually operating a newly established firm
(maximum 3.5 years old). This data was also
included in the Global Benchmark Report
2013. Additional information is provided in
the section on methodology.
Russia
China
Brazil
Behind the benchmark
Source GEM 2013
0
10
20
30
40
50
Per cent
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
38
2.13 Entrepreneurial activity, 2012
OECD
EUROZONE
Chile
Estonia
United States
Turkey
Iceland (2010)
Australia (2011)
Netherlands
Slovak Republic
Austria
Poland
Hungary
United Kingdom
Portugal
Czech Republic (2011)
Norway
South Korea
Israel
Greece
Sweden
Ireland
Finland
Switzerland
Spain
Slovenia
Denmark
Germany
Belgium
France
Italy
Japan
Entrepreneurial activity is an important precondition for economic
growth.
Chile ranks highest on the list again
this year followed by Estonia and the
United States as the countries with
the greatest share of new entrepreneurs in the OECD.
It is normal to distinguish between
entrepreneurship driven by necessity and entrepreneurship driven by
opportunity. Countries such as Chile
and Estonia with a relatively low
level of prosperity typically have a
large share of entrepreneurs driven
by necessity.
Note The share of the population in the
18-64 age group which is either in the process
of starting a business or is actually operating
a newly established firm (maximum 3.5 years
old). This data was also included in the Global
Benchmark Report 2013. Additional information is provided in the section on methodology.
Brazil
China
Russia
Behind the benchmark
Source GEM 2013
0
5
10
15
20
25
Per cent
2.14 Framework conditions for entrepreneurship, 2013
EUROZONE
OECD
New Zealand
Canada
Australia
Portugal
Slovenia
Belgium
Netherlands
Finland
Ireland
Denmark
Sweden
Hungary
France
Iceland
Norway
Estonia
South Korea
United States
Israel
Greece
United Kingdom
Chile
Turkey
Italy
Mexico
Poland
Switzerland
Slovak Republic
Germany
Japan
Austria
Czech Republic
Spain
In order to support the establishment of new businesses it is important that the structures and legislation of society provide good
conditions for entrepreneurship.
Again this year, New Zealand wins
most points and gets the maximum
score (100 per cent). Canada and
Australia are close to 100 per cent in
second and third place.
Note This benchmark is an indicator of the
scope of procedures, time and costs required
for a small or medium-sized enterprise to get
started and to function formally. New Zealand
has the best business conditions for entrepreneurship and is therefore assigned a score of
100 per cent. The other countries are benchmarked in relation to New Zealand.
Russia
China
India
Brazil
Behind the benchmark
Source World Bank, Doing Business 2014
0
10
20
30
40
50
60
70
80
90
100
Per cent
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
39
2.15 Average time to complete the procedure of closing a business, 2013
OECD
EUROZONE
Entrepreneurs who start a new
business after bankruptcy or closure grow faster than other newly
established businesses. This is why
it should be easy to close the old
business and get started again with
a new one after bankruptcy.
Ireland
Japan
Canada
Belgium
Finland
Norway
Australia
Denmark
Iceland
United Kingdom
Austria
Netherlands
Germany
New Zealand
South Korea
Spain
United States
Italy
Mexico
France
Hungary
Israel
Portugal
Slovenia
Sweden
Czech Republic
Estonia
Poland
Switzerland
Chile
Turkey
Greece
Slovak Republic
In Ireland it takes less than six
months to close a business and
once again this puts Ireland in the
top position in this indicator.
It is important to create a comeagain-culture in society in order to
encourage entrepreneurs to start
again after a bankruptcy or closure.
The procedures of closing a business generally take longer in the
BRIC countries. Particularly in
India where it takes more than four
years, on average, to complete the
closing of a business.
Note The estimated time it takes to handle a
bankruptcy case and close/reorganise a bankrupt company from presumed information
about the company.
China
Russia
Brazil
India
Behind the benchmark
Source World Bank, Doing Business 2014
0
1
2
3
4
5
Years
2.16 Venture capital investments as a percentage of GDP, 2009-2012 (average)
EUROZONE
Access to risk capital is essential
for entrepreneurs in order to realise
their ideas and start their own business. Venture capital is particularly
important for entrepreneurs for
whom return on investment lies relatively far into the future.
Denmark
Switzerland
Sweden
Finland
These enterprises are often based
on technology and knowledge that
it takes a long time to develop, but
which, on the other hand, are vital
for productivity. Therefore, access to
venture capital is not only important
for the individual entrepreneur, but
also for the general improvement of
productivity in society.
Norway
Ireland
Belgium
Hungary
United Kingdom
This year, Denmark is the country
with the best access to risk capital
as seen as an average over the
period 2009-2012.
France
Netherlands
Germany
Portugal
Austria
Spain
Italy
Czech Republic
Greece
Note Data shows the level of seed and early
stage investments.
Poland
Source Eurostat and DI calculations
Behind the benchmark 0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
40
2.17 Gazelle enterprises, 2010
Manufacturing
Service
Czech Republic
Gazelles are the subset of high-growth
enterprises up to five years old with
average annualised growth greater
than 20 per cent over a three-year
period and at least 10 employees.
Estonia (2009)
France
Gazelles are an indication of how
favourable the environment in which
the enterprises operate is. Countries
such as the Czech Republic and Estonia have a very low starting point,
and therefore it is relatively easy for
them to achieve a higher proportion
of gazelles.
Canada (2009)
Israel
Portugal
Hungary
Slovenia (2009)
Sweden
New Zealand
Italy
* Data for Denmark is gleaned from
Statistics Denmark and is based on
market sectors while the OECD has categorised data according to service and
manufacturing. Data therefore is not
directly comparable, but gives an indication of levels. The ranking is based on
manufacturing enterprises.
Spain
Denmark*
United States
Source OECD, Entrepreneurship at a
Glance, 2013 and Statistics Denmark
Behind the benchmark 0.0
0.2
0.4
0.6
0.8
1.0
1.2
Share of enterprises with 10 or more
employees, per cent
2.18 Mentality of society supporting competitiveness, 2013
OECD
EUROZONE
United States
Switzerland
Israel
Ireland
Sweden
Canada
Australia
Chile
Germany
New Zealand
United Kingdom
Netherlands
Estonia
Finland
Norway
South Korea
Iceland
Denmark
Turkey
Mexico
Japan
Belgium
Austria
Greece
Slovak Republic
Czech Republic
Portugal
Italy
France
Slovenia
Poland
Spain
Hungary
Strong competitiveness contributes
to increasing the incentive to qualify
further and achieve good results both
individually and at company-level.
For the tenth consecutive year,
the United States is the country
assessed to have the most competitive mentality. American society
is permeated by a strong competitive mentality that is cultivated
already in the educational system
with tracking and privileges for the
best pupils. This continues onto the
labour market where schemes such
as “the employee of the month” help
to promote competition among the
employees of a company.
Note This indicator shows to which degree
senior managers in the country assess the
mentality of society to support competition.
India
China
Brazil
Russia
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0-10
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
41
2.19 Flexibility and adaptability, 2013
OECD
EUROZONE
Ireland
Israel
Poland
Turkey
Sweden
United States
Iceland
Denmark
New Zealand
Canada
Switzerland
Mexico
Portugal
Australia
South Korea
United Kingdom
Netherlands
Estonia
Slovak Republic
Greece
Norway
Italy
Finland
Belgium
Chile
Czech Republic
Germany
Austria
Japan
Spain
Hungary
France
Slovenien
Changing market conditions are
companions of globalisation. This
means that businesses must be
flexible and adaptable if they are to
succeed in global competition.
Ireland tops the list this year as the
country with the greatest flexibility
and adaptability.
Brazilian and Indian flexibility and
adaptability are assessed to be over
the level of the average performance
in both the OECD countries and the
Eurozone.
Note This benchmark shows to which degree
senior managers in the country assess that
the local population displays flexibility and
adaptability in the face of challenge.
Brazil
India
China
Russia
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0-10
2.20 Fixed broadband subscribers, 2012
OECD
EUROZONE
Switzerland
Netherlands
Denmark
South Korea
France
Norway
Iceland
United Kingdom
Germany
Belgium
Canada
Sweden
Finland
United States
New Zealand
Japan
Australia
Austria
Israel
Spain
Estonia
Slovenia
Greece
Ireland
Portugal
Italy
Hungary
Czech Republic
Poland
Slovak Republic
Chile
Mexico
Turkey
Behind the benchmark
The number of fixed broadband
connections is an indicator of the
degree to which the individual citizen has access to a good and fast
Internet connection.
IT and high-speed connections in
both the private and public sector
help boost productivity and enhance
international competitiveness. The
spread of high-speed Internet in
sparsely populated areas can reduce
gaps between different parts of a
country and enhance economic
development.
In order to ensure this, the EU
has prioritised the rollout of the
extremely fast next-generation
access network. The European
Commission’s 2020-target aims at
speeds of 30 megabit per second for
all and 100 megabit per second for
more than half of all households.
Switzerland, the Netherlands and
Denmark take the top three positions.
Source OECD Broadband Statistics,
2012
0
5
10
15
20
25
30
35
40
45
Broadband subscribers per 100
inhabitants
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
42
2.21 E-commerce, 2012
EUROZONE
E-commerce is a central element in
modern, digital society. It minimises
sales costs and makes everyday life
easier for companies as well as for
citizens. Online sales make it easier to sell products across large distances and across national borders.
The share of companies that sell
products online is therefore an indicator of the degree of digitalisation
in a country, and suggests the competitiveness of the private sector.
Iceland
Norway
Sweden
Denmark
Czech Republic
Belgium
Ireland
Germany
Iceland tops the chart this year with
35 per cent of its companies selling
products online.
Netherlands
United Kingdom
Only 14.5 per cent of Internet users
in the EU purchased products online
from another EU member state in
2012.
Finland
Portugal
Slovenia
Spain
Slovak Republic
Austria
Estonia
France
Hungary
Poland
Turkey (2010)
Note Financial sector is not included.
Enterprises with ten employees or more
selling at least 1 per cent of turnover online
Greece
Italy
Source Eurostat
Behind the benchmark
0
5
10
15
25
20
30
35
40
Percentage of enterprises that have
received orders online in the past year
2.22 Economic freedom, 2011
EUROZONE
OECD
New Zealand
Switzerland
Finland
Canada
Australia
Chile
United Kingdom
Denmark
Estonia
United States
Germany
Ireland
Austria
Hungary
Sweden
Netherlands
Norway
Spain
Japan
South Korea
Slovak Republic
France
Iceland
Belgium
Portugal
Israel
Czech Republic
Poland
Turkey
Italy
Greece
Mexico
Slovenia
Economic freedom promotes dynamism and growth in society and
creates the basis for an efficient use
of the country’s resources.
Cato's index for economic freedom
measures a number of socio-economic provisions that support the
initiative, entrepreneurship and
freedom of individuals.
For the fifth consecutive year, New
Zealand takes top rank as the best
provider of economic freedom. New
Zealand excels with a well-functioning legal system, good access
to capital and a low level of government regulation. Switzerland and
Finland are followers-up.
Brazil
China
India
Russia
Behind the benchmark
Note High values indicate high economic
freedom.
Source Cato Institute, Economic Freedom of
the World 2013
0
1
2
3
4
5
6
7
8
9
Index 0-10
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
43
2.23 Burden of government regulation, 2012-2013 (average)
OECD
EUROZONE
Finland
Estonia
New Zealand
Switzerland
Sweden
Chile
Netherlands
Ireland
Iceland
United Kingdom
Canada
Germany
Norway
Turkey
United States
Japan
Austria
South Korea
Denmark
Israel
Mexico
Spain
Australia
France
Portugal
Poland
Belgium
Czech Republic
Slovenia
Slovak Republic
Hungary
Greece
Italy
A reduction of the administrative burdens of industry presents a major
potential for releasing resources and
promoting competitiveness.
During the recession, governments
around the world have become more
aware of the benefits of rule simplification and have launched ambitious
goals.
Finland, Estonia and New Zealand are
assessed to have the least administrative hardship for industry. Among the
BRIC countries, Brazil has the most
widespread red tape.
Note High values indicate that senior
managers in the country perceive that the
government imposes major administrative
burdens on businesses.
China
India
Russia
Brazil
Behind the benchmark
Source WEF 2013-2014, survey
1
2
3
4
5
6
7
Index 1-7
2.24 Quality of infrastructure, 2012-2013 (average)
OECD
EUROZONE
Netherlands
Finland
France
Switzerland
Germany
Spain
Japan
South Korea
Iceland*
Belgium
United States
Canada
Sweden
United Kingdom
Portugal
Austria
Denmark
New Zealand
Ireland
Australia
Norway
Czech Republic
Chile
Turkey
Slovenia
Estonia
Italy
Israel
Greece
Mexico
Hungary
Slovak Republic
Poland
High mobility is important for the
competitiveness of a country. Good
quality infrastructure increases productivity and attracts international
investment. Well-developed infrastructure reduces the effects of
large distances between regions,
integrates the national market,
and connects it to other countries
and regions at low cost. A well-integrated infrastructure network
is a prerequisite for the access of
less-developed municipalities to
core economic activities, and can
thereby contribute to reducing economic inequalities across communities and stimulating economic
growth.
The Netherlands takes the top position followed by Finland and France.
* Iceland is without assessment of railway
infrastructure since there is less than 50
kilometres of railway in the country.
Note High values indicate that senior
managers perceive the infrastructure of the
country as well-functioning compared with
international standards. In this benchmark,
the quality of a country’s infrastructure is
determined on the basis of an average of
assessments of road, rail, maritime and aviation infrastructures.
China
India
Russia
Brazil
Behind the benchmark
Source WEF 2013-2014, survey
1
2
3
4
5
6
7
Index 1-7
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
44
2.25 Energy intensity, 2011
EUROZONE
OECD
Ireland
Switzerland
United Kingdom
Denmark
Italy
Portugal
Spain
Austria
Germany
Greece
Israel
Turkey
Japan
Netherlands
Norway
Chile
France
Mexico
Australia
Hungary
Slovenia
Poland
Slovak Republic
Sweden
Belgium
New Zealand
Czech Republic
United States
South Korea
Canada
Finland
Estonia
Iceland
Energy intensity is a benchmark of
the amount of energy used for society’s production. Here it is calculated
as million tons of oil equivalents relative to GDP. Low energy intensity
means that only little energy is used
in production, indicating high energy
efficiency.
For the fifth consecutive year, Ireland
tops the chart as the most energy efficient country along with Switzerland.
Data goes back to 2011 when many
countries were badly affected by the
recession and therefore reported
decreasing production, including
decreasing energy-intensive production.
The variety of energy intensities can
be partly explained by the industrial
structure of the countries. Countries
with much heavy industry have higher
energy intensity than countries with a
large proportion of service companies.
Note Calculated as total primary energy
supply (million tons of oil equivalents) per
billion GDP units (PPP) in fixed USD 2005prices.
Brazil
India
China
Russia
Behind the benchmark
Source IEA, Key World Energy Statistics
2013
0.0
0.1
0.2
0.3
0.4
0.5
0.6
Million TOE relative to GDP
(PPP, bn. 2005 USD)
2.26 Quality of electricity supply, 2012-2013 (average)
OECD
EUROZONE
Switzerland
Netherlands
Austria
Finland
Denmark
Iceland
United Kingdom
France
Norway
Sweden
Canada
Ireland
Czech Republic
Belgium
Portugal
Spain
Slovenia
Australia
United States
Slovak Republic
Germany
New Zealand
Japan
Italy
South Korea
Israel
Hungary
Poland
Greece
Chile
Estonia
Turkey
Mexico
In order to operate a business efficiently, energy supply should be
reliable, stable and sustainable at
affordable prices. Therefore, an efficient supply of electricity will help
increase productivity and facilitate
the production process in a country.
High quality of electricity supply is
part of a well-developed infrastructure. A well-integrated infrastructure is also a precondition for the
access of less developed municipalities to core economic activities, and thereby contributes to
reducing economic inequalities
across communities and stimulate
economic growth.
Switzerland is assessed to have to
highest quality of electricity supply
in the OECD. However, it should
be noted that the average quality
is high and several countries have
an assessment close to that of
Switzerland.
Note High values indicate that senior
managers perceive the quality of electricity
supply of the country as high compared with
international standards.
China
Brazil
Russia
India
Behind the benchmark
Source WEF 2013-2014, survey
1
2
3
4
5
6
7
Index 1-7
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
45
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
46
3.00 Qualified labour
Average ranks of countries
Canada
South Korea
Switzerland
Australia
United Kingdom
Finland
Ireland
New Zealand
United States
Norway
Sweden
Japan
Denmark
Netherlands
Estonia
Austria
Iceland
Chile
Germany
Israel
France
Belgium
Poland
Czech Republic
Spain
Mexico
Portugal
Slovenia
Greece
Hungary
Turkey
Italy
Slovak Republic
1
2
2
4
5
6
6
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
Canada tops the list in terms
of average ranking in the
benchmarks for Qualified
labour.
(1)
(3)
(2)
(5)
(14)
(6)
(9)
(4)
(7)
(13)
(8)
(10)
(10)
(10)
(17)
(16)
(15)
(19)
(18)
(22)
(21)
(20)
(24)
(23)
(25)
(26)
(27)
(28)
(31)
(30)
(32)
(33)
(29)
0
5
10
15
20
25
30
The average ranks of countries
in the Qualified labour pillar
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
47
QUALIFIED LABOUR
A well-educated workforce contributes significantly to a nation's economic
value creation through productivity and business innovation. Accordingly, it
is very important that business conditions in society support education and
R&D, and businesses have access to employees with the required competences.
To ensure these conditions, it is necessary to place high priority on education
and create an attractive labour market.
Canada tops the Qualified labour pillar with a highly educated population and strong
focus on tertiary education. To a major degree, Canadian senior managers also assess
that the country's legislation on equal opportunities supports economic growth.
Switzerland and South Korea share second place this year. Switzerland has a high labour market participation rate. Swiss workers have high motivation and work satisfaction, an attractive business environment for foreign highly skilled labour, and the largest number of completed PhDs in science and engineering.
South Korea's rank is mainly due to a low unemployment rate and a number of strong
rankings in education including expenditure on educational institutions, basic competences among 15-year-olds, and share of 25 to 34-year-olds with upper secondary and
tertiary education.
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
48
3.01 Labour market participation rate, 2012
EUROZONE OECD
Iceland
Switzerland
Sweden
Netherlands
Denmark
Norway
Canada
New Zealand
Germany
United Kingdom
Australia
Austria
Finland
Spain
Estonia
Portugal
Japan
United States
Czech Republic
Israel
France
Slovenia
Slovak Republic
Ireland
Greece
Belgium
Poland
South Korea
Chile
Italy
Mexico
Hungary
Turkey
The labour market participation
rate is the share of the population of
working age (between 15 and 64)
that is active in the labour market.
A high participation rate means that
many participate in the labour market and accordingly contribute to
the growth and prosperity of society.
This figure, however, should be compared with the account of annual
working hours that is presented in
benchmark 3.04.
Iceland captures the top position
yet again in front of Switzerland
and Sweden.
China (2010)
Russia
Brazil (2011)
India (2010)
Behind the benchmark
Source OECD, Labour Force Statistics 2013
and DI calculations
0
10
20
30
40
50
60
70
80
90
Per cent
3.02 Labour market participation rate for 55 to 64-year-olds, 2012
OECD
EUROZONE
Iceland
Sweden
New Zealand
Switzerland
Norway
Japan
Israel
Germany
Estonia
Chile
South Korea
United States
Denmark
Canada
Australia
Finland
Netherlands
United Kingdom
Mexico
Ireland
Spain
Portugal
Czech Republic
Slovak Republic
France
Austria
Italy
Greece
Poland
Belgium
Hungary
Slovenia
Turkey
In many countries, people between
55 and 64 have a lower participation
rate than the rest of the population
of working age. In light of the demographic challenge that most countries are facing, it is, however, important to retain the older workers in the
labour market as long as possible.
Similar to the general labour market
participation rate, Iceland tops the
chart of labour market participation
for people in the 55-64 age group.
China (2010)
India (2010)
Brazil (2011)
Russia
Behind the benchmark
Source OECD, Labour Force Statistics 2013
and DI calculations
0
10
20
30
40
50
60
70
80
90
Per cent
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
49
3.03 Unemployment, 2013
OECD
EUROZONE
South Korea
Norway
Japan
Switzerland
Austria
Mexico
Germany
Iceland
Australia
Chile
New Zealand
Netherlands
Israel
Czech Republic
Denmark
Canada
United States
United Kingdom
Sweden
Finland
Estonia
Belgium
Turkey
Hungary
Poland
France
Slovenia
Italy
Ireland
Slovak Republic
Portugal
Spain
Greece
A high unemployment rate signifies
an imbalance between the supply of
labour in a society and the demand
of employers.
Unemployment can vary within various sectors and across educational
levels and geography.
South Korea has the lowest unemployment of the OECD countries
followed by Norway and Japan.
Note An international unemployment
concept has been used. It is based on random
sample surveys and includes everyone who
does not have a job, but wants one and
is looking for one. Data may thus include
students etc. Data is based on the latest
forecast from the end of 2013.
Russia
Behind the benchmark
Source OECD Economic Outlook No. 94
0
5
10
15
20
25
30
Per cent
3.04 Average annual working hours per employed person, 2012
OECD
EUROZONE
Mexico
South Korea (2011)
Greece
Chile
Poland
Israel
Estonia
Hungary
Turkey
Czech Republic
United States
Slovak Republic
Italy
Japan
New Zealand
Australia
Canada
Iceland
Austria
Portugal
Spain
Finland
United Kingdom
Slovenia
Switzerland (2011)
Sweden
Belgium
Denmark
Ireland
France
Norway
Germany
Netherlands
It is essential for the competitiveness of businesses to get as many
working hours as possible out of
the workforce that is available to
them. In this, the marginal tax rate is
important since a high marginal tax
rate reduces people’s incentive to
work harder.
Mexico tops the list, followed by
South Korea and Greece.
It is worth noticing that Russia has
average working hours that are significantly higher than the average
of OECD and Eurozone.
Source OECD, Labour Force Statistics 2013
and DI calculations
Russia
Behind the benchmark
0
500
1,000
1,500
2,000
2,500 Hours
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
50
3.05 Share of employees with tertiary education in the private sector 2012
EUROZONE
The share of highly qualified people
in the private sector is an indicator
of the extent to which companies
utilise labour educated at the
country’s universities.
Ireland
Belgium
Finland
United Kingdom
The share of highly qualified workers
also reflects to which degree companies are based on research, development and innovation with a view
to creating new products that can
be sold domestically and abroad.
Furthermore, a large proportion of
highly educated labour in the private
sector can contribute to increasing
the country’s productivity.
Spain
Estonia
France
Norway
Sweden
Netherlands
Ireland tops the list with more than a
third of highly qualified people working in the private sector.
Iceland
Germany
Denmark
Slovenia
Poland
Greece
Hungary
Austria
Czech Republic
Slovak Republic
Portugal
Source The Danish Ministry of Business
and Growth, Report on Growth and
Competitiveness 2013
Italy
Behind the benchmark
0
5
10
15
20
25
30
40
35
Per cent
3.06 Labour regulations, 2013
OECD
EUROZONE
Iceland
Denmark
Switzerland
Estonia
Canada
United Kingdom
Ireland
Hungary
United States
New Zealand
Israel
Chile
Turkey
Greece
Norway
South Korea
Poland
Japan
Netherlands
Mexico
Austria
Sweden
Germany
Portugal
Czech Republic
Finland
Spain
Australia
France
Italy
Slovak Republic
Belgium
Slovenia
A low degree of labour market regulation means that businesses can
quickly adjust to changing market
conditions. This gives flexibility and
enhances competitiveness.
Iceland tops the list and Denmark is
the runner-up.
In Southern Europe and in several
BRIC countries, labour market regulation is considered a major challenge.
Note High values indicate that senior
managers assess that the labour market
regulations in the country are a barrier to the
operation of their business. The indicator
tracks labour market regulations in general
including regulation of employment, layoffs
and minimum wages.
China
Russia
India
Brazil
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0-10
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
51
3.07 Job mobility, 2012
OECD
EUROZONE
Job mobility is vital for growth in
society since a flexible and mobile
labour market encourages workers to move according to the need
for labour. High job mobility is an
expression of a dynamic labour market that can solve the challenges of a
constantly changing labour market.
Chile
South Korea
Turkey
Australia
Mexico
Iceland
Denmark
Sweden
Canada
Finland
Estonia
Norway
Switzerland
Austria
United Kingdom
Netherlands
Spain
France
Germany
Hungary
Ireland
Belgium
Poland
Slovenia
Portugal
Czech Republic
Italy
Slovak Republic
Greece
Some of the job mobility can be
referred to the continuous creation
of new jobs and closing down of others. Job mobility helps to promote
productivity since less productive
jobs are closed down during such a
process. High job mobility improves
the chances of people, who lose
their job, to be quickly employed by
another company in need of labour.
Chile is the OECD country with the
highest job mobility.
Brazil (2009
Behind the benchmark
Source OECD.Stat and DI calculations
0
5
10
15
20
25
35
30
40
Per cent of employees with less than
one year's employment in the same job
3.08 Employee motivation, 2013
OECD
EUROZONE
Denmark
Switzerland
Ireland
Austria
Japan
Norway
Sweden
Germany
Iceland
Netherlands
Finland
Israel
United States
Canada
New Zealand
Mexico
Turkey
Belgium
United Kingdom
Australia
Chile
Czech Republic
Estonia
South Korea
Slovak Republic
France
Italy
Hungary
Greece
Portugal
Poland
Slovenia
Spain
Motivation and work satisfaction
contribute to increasing productivity, reducing sickness absenteeism and, generally, creating
dedicated employees. A good occupational environment with exciting
and challenging tasks can also help
to attract employees with highly
sought-after qualifications.
For a couple of years, Switzerland
and Denmark have taken turns
topping the benchmark. They have
exchanged places again this year
with Denmark taking the lead.
Note High values indicate that senior
managers in the country find the motivation among the employees of the company
to be high.
China
Brazil
India
Russia
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0-10
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
52
3.09 Financial incentives to work, 2011
OECD
EUROZONE
Australia
Greece
Turkey
New Zealand
South Korea
United Kingdom
United States
Poland
Chile
Sweden
Estonia
Hungary
Belgium
Italy
Spain
Austria
Ireland
Finland
Canada
Japan
Norway
Czech Republic
Germany
Iceland
Slovak Republic
France
Netherlands
Denmark
Slovenia
Israel
Portugal
Switzerland
Behind the benchmark
Businesses need easy and flexible
access to qualified labour in order
to be competitive. A prerequisite is
that the citizens of a country have
a financial incentive to go to work.
The financial incentive depends on
factors such as level of taxes and
income transfers – the higher the
marginal tax rate and transfers, the
lower the financial incentive to work.
Australia, Greece and Turkey are
the countries in which the financial
gain of having a job instead of being
unemployed is greatest.
Note The indicator shows how large a share
of an income a newly unemployed person
can receive on average in the form of public
benefits, calculated after tax. The share is
an average for newly unemployed people
based on six different family types and three
different levels of wages.
Source OECD, Tax benefit models and DI
calculations
0
10
20
30
40
50
60
70
80
90
Per cent of income
3.10 Equal opportunities, 2013
OECD
EUROZONE
Norway
Sweden
Canada
Iceland
Finland
Ireland
Denmark
Israel
Switzerland
Chile
United States
Australia
Japan
Netherlands
New Zealand
United Kingdom
Mexico
Belgium
Turkey
Poland
France
Spain
Portugal
Estonia
Germany
Czech Republic
Greece
South Korea
Austria
Slovenia
Slovak Republic
Hungary
Italy
Equal opportunities for all, irrespective of age, gender, culture and religion are important prerequisites for
a well-functioning society. The institutional framework for equality is
central in order to exploit the human
resources of society in the best
possible way and support economic
and social growth.
The Nordic countries are generally
characterised by a high degree of
equality and equal opportunities.
In Brazil, senior managers assess
that the country’s legislation on
equal opportunities supports
economic growth to a degree that
corresponds to both Eurozone and
OECD averages.
Note This indicator suggests the degree to
which local senior managers assess that the
country’s legislation on equal opportunities
supports economic growth.
Brazil
India
China
Russia
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0-10
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
53
3.11 Expenditure on educational institutions as a percentage of GDP, 2010
Primary and secondary school
South Korea
United States
Norway*
Denmark
New Zealand*
Canada
Ireland
Iceland
United Kingdom
Finland
Australia
Israel
Belgium
Netherlands
Chile
Sweden
France
Estonia*
Mexico
Portugal
Switzerland*
Slovenia
Austria
Poland
Spain
Germany (2009)
Japan
Italy
Czech Republic
Slovak Republic
Hungary*
Turkey*/**
Tertiary school
Making education a priority is key
to ensuring a high level of quality in
the educational system and subsequently the qualifications of the
labour force of tomorrow. The development in this area depends on
several factors, including demography (the proportion of young
people between the age of 6 and
25), the share of the population
enrolled in education and contribution per pupil.
South Korea, the United States and
Norway have the highest expenditure on education as a percentage
of GDP. The United States and
South Korea have major private
co-financing in education, particularly in tertiary education and this
is part of the explanation for their
high rank.
Brazil
Russia
India (2009)
*
**
OECD
Eurozone
Behind the benchmark
Only public expenditure
Data for tertiary school is from 2006
Note Research funds are not deducted.
Source OECD Education at a Glance 2013
0
1
2
3
4
5
6
7
8
Per cent of GDP
3.12 Expenditure on tertiary education as a percentage of GDP, 2010
Loans
Subsidies
Government expenditure
Private expenditure
United States
Canada
South Korea
Chile
Finland**
Denmark
Sweden
Netherlands
Norway
Israel
Australia
Estonia
New Zealand
Ireland**
Japan
Austria*
France**
Poland
Portugal**
Belgium**
Mexico
United Kingdom
Spain
Switzerland**/****
Germany (2009)
Slovenia**
Iceland***
Czech Republic*
Italy**
Slovak Republic
Hungary**/****
Making education a priority is key to
ensuring a high level of quality in the
educational system and subsequently
the qualifications of the labour force
of tomorrow.
It is important to stress, though, that
quality for the outlay is a prerequisite.
The United States, Canada, and
South Korea are among the countries with the highest expenditure on
tertiary education as a percentage of
GDP. The United States and South
Korea have major private co-financing in education, particularly in
tertiary education and this is a part of
the explanation for their high rank.
*
**
***
****
Russia**/***
India (2009)**/***/****
Brazil****
Note Research funds are not deducted.
OECD
Eurozone
Behind the benchmark
No government expenditure
No data for government expenditure
for loans
No data for government for subsidies
No data for private expenditure
Source OECD Education at a Glance 2013
and DI calculations
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
54
3.13 Intended instruction time in public institutions per year for 7 to 14-year-olds
(average), 2011
OECD
EUROZONE
Primary schooling is an important
contributor in providing pupils with
basic competences needed for their
continuing education, such as reading and mathematical skills. The
planned instruction time for pupils
in the 7-14 age group is an indicator
of the level of education in the country, and of the degree to which funding for education is spent on instruction time. A high level of instruction
time helps to increase the level of
competence.
Chile
Australia
France
Israel
Netherlands
Spain
Italy
Mexico
Portugal
Canada
Ireland
Belgium
Iceland
Turkey
Austria
Denmark
Japan
Slovak Republic
Germany
Norway
Greece
Hungary
Sweden
Slovenia
Czech Republic
South Korea
Poland
Finland
Estonia
Chile tops the chart with most
instruction time for this age group.
The country has gone through a
comprehensive reform of its school
system with all-day school having
replaced half-day school.
Note Average of planned annual lessons for
7 to 14-year-olds.
Source OECD Education at a Glance 2013
and DI calculations
Russia
Behind the benchmark 400
500
600
700
800
900
1,000
1,100 Hours
3.14 OECD Pisa study, Reading skills, 2012
EUROZONE OECD
Japan
South Korea
Finland
Ireland
Canada
Poland
Estonia
New Zealand
Australia
Netherlands
Belgium
Switzerland
Germany
France
Norway
United Kingdom
United States
Denmark
Czech Republic
Italy
Austria
Hungary
Spain
Portugal
Israel
Sweden
Iceland
Slovenia
Greece
Turkey
Slovak Republic
Chile
Mexico
Every three years, the OECD’s Programme for International Student
Assessment (PISA) assesses the
qualifications of 15-year-olds in
reading, mathematics and science.
Mastering these basic competences
is important in order to continue
in the educational system.
This benchmark shows the result
for reading skills.
The Japanese teenagers have
achieved the highest score followed
by South Korea and Finland.
China’s Shanghai region impresses
by passing all OECD countries in
reading skills.
China (Shanghai)
Russia
Brazil
Behind the benchmark 350
Source OECD PISA 2012
400
450
500
550
600
PISA score
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
55
3.15 OECD Pisa study, Mathematical qualifications, 2012
OECD
EUROZONE
South Korea
Japan
Switzerland
Netherlands
Estonia
Finland
Canada
Poland
Belgium
Germany
Austria
Australia
Ireland
Slovenia
Denmark
New Zealand
Czech Republic
France
United Kingdom
Iceland
Norway
Portugal
Italy
Spain
Slovak Republic
United States
Sweden
Hungary
Israel
Greece
Turkey
Chile
Mexico
Every three years, the OECD’s Programme for International Student
Assessment (PISA) assesses the
qualifications of 15-year-olds in
reading, mathematics and science.
Mastering these basic competences
is important in order to continue in
the educational system.
This benchmark shows the result for
mathematical qualifications.
In this benchmark, the South
Korean teenagers have achieved the
highest score followed by Japan and
Switzerland. South Korea is known
for its high priority on education.
China’s Shanghai region also
impresses in mathematics by passing all OECD countries.
China (Shanghai)
Russia
Brazil
Behind the benchmark
Source OECD PISA 2012
350
400
450
500
550
600
650
PISA score
3.16 OECD Pisa study, Scientific qualifications, 2012
OECD EUROZONE
Japan
Finland
Estonia
South Korea
Poland
Canada
Germany
Netherlands
Ireland
Australia
New Zealand
Switzerland
Slovenia
United Kingdom
Czech Republic
Austria
Belgium
France
Denmark
United States
Spain
Norway
Hungary
Italy
Portugal
Sweden
Iceland
Slovak Republic
Israel
Greece
Turkey
Chile
Mexico
Every three years, the OECD’s Programme for International Student
Assessment (PISA) assesses the
qualifications of 15-year-olds in
reading, mathematics and science.
Mastering these basic competences
is important in order to continue in
the educational system.
This benchmark shows the result
for scientific qualifications.
Japan takes the top position, ahead
of Finland and Estonia. Once again,
the young people from China’s
Shanghai region pass all OECD
countries.
China (Shanghai)
Russia
Brazil
Behind the benchmark
Source OECD PISA 2012
350
400
450
500
550
600
PISA score
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
56
3.17 Share of 25 to 34-year-olds with upper secondary education, 2011
EUROZONE
OECD
South Korea
Czech Republic
Slovak Republic
Poland
Slovenia
Canada
Sweden
Finland
Israel
Switzerland
United States
Austria
Chile
Hungary
Germany
Estonia
Ireland
Australia
United Kingdom
Norway
France
Belgium
Netherlands
New Zealand
Denmark
Greece
Iceland
Italy
Spain
Portugal
Mexico
Turkey
A high level of education is a prerequisite for competitiveness in a
globalised world. This is why it is
important that, as a minimum, a
very large proportion of the population have upper secondary education.
South Korea wins first place. Nearly
98 per cent of the population have
completed upper secondary education.
Note It is difficult to compare across countries
for this benchmark. The OECD partially uses
random sampling, and therefore the ranking
is not comparable with last year’s chart.
Russia
Brazil
Behind the benchmark
Source OECD Education at a Glance 2013
0
20
40
60
80
100
Per cent
3.18 Share of 25 to 34-year-olds with tertiary education*, 2011
EUROZONE
OECD
South Korea
Japan
Canada
Ireland
United Kingdom
Norway
New Zealand
Israel
Australia
United States
France
Sweden
Belgium
Chile
Switzerland
Netherlands
Finland
Iceland
Poland
Spain
Estonia
Denmark
Slovenia
Greece
Hungary
Germany
Portugal
Slovak Republic
Czech Republic
Mexico
Austria
Italy
Turkey
Since education plays a still more
important role in the globalised
world, a well-educated workforce
is crucial for a country’s ability to
compete in the global marketplace.
For the fourth consecutive year,
South Korea wins this category ahead
of Japan and thus underlines its
strong position in education.
* Tertiary education includes long-cycle,
medium-cycle and short-cycle higher
education.
Note It is difficult to compare across countries
for this benchmark. The OECD partially uses
random sampling, and therefore the ranking
is not comparable with last year’s chart.
Russia
Brazil
China (2010)
Behind the benchmark
Source OECD Education at a Glance 2013
0
10
20
30
40
50
60
70
Per cent
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
57
3.19 Age by completion of tertiary education, 2011
EUROZONE
Fast completion of tertiary education helps to ensure a large workforce, high tax income and low
government expenditure. This is
particularly important at a time
when the workforce in many
European countries will be diminishing in coming years due to an
ageing population.
Belgium
Netherlands
Turkey
Estonia
Slovak Republic
Belgium, the Netherlands and
Turkey continue to top the list as
the countries in which most young
people have completed tertiary
education when they are 25 years
old.
United Kingdom
Spain
Hungary
Czech Republic
Portugal
Poland
Italy
Norway
Slovenia
Denmark
Austria
Germany
Note Includes first completed tertiary
education (including bachelor degrees) but
excludes certain short-cycle educational
programmes.
Switzerland
Finland
Sweden
Behind the benchmark
Source Danish Ministry of Business and
Growth, Report on growth and competitiveness 2013
0
10
20
30
40
50
60
70
80
90
Percentage of students who are 25
or younger at completion of tertiary
education
3.20 Share of graduates by subject, 2011
Engineering, manufacturing
and construction
Life sciences, physical sciences,
math/statistics and computing
Health and Welfare
Social sciences, business,
law and services
Humanities, art and education
Not known/unspecified
South Korea
Germany
Greece
Finland
France (2009)
Austria
Estonia
Spain
Japan
Mexico
Czech Republic
Portugal
Sweden
Slovenia
United Kingdom
Belgium
Italy
Switzerland
Ireland
Slovak Republic
Canada
Denmark
Turkey
Hungary
Israel
New Zealand
Chile
Australia
Poland
Norway
Iceland (2010)
United States
Netherlands
In the context of shrinking national
budgets and economic downturn,
it is important that countries invest
in the fields of education that are
needed in the labour market. As
a consequence of the increasing
demand for labour with education in science and engineering,
a large share of graduates with a
background in these subjects is
crucial for a country’s international
competitiveness. Access to competent science graduates is central for
companies choosing to establish in a
globalised world.
South Korea has the largest share of
scientific and engineering graduates
followed by Germany and Greece.
Graduates with these competences
are particularly attractive to many
companies.
Russia
Brazil
Note Data includes medium-cycle and longcycle higher education.
Eurozone
OECD
Behind the benchmark
Source OECD.Stat and DI calculations
0
10
20
30
40
50
60
70
80
90
100
Per cent
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
58
3.21 Personal gain on further education, 2009
OECD
EUROZONE
The personal gain in completing
higher education in the form of
higher income plays a major role
in convincing young people to take
further education.
United States
Ireland
Czech Republic
Slovenia
Poland (2008)
The United States is in the forefront
followed by Ireland and the Czech
Republic.
Slovak Republic
Portugal
United Kingdom
Hungary
Austria
South Korea
Canada
Spain
France
Australia
Israel
Finland
Japan (2007)
Netherlands (2008)
Estonia
Italy (2008)
Belgium
Germany
Norway
Greece
Note Average personal net present value for
men and women completing tertiary education.
Sweden
Denmark
New Zealand
Behind the benchmark
Source OECD Education at a Glance 2013
and DI calculations
0
50,000
100,000
150,000
200,000
250,000
300,000 USD (net present value)
3.22 Share of foreign students at tertiary education institutions, 2011
EUROZONE
OECD
New Zealand
Switzerland
Australia
United Kingdom
Austria
Canada
France
Ireland
Denmark
Belgium
Sweden
Germany
Czech Republic
Netherlands
Norway
Iceland
Portugal
Spain
Finland
Greece
Hungary
Slovak Republic
Japan
Estonia
Italy
Slovenia
South Korea
Poland
Israel
Chile
Turkey
The share of foreign students in
tertiary education is an expression
of the degree to which universities
take part in international knowledge-sharing and have the ability to
attract students from other countries.
In general, it is easier for Englishspeaking countries to attract international students. New Zealand,
Australia and the United Kingdom
are among the leading four in this
benchmark. New Zealand and
Australia have massively targeted
education as a source of income.
This year Switzerland comes in
second. The country has one of the
highest percentages of international faculty staff per capita in the
world, partly due to the fact that 40
per cent of the country’s PhD candidates, who count as faculty, are
non-Swiss.
Russia
China
Brazil
Behind the benchmark
Source OECD Education at a Glance 2013
0
5
10
15
20
25
30
Per cent of all students
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
59
3.23 Attractive business environment for foreign highly skilled people, 2013
OECD
EUROZONE
Switzerland
United States
Australia
United Kingdom
Canada
Netherlands
Ireland
Norway
Chile
Austria
New Zealand
Poland
Mexico
Germany
Belgium
Sweden
Turkey
South Korea
Denmark
Czech Republic
France
Israel
Estonia
Finland
Spain
Japan
Portugal
Hungary
Slovak Republic
Italy
Iceland
Greece
Slovenia
In step with the tendency in many
countries that more elderly people
retire from the labour market than
there are young people to enter it,
the financing of public expenditure
becomes an increasing challenge.
Brazil
China
India
Russia
Note Low values indicate that the country’s
senior managers find the business environment for non-national professionals poor.
Behind the benchmark
In order to cope with this challenge,
the ability to attract and retain
non-national labour becomes an
important factor. With their unique
knowledge, highly skilled non-nationals contribute to increasing
productivity in businesses,
enhanced competitiveness and
increased growth.
Once again, Switzerland wins the
category as the country that seems
most attractive to highly qualified foreign labour, followed by the
United States and Australia.
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0-10
3.24 Completed PhDs in science and engineering, 2011
EUROZONE
OECD
Education of competent researchers
is an essential competitive parameter in order to attract and retain
private investment in R&D. It also
strengthens the competitiveness of
businesses generally and is a precondition for strong public research. In
particular, this applies to researchers
in science and engineering.
Switzerland
Germany
United Kingdom
France (2010)
Denmark
Ireland
Finland
Switzerland has yet again taken the
top spot with a significant lead over
the rest of the OECD countries.
Austria
Sweden
Norway
Czech Republic
Slovenia
Belgium
Netherlands
Italy
Spain
Estonia
United States
Portugal
Iceland (2010)
Greece
Japan
Poland (2009)
Hungary
Turkey
Source Eurostat and DI calculations
Behind the benchmark
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
Completed PhDs in 2011 in science and engineering
per 1,000 inhabitants in the age between 25 and 34
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
60
3.25 Adult participation in education and learning, 2012
OECD
EUROZONE
In a globalised world, it is important
continuously to adjust the skills of
the workforce according to the needs
of industry and society in general.
Denmark
Switzerland
Iceland
A continuing focus on job-related
training and lifelong learning is a
vital part of the enhancement of the
competences of the workforce.
Sweden
Finland
Norway
Denmark is still the absolute winner
of this benchmark. According to this
survey, more than 30 per cent of the
population in the 25-64 age group
have participated in job-related
education and training within the last
month. The Danish rank should be
viewed in the light of a long tradition
for in-service training in Denmark,
but has also to do with the fact that
relatively many young Danes do not
complete their education before the
age of 25.
Netherlands
United Kingdom
Austria
Slovenia
Estonia
Czech Republic
Spain
Portugal
Germany
Ireland
Belgium
Italy
France
Poland
Turkey
Slovak Republic
Greece
Note The figure covers all types of training
and education. In some countries, it also
includes students who start late.
Hungary
Source Eurostat, EU Labour Force Survey
Behind the benchmark
0
5
10
15
20
25
30
35
Percentage of population between the
age of 25 and 64 who indicate they have
attended education or training in the past
four weeks
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
61
GLOBAL BENCHMARK REPORT 2014 – PUBLIC ECONOMY
62
4.00 Public economy
Average ranks of countries
Switzerland
South Korea
Estonia
Finland
Chile
Norway
New Zealand
Sweden
Australia
Denmark
Slovak Republic
Czech Republic
Germany
Iceland
Poland
Canada
Netherlands
Austria
Hungary
Slovenia
Israel
United States
Turkey
United Kingdom
France
Ireland
Mexico
Japan
Italy
Portugal
Spain
Greece
Belgium
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
25
27
28
29
30
31
32
33
Switzerland is most
successful in terms of
average ranking in the
benchmarks for Public
economy.
(1)
(2)
(3)
(6)
(7)
(4)
(9)
(8)
(5)
(10)
(11)
(12)
(13)
(14)
(16)
(18)
(19)
(15)
(20)
(17)
(23)
(22)
(21)
(24)
(28)
(32)
(27)
(26)
(29)
(24)
(30)
(31)
(33)
0
5
10
15
20
25
30
The average ranks of countries in the
Public economy pillar
GLOBAL BENCHMARK REPORT 2014 – PUBLIC ECONOMY
PUBLIC ECONOMY
Among other lessons, the financial crisis and the following European debt
crisis have taught the world how important it is to monitor the health of a
country's public sector. A country's economic robustness is dependent not
only on a strong and prosperous private sector but also on an efficient and
balanced public sector. Among other factors, the fourth pillar assesses budget
balance, public debt, public expenditure, and corruption levels.
Switzerland excels as the OECD country with the best average ranking in Public economy. The country has the lowest public expenditure as a share of GDP. Additionally,
Switzerland is one of few OECD countries with a structural surplus on its public budgets and the Swiss public sector is among the smallest in the OECD.
South Korea ranks second with the largest structural surplus on its public budgets.
Furthermore, South Korea places the highest priority on investing government funds in
areas most likely to generate future growth, such as education and R&D.
Estonia is in third place. The country has the lowest public gross debt as a percentage
of GDP as well as frequent use of the Internet for communication between the public
and private sectors.
63
GLOBAL BENCHMARK REPORT 2014 – PUBLIC ECONOMY
64
4.01 Public spending as a percentage of GDP, 2012
OECD
EUROZONE
Switzerland
Mexico
Chile
Turkey
United States
South Korea
Slovak Republic
Greece
Poland
Ireland
Portugal
Australia
Austria
Estonia
Germany
New Zealand
Italy
Spain
Hungary
Japan
Czech Republic
Slovenia
Norway
Canada
United Kingdom
Israel
France
Belgium
Finland
Iceland
Sweden
Netherlands
Denmark
Public spending covers a range of
different services, which are central
in supporting the business community, for example childcare, education and research. But the public
sector is financed by taxes that
decrease wealth in society, and at
the same time the public and private
sectors are competing for the same
workers.
Switzerland, Mexico and Chile have
the lowest public spending as a
percentage of GDP.
There is some uncertainty linked to
comparability across countries.
China
Russia
Behind the benchmark
Source OECD.Stat
0
5
10
15
20
25
30
Per cent of GDP
4.02 Public primary expenditure as a percentage of GDP, 2011
OECD
EUROZONE
Public primary expenditure is
expenditure excluding interest
payment on public debt and is
therefore an indication of the size of
the public sector. Since the public
sector is financed by taxes that
reduce the prosperity of society,
there is an upper limit for the size
of the public sector if the country
wishes to be a dynamic business
community.
South Korea
Switzerland
Turkey
Slovak Republic
Estonia
Israel
Japan
Poland
Czech Republic
Iceland
South Korea, Switzerland and
Turkey have the lowest public
primary expenditure among the
OECD countries (measured as a
percentage of GDP).
Germany
Norway
Spain
Ireland
There is some uncertainty linked
to comparability across countries.
This uncertainty is mainly due to
differences in the degree to which
social transfers are disbursed in net
or gross values – i.e. whether they
are taxed or not.
Greece
United Kingdom
Italy
Portugal
Hungary
Netherlands
Austria
Slovenia
Belgium
Sweden
France
Finland
Denmark
Russia (2008)
Source OECD.Stat and DI calculations
Behind the benchmark
0
10
20
30
40
50
60
70
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – PUBLIC ECONOMY
65
4.03 Structural budget balance, 2013
OECD
EUROZONE
Public deficits and public borrowing
affect the growth potential of businesses, including demand and
access to financing. Furthermore,
public deficits contribute to creating
uncertainty regarding the future,
and this often has negative consequences for the investment level of
businesses.
South Korea
Greece
Italy
Switzerland
Germany
Sweden
Denmark
Norway
New Zealand
Finland
Austria
Netherlands
Czech Republic
Iceland
Belgium
Hungary
Portugal
Australia
France
Canada
Spain
Ireland
Poland
United States
United Kingdom
Japan
South Korea, Greece, Italy,
Switzerland and Germany were the
only OECD countries with structural
surpluses on their public budgets
in 2013.
* Data from IMF.
Note The structural budget balance shows
the public budget balance adjusted for the
cyclical situation and special temporary
factors (such as temporary high/low public
income from stock or non-recurring income/
expenses).
Russia*
China*
Brazil*
India*
Behind the benchmark
Source OECD Economic Outlook No. 94 and
IMF World Economic Outlook October 2013
-10
-8
-6
-4
-2
0
2
Per cent of GDP
4.04 Public gross debt as a percentage of GDP, 2013
EUROZONE
OECD
Estonia
Norway
Australia
South Korea
New Zealand
Switzerland
Sweden
Czech Republic
Denmark
Slovak Republic
Poland
Finland
Israel
Slovenia
Germany
Netherlands
Austria
Hungary
Canada
Spain
United States
Belgium
United Kingdom
France
Iceland
Ireland
Portugal
Italy
Greece
Japan
Behind the benchmark
The size of the public debt is significant for the government’s freedom
of economic action. A country with
high debt is burdened with significant interest payments. Public gross
debt primarily covers the liabilities
of the public sector.
Estonia, Norway and Australia had
the lowest public gross debt in
2013.
Note Public financial gross debt.
Source OECD Economic Outlook No. 94
0
40
80
120
160
200
240
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – PUBLIC ECONOMY
66
4.05 Public net debt as a percentage of GDP, 2013
EUROZONE OECD
Public net debt comprises all financial assets and liabilities in the
public sector. The size of public
debt is a determining factor in a
state’s ability to act economically. A
country with high debt is burdened
with sizeable interest payments.
Norway
Finland
South Korea
Estonia
Sweden
Switzerland
Norway has comprehensive public
net wealth and yet again takes a
clear top position in the benchmark
for net debt.
New Zealand
Denmark
Australia
Czech Republic
Slovenia
Slovak Republic
Poland
Canada
Netherlands
Germany
Austria
Iceland
Hungary
Spain
France
United Kingdom
United States
Belgium
Ireland
Portugal
Italy
Greece
Note Public financial net debt.
Japan
Source OECD Economic Outlook No. 94
Behind the benchmark -200
-160
-120
-80
-40
0
40
80
120
160
200
Per cent of GDP
4.06 Growth expenditures as percentage of primary expenses, 2011
Education and state
education grants
Investment
Research and development
South Korea
Poland
Switzerland
Norway
It may support the growth of the
private sector if the government
prioritises its expenditure so that a
larger share of it goes to areas that
represent a genuine investment in
the future.
Iceland
Slovenia
Sweden
Netherlands
Expenditure for education, R&D and
public investment, in particular, can
be viewed as supporting growth.
Czech Republic
Spain
Portugal
South Korea, Poland and
Switzerland take the top three ranks
in terms of the share of primary
public expenditure that supports
growth.
Denmark
Japan
Finland
Israel
France
Hungary
Belgium
Ireland
Germany
Note This benchmark is combined of 2.02
(Public sector investment as a percentage
of GDP), 2.06 (Public expenditure on
research and development as a percentage of
GDP), 3.11 (Expenditure on education as a
percentage of GDP) including state education
grants and 4.02 (Public primary expenditure
as a percentage of GDP)
Austria
Italy
OECD
Eurozone
Source OECD.stat and DI calculations
Behind the benchmark
0
5
10
15
20
25
30
35
40
Per cent
GLOBAL BENCHMARK REPORT 2014 – PUBLIC ECONOMY
67
4.07 Government-funded research, development and demonstration in energy technologies, 2012
OECD
EUROZONE
Demand for modern energy technology is increasing across the
globe. Public investment in the
development of energy technology
is a precondition for realising the
market potential.
Finland (2011)
Hungary
Canada
Japan (2011)
Norway
Finland and Hungary are the countries to undertake most public
investment in this area. Both countries actively support research,
development and demonstration
in energy efficiency and renewable energy. Finland also spends
a smaller part of the funding on
nuclear power.
France (2011)
Denmark
South Korea (2011)
United States (2011)
Austria (2011)
Switzerland
Sweden
Australia
Slovak Republic
Germany
Netherlands (2011)
Italy (2011)
Portugal
Czech Republic (2010)
Spain (2010)
United Kingdom
Ireland (2011)
New Zealand
Greece (2011)
Turkey (2009)
Source IEA, OECD.Stat, energiforskning.dk
and DI calculations
Behind the benchmark 0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Share of GDP (per mille)
4.08 Government purchase of goods and services*, 2012
EUROZONE
OECD
To a certain extent, government
purchases of goods and services can
be seen as an indicator of public use
of private suppliers. In addition to
purchases of IT equipment, means
of transport, furniture etc. the
public sector also buys a long list of
services from private businesses.
United Kingdom
Finland
Iceland
Netherlands
Hungary
Czech Republic
The public sector’s use of private
suppliers helps to ensure that the
assignments are carried out in the
most efficient way. At the same
time, government use of private
suppliers supports the development
of the private service sector.
Estonia
Germany
Sweden
Slovak Republic
Switzerland
The three top ranks are taken by
the United Kingdom, Finland and
Iceland.
Poland
Denmark
Slovenia
Italy
Spain
Austria
Norway
Ireland
Portugal
France
* Public spending does not necessarily cover
the same activities in all countries. The indicator also includes public purchases of goods
and services from other public institutions.
Greece
Belgium
Source Eurostat and DI calculations
Behind the benchmark
0
10
20
30
40
50
60
Government purchases of goods
and services as percentage of total
government expenditure
GLOBAL BENCHMARK REPORT 2014 – PUBLIC ECONOMY
68
4.09 E-government usage by enterprises, 2013
EUROZONE OECD
Usage of the Internet for communication and reporting between the
public and private sectors leads to
considerable resource savings for
both parties. In a competitive society, it is important that government
e-services are available and user
friendly, and that they are used by
businesses.
Finland
Iceland
France
Denmark
Estonia
Ireland
Companies in Finland are the most
frequent users of e-government.
Sweden
Czech Republic
Norway
Slovenia
Austria
Portugal
Slovak Republic
United Kingdom
Netherlands
Poland
Belgium
Italy
Greece
Hungary
Germany
Spain
Turkey
Source Eurostat
Behind the benchmark
0
10
20
30
40
50
60
70
80
90
100
Percentage of enterprises that use
the Internet for interaction with public
authorities
4.10 Bribery and corruption, 2013
OECD
EUROZONE
Denmark
New Zealand
Finland
Sweden
Norway
Switzerland
Netherlands
Australia
Canada
Germany
Iceland
United Kingdom
Belgium
Japan
United States
Ireland
Chile
France
Austria
Estonia
Portugal
Israel
Poland
Spain
Slovenia
South Korea
Hungary
Turkey
Czech Republic
Slovak Republic
Italy
Greece
Mexico
Bribery and corruption prevent the
growth and development of companies and create insecurity regarding
their business opportunities.
Scoring the lowest level of bribery
and corruption, Denmark and New
Zealand share first place. Generally,
the bottom places have not changed
significantly for several years. This
confirms the notion that the fight
against corruption is a lengthy
process that requires changes of
both the institutional framework
and the mentality of the population.
Corruption and bribery are widespread in many growth markets
including the BRIC countries.
Brazil
China
India
Russia
Behind the benchmark
Note High values indicate that bribery and
corruption are widespread.
Source Transparency International,
Corruption Perceptions Index 2013
0
1
2
3
4
5
6
7
8
Index 0-10
GLOBAL BENCHMARK REPORT 2014 – PUBLIC ECONOMY
69
GLOBAL BENCHMARK REPORT 2014 – COSTS
70
5.00 Costs
Average ranks of countries
Switzerland
Chile
Poland
Ireland
Slovak Republic
Canada
Czech Republic
United States
Japan
Spain
South Korea
Turkey
Portugal
Estonia
Israel
Sweden
Greece
Slovenia
United Kingdom
Mexico
Germany
Hungary
Australia
France
Iceland
Netherlands
Austria
New Zealand
Belgium
Denmark
Norway
Finland
Italy
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
18
20
21
22
23
23
25
26
27
28
29
30
31
32
32
Switzerland tops the list of
average ranking in the
benchmarks for Costs.
(1)
(2)
(13)
(4)
(3)
(5)
(7)
(9)
(10)
(6)
(8)
(11)
(15)
(26)
(16)
(21)
(12)
(20)
(19)
(28)
(14)
(24)
(22)
(24)
(22)
(16)
(18)
(29)
(31)
(32)
(27)
(30)
(33)
0
5
10
15
20
25
The average ranks of
countries in the Costs pillar
GLOBAL BENCHMARK REPORT 2014 – COSTS
71
COSTS
The competitiveness of businesses in a global economy depends on whether
productivity and the quality of the product offset the costs of production.
Production costs and taxes are therefore important indicators of competitiveness. Maintaining a competitive cost level includes competitive income
and corporate tax levels, competitive labour costs and fair access to capital
markets.
In spite of high labour costs, Switzerland is the most competitive country in terms of
costs. This rank is earned as a result of low marginal tax rates, particularly for medium wage earners, and low inflation. Furthermore, Swiss businesses have easy access
to capital markets, which minimises financial costs and helps to stimulate economic
growth.
Chile holds second place in Costs primarily due to a low tax burden.
Poland is number three. The country is favoured by a highly competitive nominal corporate tax rate, easy access to capital markets and the lowest hourly compensation
costs in manufacturing.
GLOBAL BENCHMARK REPORT 2014 – COSTS
72
5.01 Total tax revenue as a percentage of GDP, 2012
OECD
EUROZONE
Mexico (2011)
Chile
United States
Australia (2011)
South Korea
Turkey
Switzerland
Ireland
Slovak Republic
Japan (2011)
Canada
Israel
Poland (2011)
Portugal
Estonia
Spain
New Zealand
Greece
United Kingdom
Czech Republic
Iceland
Slovenia
Germany
Netherlands (2011)
Hungary
Norway
Austria
Finland
Sweden
Italy
Belgium
France
Denmark
Behind the benchmark
Total tax revenue is a measure of
the size of the government and thus
the country’s structure with regard
to public versus private handling
of welfare tasks such as childcare,
hospitals, elderly care etc.
A high level of taxes makes it less
attractive for individual citizens
to show private initiative. The tax
burden is also a fine indicator of how
competitive each country is in terms
of attracting foreign entrepreneurs.
With a tax burden of almost 20
per cent of GDP, Mexico retains its
lead as the country with the lowest
overall tax revenue as a percentage
of GDP. Chile and the United States
occupy the following two positions.
Note The tax burden can be calculated in
many different ways.
Source OECD, Revenue Statistics 2013
0
5
10
15
20
25
30
35
40
45
50
Per cent of GDP
5.02 Marginal tax rate for medium wage earners*, including indirect taxes, 2012
Direct marginal tax
Indirect taxes
Chile
Mexico
Switzerland
South Korea
Japan
New Zealand
Australia
United States
Israel
Canada
Poland
Ireland
United Kingdom
Turkey
Iceland
Slovak Republic
Estonia
Denmark
Spain
Portugal
Czech Republic
Sweden
Greece
Slovenia
Netherlands
Italy
Norway
Hungary
Finland
France
Germany
Austria
Belgium
The marginal tax rate indicates
how much the individual taxpayer
receives after tax per additional
dollar earned. The marginal tax rate
is therefore vital for the incentive
to make an extra effort at the workplace. By including indirect taxes,
this benchmark displays the effect of
Value Added Tax and other indirect
taxes on the consumption value of
income after tax.
Chile is the OECD country with the
lowest marginal tax for medium
wage earners. Belgium takes the
bottom place with a marginal tax
rate of almost 75 per cent.
* Average wage for an industrial worker.
Note Data for indirect taxes is from 2011
OECD
Eurozone
Behind the benchmark
Source OECD, Taxing Wages 2012, Danish
Ministry of Taxation and DI calculations
0
10
20
30
40
50
60
70
80
Per cent
GLOBAL BENCHMARK REPORT 2014 – COSTS
73
5.03 Marginal tax rate for high wage earners*, including indirect taxes, 2012
Direct marginal tax
Indirect taxes
Chile
South Korea
Mexico
Japan
Switzerland
New Zealand
Canada
United States
Spain
Poland
Australia
Austria
Slovak Republic
Germany
Israel
Estonia
Turkey
United Kingdom
Czech Republic
Iceland
Netherlands
Hungary
Portugal
Norway
Ireland
Greece
Finland
Denmark
France
Slovenia
Italy
Sweden
Belgium
The marginal tax rate for higher
wage earners affects the labour
supply of the most productive
workers. High taxes reduce the
advantage of taking tertiary education, completing it quickly, working
longer hours and retiring later.
Chile has the lowest level of
marginal taxes for higher paid wage
earners. The highest marginal tax
rate is found in Belgium.
* 167 per cent of the average wage for
an industrial worker
Note Data for indirect taxes is from 2011
OECD
Eurozone
Behind the benchmark
Source OECD, Taxing Wages 2012, Danish
Ministry of Taxation and DI calculations
0
10
20
30
40
50
60
70
80
Per cent
5.04 Nominal corporate tax rate, 2013
EUROZONE
OECD
Ireland
Slovenia
Czech Republic
Poland
Chile
Iceland
Turkey
Hungary
Estonia
Switzerland
Sweden
Slovak Republic
United Kingdom
South Korea
Finland
Austria
Denmark
Israel
Netherlands
Greece
Canada
Italy
New Zealand
Norway
Germany
Australia
Mexico
Spain
Portugal
Belgium
France
Japan
United States
With increasing globalisation, both
capital and companies become
increasingly mobile. The corporate
tax rate therefore becomes increasingly significant because it reduces
investment yield. OECD analyses
show that lower corporate tax is
the most effective fiscal measure to
increase growth.
Ireland still has the lowest corporate tax rate among OECD countries
at only 12.5 per cent. The United
States, Japan and France still have
the highest corporate tax rates
and this reflects the fact that large
countries, thanks to their domestic
markets, can easily attract investment despite high corporate tax
rates.
Russia
China
India
Brazil
Behind the benchmark
Source OECD Tax database and KPMG’s
Corporate and Indirect Tax Rate Survey 2013
0
5
10
15
20
25
30
35
40
45
Per cent
GLOBAL BENCHMARK REPORT 2014 – COSTS
74
5.05 Actual corporate tax rate, 2012
OECD
EUROZONE
Belgium
Canada
Slovak Republic
Czech Republic
Estonia
France
Iceland
Switzerland
Greece
Hungary
Ireland
Slovenia
Finland
Poland
South Korea
Portugal
Austria
Sweden
Turkey
Denmark
Italy
Netherlands
Chile
Spain
United Kingdom
Germany
Israel
Mexico
Norway
Australia
Japan
United States
New Zealand
The tax payment of businesses
depends not only on the corporate
tax rate, but also on the breadth of
the tax base – which means how
big a proportion of the profit that is
taxed. The actual corporate tax rate
is significant in relation to company
localisation and investment decisions and, consequently, in relation
to retaining and attracting businesses and jobs.
Belgium has OECD’s lowest actual
corporate tax rate at 6.4 per cent.
Note The actual corporate tax rate is based
on a model calculation (for a conventional
production company (Ltd) with 60 employees
and without international operations).
China
Russia
India
Brazil
Behind the benchmark
Source PricewaterhouseCoopers Paying
Taxes “The Global Picture” 2014
0
5
10
15
20
25
30
35
Per cent
5.06 Annual inflation, 2009-2013 (average)
EUROZONE OECD
Japan
Switzerland
Ireland
Sweden
France
Portugal
Germany
Canada
United States
Norway
Spain
Slovenia
Czech Republic
Denmark
Belgium
Greece
Netherlands
Italy
Austria
New Zealand
Chile
Slovak Republic
Australia
Finland
Israel
South Korea
United Kingdom
Poland
Estonia
Mexico
Hungary
Iceland
Turkey
Price inflation is central to the stability of a country, and stable price
development is also an essential criterion for countries in the European
monetary cooperation. This benchmark shows the average annual
increase in consumer prices.
For several years, Japan has
recorded falling prices (deflation)
and once again ranks as number one
with an average growth in consumer
prices of -0.5 per cent over the past
five years. It should be noted that
deflation is not desirable.
Growth markets often face problems
curbing inflation. Especially Russia
and India have high inflation rates.
China
Brazil
Russia
India
Behind the benchmark
Source OECD Economic Outlook No. 94
and DI calculations
-2
0
2
4
6
8
10
12
Per cent
GLOBAL BENCHMARK REPORT 2014 – COSTS
75
5.07 Access to capital markets, 2013
EUROZONE
OECD
Poland
Switzerland
Sweden
Germany
Norway
Israel
Belgium
United States
Denmark
Netherlands
United Kingdom
Canada
Turkey
Australia
Chile
Finland
Czech Republic
Ireland
France
New Zealand
Japan
Austria
South Korea
Slovak Republic
Estonia
Mexico
Portugal
Hungary
Italy
Spain
Greece
Slovenia
Iceland
Easy access to capital markets minimises the financial costs for businesses, contributes to increased
investment, and stimulates
economic growth. In the wake of
the financial crisis, access to capital
markets is still difficult in many
countries.
In their own assessment, senior
managers in Poland, Switzerland
and Sweden have easy access
compared with the other OECD
countries.
Note This benchmark shows to which degree
senior managers assess that access to
national and foreign capital markets is easy.
The survey dates back to early 2013.
India
Brazil
China
Russia
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0-10
5.08 Hourly compensation costs in manufacturing, 2012
OECD
EUROZONE
In a globalised world, company
competitiveness is determined by
a reasonable relationship between
productivity and costs. The higher
the costs, the more productive businesses need to be in order to be
competitive – all other things being
equal.
Poland
Hungary
Slovak Republic
Czech Republic
Portugal
Poland, Hungary and the Slovak
Republic are among the countries
with the lowest hourly compensation
costs in manufacturing.
Slovenia
Greece (2009)
United Kingdom
Spain
Italy
Ireland
Japan
United States
Austria
Netherlands (2011)
Finland
Germany
France
Denmark
Belgium
Sweden
Norway
Behind the benchmark
Source DA’s database on international
wage statistics
0
50
100
150
200
250
300
350
400
DKK
GLOBAL BENCHMARK REPORT 2014 – COSTS
76
5.09 Annual growth in unit labour costs, 2009-2013 (average)
EUROZONE
OECD
The development of unit labour
costs illustrates the combined
effect on production costs of wage
increases and productivity development. An increase is an expression of the fact that the pay rises
were larger than productivity development.
Greece
Ireland
Spain
Japan
United States
Estonia
Switzerland
All OECD countries except for
Greece, Ireland, Spain and Japan
display average positive growth in
unit labour costs over the past few
years.
Slovak Republic
Czech Republic
Sweden
Slovenia
Denmark
Poland
France
Netherlands
Canada
Italy
Hungary
South Korea
Germany
Belgium
Australia
Austria
United Kingdom
Finland
Note Unit labour costs for the entire
economy. Data from the second half of 2013
is an OECD estimate.
Norway
Iceland
Behind the benchmark
Source OECD, Economic Outlook No. 94
and DI calculations
-3
-2
-1
0
1
2
3
4
5
6
Per cent
5.10 Yield of environmental taxes as a percentage of GDP, 2011
Energy
Transport excluding fuel
Pollution/resources
Spain
France
Slovak Republic
Environmental taxes are a cost for
enterprises and have major influence on their international competitiveness.
Iceland
Belgium
Germany
The rationale behind environmental
taxes is to make utilisation of scarce
or undesired resources more expensive and thus reduce consumption.
If individual countries choose to go
alone and impose increased costs
on production without balancing
them with other relief, then there is
a risk that production moves away
from these countries.
Czech Republic
Portugal
Austria
Sweden
Hungary
Poland
Ireland
Taxes on resources and transboundary pollution should be agreed
internationally if they are to have an
effect on global resource consumption and the climate.
United Kingdom
Norway (2010)
Greece
Italy
Spain has the smallest yield of environmental taxes as a percentage of
GDP, and Denmark the highest.
Estonia
Finland
Slovenia
Netherlands
Denmark
Eurozone
OECD
Behind the benchmark
Source European Commission, Taxation
trends in the EU, 2013
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – COSTS
77
78
GLOBAL BENCHMARK REPORT 2014 – X X X
GLOBAL BENCHMARK REPORT 2014 – X X X X
Global Benchmark Report
79
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
81
NEW TRENDS IN GLOBAL
INVESTMENT FLOWS
In 2012, for the first time ever, more than half of the world’s foreign direct investment (FDI) was channelled to countries outside OECD member states,
which, on the other hand, are still responsible for the majority of the investments. This development is apparent when looking at the balance between inward and outward FDI in the EU-15, where stocks of outward FDI increasingly exceed inward FDI. The situation is particularly problematic for countries experiencing a declining inflow since FDI can raise both employment and
productivity wherever it occurs. It is therefore important for all countries to be
able to attract FDI.
A large gap in FDI has evolved in the EU-15 countries
Many affluent countries have more outward foreign direct investment (FDI) than
inward. In other words, they have invested more abroad than other countries have
invested in them and this gap in FDI seems to be growing. In fact, the FDI gap of
the EU-15 has nearly tripled over the past decade and overall currently constitutes
about 15 per cent of GDP in these countries. Although many countries have experienced this development, the scope varies greatly as well as the underlying reasons
for the development of the investment gap.
Many countries have
growing FDI gaps
The FDI gap has grown significantly in EU-15
EU-15 outward FDI stock less inward FDI stock
Per cent of GDP
18
16
14
12
10
8
6
4
2
0
Source OECD and DI
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
82
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
Increasing amounts of FDI channelled to non-OECD countries
Total global flow of inward FDI from OECD member states and the world's other countries
OECD
The world excluding
the OECD
USD bn
2,500
Financial crisis
2,000
European
debt crisis
Dot-com bubble
1,500
1,000
Note Estonia and the Slovak Republic
are not included in flow to the OECE
before 1992.
The world's aggregate inward and
outward FDI flows should be the same but
are not due to measurement errors.
Source UNCTAD and DI
500
0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010 2012
FDI is moving outside of the
OECD…
Similar to the EU-15, many OECD member states are experiencing a gap between
inbound and outbound FDI. The reason is a general and growing tendency to invest outside these countries. In 2006, 70 per cent of the world’s FDI flows went to
OECD member states while, in 2012, less than half landed there.
… but it still comes from
OECD member states
The main part of the world’s FDI, however, still comes from OECD member states
even though there has been a small decline in their share of the world’s outward
FDI flows from 80 per cent in 2006 to 70 per cent in 2012. This means that in 2012,
70 per cent of the world’s FDI came from OECD member states while only half of
global FDI was channelled to those countries. The result is that overall the gap has
increased.
Furthermore, the financial crisis in 2008 and the debt crisis in 2011 had a restraining effect on global FDI flows. The flows, however, were only below the 2006 level
in 2009; otherwise, they have been higher. The general increase in FDI has to do
with the general growth of the world economy and is similarly an expression of an
increasingly globalised world.
In comparing OECD member states, it appears that outward FDI primarily exceeds
inward FDI in the most affluent countries. The question is then whether such a FDI
gap is good or bad?
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
83
FDI primarily comes from the OECD member-states
Total global flow of outward FDI to OECD member states and the world's other countries
USD bn
2,500
OECD
The world excluding
the OECD
Financial crisis
2,000
European
debt crisis
1,500
Dot-com bubble
1,000
Note Estonia and the Slovak Republic
are not included in flow to the OECE
before 1992.
500
The world's aggregate inward and
outward FDI flows should be the same but
are not due to measurement errors.
Source UNCTAD and DI
0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Although investment gaps seem to have occurred primarily in the most affluent
OECD member states, the pattern of inward FDI is not the same across the states.
OECD member states differ significantly in their ability to attract direct investments
from abroad. This shows that although a larger share of global FDI is channelled
outside OECD member states, there is still great potential to attract more FDI within these countries.
Great differences in a
country’s ability to attract
FDI
It is not obvious whether a gap between the outward and inward FDI is a positive or
negative development for a given country. As an example a FDI gap that occurs due
to less inward FDI and increasing outward FDI could indicate that domestic businesses increasingly remain with domestic owners while they are acquiring foreign
companies and expanding their operations in export markets. At face value that
sounds positive, but is foreign ownership necessarily a bad thing, or could it even
be preferable?
Not so clear whether the
development is positive or
negative
On the other hand, the gap could signify that both domestic and foreign companies
have lost interest in the given country. In that case, a large and growing FDI gap is
undesirable.
In order to understand whether a FDI gap is good or bad, it is necessary to take a
closer look at the development of the investment balance, and at what FDI actually entails. Based on the development in many European countries, it appears that
there are both positive and negative aspects to a growing FDI gap.
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
84
AN INVESTMENT GAP CAN BE LARGE OR
SMALL FOR MANY REASONS
Outward FDI exceeds inward FDI in affluent countries
OECD member states' outward FDI stock less inward FDI stock, 2012
Luxembourg
Switzerland
Netherlands
Ireland
Denmark
Germany
Finland
United Kingdom
France
Austria
Japan
Italy
USA
Sweden
Belgium
Norway
Canada
South Korea
Greece
Israel
Spain
Australia
Mexico
Iceland
Slovenia
Turkey
Portugal
Poland
New Zealand
Chile
Hungary
Slovak Republic
Estonia
Czech Republic
-80
-60
-40
-20
0
20
40
60
80
Source OECD and DI
100
Per cent of GDP
The attraction of FDI varies greatly among the individual countries
Average annual flow of inward FDI 2007-2012 as a proportion of GDP
Luxembourg
Belgium
Ireland
Iceland
Chile
Estonia
Hungary
Israel
Switzerland
Australia
Netherlands
United Kingdom
Canada
Sweden
Czech Republic
Norway
Poland
Slovak Republic
Austria
Spain
Portugal
Mexico
Turkey
France
New Zealand
USA
Slovak Republic
Finland
Denmark
Germany
South Korea
Italy
Greece
Japan
0
Source UNCTAD and DI
5
10
15
20
25
30
Per cent
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
85
Australia
Norway
Denmark
France
France’s stocks
of both inward and
outward FDI have
decreased in the
same period, and
since outward FDI
has decreased more,
the gap has become
smaller. An explanation could be that
France is generally
struggling with poor
competitiveness and
has had a tough time
in the financial crisis
and the successive
debt crisis.
The Danish FDI gap
is caused by a
decreasing flow of
inward FDI that
coincides with an
increasing flow of
outward FDI.
Similar to Denmark,
outward FDI in
Norway exceeds
inward FDI, but in
Norway, the gap is
smaller today than
in 2006 because the
inward FDI stock has
increased more than
the outward FDI. The
increase in inbound
FDI is mainly found
in oil production and
real estate.
In Australia, the
stock of outward FDI
has declined from
2006 through 2012
while the stock of
inward FDI has
increased.
It is primarily the
major inflow of
FDI to the mining
industry that has
caused Australia’s
stock of inward FDI
to exceed outward
FDI.
Source OECD and UNCTAD
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
86
FDI has many favourable effects
FDI can be many things
In principle, FDI is a transfer of capital securing the investor a significant share of
equity and accordingly influence in the company in which he has invested. Technically, FDI can be divided into four types:
1 Start-up of a new company/subsidiary
2 Transfer of capital to subsidiaries
3 Whole or partial acquisition of companies
4 Flow-through investment
The division into the four types makes it easier to understand how FDI can affect
the economy in the country it targets.
Some FDI benefits
employment ...
Start-up of new companies will involve the creation of new jobs since it can be characterised as green field investment. This is a particularly interesting aspect of inward FDI.
… while others have no real
economic effect
The transfer of capital to subsidiaries may also involve green field investment in
cases where the capital is used to expand the activities of the subsidiaries. There
may be other motives, though. If, for instance, the company’s investment goes to
improvements in production equipment, it does not immediately create a need for
more employment. On the other hand, it increases productivity. However, investment in a subsidiary may also be pure cash management with no real economic effect since it is simply a transfer of money that will be returned at a later stage.
Much FDI is acquisitions
Acquisitions have no obvious effect on employment. Since a major part of FDI covers whole or partial acquisitions of companies, no direct correlation between FDI
and employment can be expected.
1 Start-up of new business
2 Transfer of capital to subsidiary
Over the next five years Siemens will expand its
presence in Brazil by investing up to USD 1 billion inlcuding a brand new factory producing high
and low voltage motors and generators and a R&D
center in Rio de Janeiro.
Dell is expected to expand its operations in China
by 2020 with a USD 100 billion investment.
Sources Siemens, Microsoft, Dell and Nationalbanken
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
Flow-through investment has no real economic significance since the capital is
merely flowing through a holding company to the country where the actual investment takes place. In countries such as Belgium, Ireland, the Netherlands and Luxembourg, where much FDI flows through holding companies, both inbound and
outbound FDI will be at an artificially high level.
87
Flow-through investment
has no effect on the
economy
This means that not all FDI has an effect on the economy, but over the years, the
FDI will presumably include all types.
Increasing globalisation makes it important to understand
the factors that determine whether national and international
companies expand abroad or at home. The easy answer is
that businesses locate wherever it is most profitable.
3 Acquisition of company
4 Flow-through investments
In 2013, software giant Microsoft bought Nokia’s
main handset business for 5.44 billion euros.
American DuPont paid 5.8 billion dollars for the acquisition of Danish Danisco in 2011. The company was acquired
through a holding company in Luxembourg. Therefore, the
investment did not affect the economy of Luxembourg, even
though it was considered an American investment in Luxembourg and an investment from Luxembourg into Denmark.
billion euros
billion USD
billion USD
88
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
Greater revenue per employee with foreign owners
2006-2011, number of employees in man-years
USD 1,000 per employee
600
500
400
300
200
100
Source Statistics Denmark
Higher revenue per employee with foreign owners
0
Danish owners
Foreign owners
Foreign owners raise productivity
As mentioned above, foreign ownership per se does not affect employment, but
may have a positive effect on productivity. Considering Denmark as an example,
foreign-owned companies in Denmark have higher revenue per employee than
Danish-owned companies. This may be due to the fact that new owners bring new
knowledge, new ideas or new technology when they take over a company.
Part of the explanation as to why foreign-owned companies have higher revenue
per employee is presumably also that it is often the largest and most productive
companies that are acquired by foreign investors. On the other hand, the object
of acquiring a company must be to increase its value by increasing the expected
future earnings, either by raising productivity or by increasing sales. This leads to
the conclusion that foreign owners often work with productivity improvements – a
conclusion that is confirmed in a Danish context by a survey taken among DI member companies.
When FDI increases the productivity of companies invested in, it also works as an
incentive for other companies to increase their productivity in order to remain competitive. One way to do this could be to copy some of the foreign owners’ methods,
and this means that, over time, foreign ownership could create a broader productivity lift.
Interest from abroad also
facilitates access to capital
Last, but not least, a general interest from foreign investors is important in terms
of being able to obtain capital for the companies of a country. Major interest will
make it easier and less expensive for companies to find financing. This will make
more investment attractive, and this again will increase the physical capital stocks
and raise productivity.
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
89
Companies with foreign ownership have more focus on productivity improvements
Responses to question whether the company is working to enhance productivity
Per cent
100
No
Yes, but without concrete
productivity targets
80
Yes, with concrete
productivity targets
60
40
20
0
Source DI's company panel, survey
among 552 member companies of which
157 have foreign owners among their
ownership
Foreign ownership
Danish owners
Foreign ownership not always to be preferred
Foreign capital may provide new jobs in the country it is invested in, but it may also
have a positive effect on productivity through the increase of capital goods or the introduction of new ideas and technologies by the foreign owners. It does not mean,
however, that any FDI or acquisition is an advantage for the receiving country. The
motive of the individual investor varies, and for some this could be the closure of
domestic branches. Precisely for this reason, it is vital to be as attractive as possible to a large number of investors so that it is possible to deselect those who do not
benefit the country.
In this context it is worth stressing that we are not anywhere near a situation where
all companies in either individual countries or in Europe as such are owned by foreigners. Denmark has relatively many foreign-owned companies compared with
other European countries, and still only 1.3 per cent of all companies in Denmark
have non-Danish owners. On the other hand, these are mainly larger companies,
so non-Danish ownership comprises a larger share of privately employed Danes.
Not all foreign acquisitions
are good…
... but most businesses still
have national owners
The majority of companies in Denmark have Danish owners
Proportion of foreign-owned companies of all firms and all private-sector employees in Denmark
1.3%
Danish owned
19.8%
98.7%
Foreign owned
80.2%
Number of companies
Number of employees
Note Number of employees in man-years
Source Statistics Denmark and DI
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
90
Measured by the number of employees, one fifth of those employed in the private
sector in Denmark are working in a company with non-Danish owners. These do
not only count companies acquired by foreign investors, but also jobs that were created as a result of foreign companies’ green field investment.
Relocation may be necessary for companies…
You could fear that companies that are being acquired will relocate to another
country. It seems at least plausible that foreign owners do not have the same sense
of belonging to the countries where they buy companies that the national owners
have. On the other hand, it is not a given fact that national owners have a choice in
deciding whether to keep the company in the original country. Irrespective of the
nationality of the owner, it is difficult for a company to survive if the product or service it offers can be produced more efficiently and cheaply abroad.
…. if they are not competitive in their country of origin
What keeps the companies at home in the long term are not the boundaries to the
outside world, but rather the conditions businesses operate under. National borders simply have diminishing significance for many companies. The increasing investment flows across national borders are evidence of that.
Outward FDI is often a good
thing …
…. but not always
Outward FDI is not all positive
When a country’s businesses have many direct investments and employees abroad,
it is generally good for the country. It is evidence of efficient and expanding companies that increase their presence in the world through acquisitions and expansion.
This was also highlighted in a Danish context in a survey taken among DI’s members. The survey showed that access to new markets and proximity to customers
were the main motive when Danish companies established jobs abroad.
When proximity to customers and new markets are the main motive for establishing jobs abroad, there is obviously nothing to be done differently to convince the
companies to establish the jobs at home. On the other hand, we can do something
New markets abroad and high labour costs in Denmark are main motives for establishing jobs abroad
Indicate how you weighted the motives for the decision to establish jobs abroad and not in Denmark
Better access to new markets/close to the customer
Very important
Important
Reduction of labour costs
Less important
Enhancement of company structure and internal
division of labour
Not important
Don't know
Taxes
Not sufficient access to qualified labour in Denmark
Source DI's company panel. Survey
among 442 companies. Completed
mid-June 2011
To get better access to specialised knowledge
and technology
0
20
40
60
80
100
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
91
in relation to the second most quoted motive for establishing jobs abroad, which
was reduction of labour costs.
In Denmark, as in several other affluent countries, we are not interested in competing directly with low-wage countries on wages. In order to avoid that, work carried out in Denmark must have a high level of knowledge in order to give it a higher
value, and production must be smarter or more automated. Many other European
countries also meet these criteria; so irrespective of how innovative Danish companies are, costs are still very important.
Outward FDI also covers outsourcing
Some of the jobs that companies establish abroad are not just expansions, but a
relocation of jobs to other countries. In other words, some of the outward FDI does
not only mean that a country is missing out on new jobs, but is an expression of a
direct loss of jobs.
Quality should offset costs
Outward FDI can also be
outsourcing…
Outsourcing may be necessary in order to secure the survival of companies if they
have activities that could be performed more efficiently or cheaply in other countries. In this case, outsourcing contributes to ensuring the survival of domestic
businesses. It is however a problem from a country’s perspective if its businesses
will be outperformed if they retain the jobs in the country.
When looking at the degree of outsourcing that takes place from countries across
Europe, the pattern seems to be that the most affluent countries are outsourcing
the largest share of their industrial jobs.
… some countries outsource
more than others…
Costs are a common cause of outsourcing in many other European countries, particularly the most affluent among them.
…. mainly due to high costs
Denmark has outsourced the highest proportion of industrial jobs
Outsourced jobs in the period 2009-2011 as a proportion of employment in industrial companies with 100 or more employees
Denmark
Netherlands
Norway
Portugal
Sweden
Belgium
Estonia
Slovak Republic
France
Romania
Lithuania
0
1
2
3
4
5
6 Per cent
Source Eurostat
92
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
High costs motivate outsourcing in affluent countries
Proportion that states costs as motivation factor for outsourcing
Finland
Denmark
Sweden
Ireland
Norway
Belgium
Netherlands
Slovak Republic
France
Latvia
Portugal
Estonia
Source Eurostat, International sourcing
Romania
statistics survey 2012
Lower wage costs
Lower costs
(excluding wage costs)
0
High knowledge content
retains jobs in affluent
countries
10
20
30
40
50
60 Per cent
In contrast, in affluent countries, access to qualified labour, specialised knowledge
and higher quality apparently have no significance in relation to outsourcing decisions. However, these factors cause companies to outsource from the less affluent countries in the study. The reasons for outsourcing offer indications about the
strengths and weaknesses of the individual countries. Denmark, for example, produces high quality products with high knowledge content, and very few companies
outsource with the motive to improving those aspects. The motivation for Danish
companies to relocate their production to other countries is Denmark’s high level
of costs.
The major scope of outward FDI and in some cases also outsourcing that many
countries experience could partly be compensated for by a capacity for attracting
more investment from abroad. In this context, it may be natural that inward FDI
and outward FDI do not balance in many OECD member states since a long list of
countries outside the OECD record far higher growth rates, which simply make it
more attractive to invest there. There are, however, major differences across countries, and some countries are doing far better than others in terms of the scope of
outsourcing and the ability to attract FDI.
Reduced inward FDI is worrying
Many countries attract less
FDI than they used to
As mentioned earlier, there is major difference as to how much FDI the various
countries attract. It is, however, equally interesting whether the individual countries, irrespective of level, have been able to increase their attraction of FDI or
whether they have experienced a distinct fall in recent years.
This picture is also rather mixed, but in general, most countries have increased
their attraction of new FDI in the period 2007-2012 compared with the period
2001-2006. This has to do with the fact that the flow of FDI to OECD member
states has generally increased in the period despite constituting a smaller proportion of the world’s total FDI.
However, many countries have also experienced a major decline in inward FDI,
which is a development that those countries should aim to reverse since it means
that they miss out on investment that can increase productivity and create jobs.
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
93
In low wage countries, quality, knowledge and qualifications motivate companies to outsource
Proportion that states quality, knowledge and qualification as motivation factor for outsourcing
Enhanced quality or introduction of new products
Access to specialised know
ledge and technology
Shortage of qualified labour
Romania
Estonia
Latvia
Portugal
Slovak Republic
Ireland
Finland
Norway
Belgium
Sweden
Netherlands
France
Denmark
0
5
10
15
20
30 Per cent
25
Source Eurostat, International sourcing
statistics survey 2012
Many countries have recorded increasing inward FDI
In the national currency, growth in inward FDI including flow-through from the period 2001-2006 through the period 2007-2012
Ireland
Norway
Chile
Australia
Japan
Turkey
Belgium
Canada
Israel
Austria
USA
Iceland
Switzerland
Poland
Hungary
Spain
United Kingdom
Sweden
Mexico
New Zealand
Greece
Germany
Portugal
Netherlands
Luxembourg
Italy
Estonia
Slovenia
Czech Republic
France
Finland
South Korea
Denmark
Slovak Republic
-100
Source OECD and DI
-50
0
50
100
150
200
250
300
350
400 Per cent
94
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
If return is too low, no investment
Other countries become
more attractiv …
The increasing global flow of foreign direct investment makes it important to understand the factors that determine whether national and international companies
expand abroad or at home. The easy answer is that businesses locate wherever it is
most profitable, and this is determined by the return on investment (ROI) and the
security for achieving the desired ROI.
… because high costs re- For countries such as Denmark, which attract less FDI than their neighbours and
duce the yield other comparable countries, as a minimum, investments should return the same
yield as in the other countries. Declining or relatively low inward FDI is not simply a
natural development that must be accepted.
EU-15 can increase their
attractiveness
Several factors can increase a country’s attractiveness
Investments in any country have advantages and drawbacks, but it is vital to
strengthen the advantages and reduce the drawbacks if the flow of FDI is to increase. This will also ensure a situation in which national businesses increasingly
retain and establish jobs at home instead of abroad. As stated earlier, several EU15 countries struggle with high costs and are therefore attracting less FDI than earlier. However, apart from the high costs, these countries have strong foundations
for attracting FDI on other accounts.
Denmark has a strong foundation for attracting FDI ...
Taking Denmark as an example, the advantages of operating a business include our
business conditions that fundamentally support the Danish industrial strengths,
which are production of high quality products and niche products. Denmark has
a qualified labour force, a low degree of corruption and a high level of confidence
in the population. These are strengths we should hold on to and continuously improve. Generally speaking, we have a strong foundation for operating a business in
Denmark, and this also suggests that foreigners should invest more in Denmark.
... but it must be even
stronger ...
The fact that this is not the case is because other factors limit investment in Denmark. Locating in Denmark does not provide access to a large market. This factor
is difficult to change. On the other hand, we can do something about the high level
of costs, which many businesses point to as an important motive for choosing to
invest abroad rather than in Denmark.
... our neighbours have a
strong foundation, too
We are not talking about Denmark lowering the level of cost to that of Eastern Europe or Asia. The high level of knowledge in the products that are made in Denmark
vouch for that. It is rather about competing with the cost levels in the countries
around us.
Improvement can be made
in many areas
Many other factors could be adjusted in order to make Denmark or any other country an attractive investment destination. This would make long-term investment
far more attractive along with an increased focus on ensuring sufficient labour with
the right qualifications, a good infrastructure and improved conditions for research
and development.
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
95
In addition, an investment always involves a certain degree of risk, and the greater
the risk, the larger the ROI required. For this reason, we must also consider how
the risk can be minimised. One way for governments to contribute is by being forthcoming and action-oriented towards foreign investors. If, from the outset, the companies experience fast and efficient service from the public authorities, it will be a
clear indication that they do not risk their investment and subsequent operation
being negatively affected by unpredictable costs due to slow case processing or
other administrative burdens. Fewer administrative burdens, per se, will reduce the
costs of the companies.
DI RECOMMENDS
In general, these recommendations deal with the following categories: administrative burdens, interaction with government investment, and direct financial incentives. The recommendations touch upon areas that any country should aim to improve if it wants to attract and retain more investment.
Fewer administrative burdens
>> Governments should establish ambitious quantitative targets for
reducing the administrative burdens of businesses.
>> Public case processing should have a focus on attracting more
businesses and investment
>> Consistent municipal planning and transparent planning criteria
will support a shorter path “from project to product” for businesses.
Enhanced interaction between public and private R&D
will raise the level of knowledge and innovation
>> Focus on business-oriented research
>> Enhanced cooperation between businesses and universities
>> Focus on strong and business-relevant public research environments
Financial incentives
>> Competitive corporate tax
>> Ensuring competitiveness of several other taxes that affect
businesses, which compete on the international markets
>> Improved wage competitiveness
The problem can be solved
Portugal
Denmark
Belgium
The Netherlands
Switzerland
France
Germany
Spain
Italy
USA
Eastern
Europe
India
China
Africa’s size is often underestimated. The map illustrates
that Africa is about the same
size as USA, China, India,
Japan, and Europe combined.
India
part 2
China
part 2
Great Britain
Japan
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AFRICA: OPEN FOR BUSINESS
In the past decade, Africa has developed from being an extremely impoverished
continent with gloomy prospects for the future to accommodating some of the
world’s fastest growing economies. The progress is thanks to high growth rates
caused by a strong increase in inward foreign direct investment, major
demand for African raw materials and a remarkable development of the
African consumer markets. Business conditions in Africa have also improved.
The EU is still Africa's largest donor and trading partner. However, the EU is
getting less relevant to the continent due to other countries' interest in trading
with and investing in the African countries. With changes in trade agreements
and aid policy underway, 2014 holds ample opportunity for revitalizing the
cooperation between the two regions.
Imagine Africa as the world’s factory floor. The first place that any CEO would consider to have any kind of product manufactured at a reasonable price and quality.
The question is only whether to locate the production in Uganda, Ethiopia or Mali.
The world’s factory floor …
Imagine Africa as the world’s food producer. A producer of tonnes of meat, vegetables, fruit, cereals and dairy products that are shipped – both as processed and
unprocessed goods – to consumers across the world.
… the world’s food
producer …
Or imagine Africa as one of the world’s most interesting consumer markets. New
trends are created and born here, and any international brand worth its salt has a
massive presence.
… the world’s most
interesting consumer
market …
These three scenarios may all sound utopian. The reality, however, is that now, in
2014, Africa is in the midst of a development process that may very well lead to all
three situations coming true by 2040.
… may be found in
Africa in 2040
The continent has already made so much progress that what is reality today – that
half of the African countries are middle income states and that there are more
than 650 million mobile telephone subscribers in Africa – would have sounded like
science fiction for a citizen of the world in the year 2000.
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At that time, Africa was named “The hopeless continent” by the Economist.
”Floods in Mozambique; threats of famine in Ethiopia
(again); mass murder in Uganda; the implosion of
Sierra Leone; and a string of wars across the continent. The new millennium has brought more disaster
than hope to Africa. Worse, the few candles of hope
are flickering weakly.
...
All the bottom places in the world league tables are
filled by African countries, and the gap between
them and the rest of the world is widening.”
The Economist, May 2000
In the early 1990s, a few African countries had experienced years of decent growth
rates, but around the turn of the millennium, growth rates had fallen to 1-3 per
cent, and with major population growth the countries were in reality in economic
recession. In the 1990s, several new leaders had given the impression that they
were more concerned with fighting poverty than lining their own pockets, but by
2000 several of them had thrown their countries into war. On top of this, a number of states suffered natural disasters such as floods, drought and, subsequently,
failed harvests and floods of refugees. In addition, diseases such as aids threatened
to make major inroads into the new generations.
The future of Africa was far
from bright in 2000
In conclusion, prospects for Africa were far from promising in 2000. In spite of this,
something surprising happened in the first decade of this century. Most African
countries have arrived at a positive course that has turned out to be self-reinforcing. Many years have displayed stable, high growth rates driven by external and internal demand and increasing direct investment from the rest of the world. There
have been fewer wars and more good leaders. Less disease and more education.
Most of all, however, optimism and growing self-confidence bring even more fuel to
Africa’s wish of creating a better life for coming generations.
In brief, Africa is open for business.
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Africa – a continent in progress
The African economy is forging ahead. With an annual average growth rate of 4.6
per cent in the period 2000-2012, Africa was one of the fastest growing regions in
the world.
High and stable growth in
the 2000s …
Africa had the world's third highest growth rates in the 2000s
Average annual GDP growth, 2000-2012
Asia
Middle East
Africa
Sub-Saharan Africa
* G7 are Canada, France, Germany,
Italy, Japan, UK and USA.
Central and
Eastern Europe
Note Africa includes Northern Africa
G7*
Source IMF, World Economic Outlook,
Database, October 2013
0
1
2
3
4
5
6
7 Per cent
Growth will speed up even more in the next five years when Africa – led by the
sub-Saharan states – is expected to be world champion in growth. According to
forecasts by the International Monetary Fund, Africa will have an average annual
growth rate of more than five per cent in the years up to 2018. And this even in a
period when the majority of advanced economies are licking their wounds after the
financial crisis.
… and in the 2010s
Africa will be world champion in economic growth in the next five years
Expected average annual GDP growth, 2013-2018
Sub-Saharan Africa
Africa
Asia
Middle East
* G7 are Canada, France, Germany,
Italy, Japan, UK and USA.
Central and
Eastern Europe
Note Africa includes Northern
Africa
G7*
Source IMF, World Economic
Outlook, Database, October 2013
0
1
2
3
4
5
6 Per cent
10 of the world’s 20 fastest growing economies in 2012 are
situated in Africa
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In 2012, a quarter of the African countries recorded growth rates of seven per cent
or higher. Several of them were even among the countries in the world with the
highest growth rates. These include Sierra Leone, Niger, Ivory Coast, Liberia, Ethiopia, Burkina Faso and Rwanda. It should be considered, however, that most of
them come from a very low level. If they can maintain high growth rates, many African states will quickly ascend the world’s GDP charts.
Africa’s economy is more voluminous
Africa’s economy has tripled since 1980 – GDP (fixed prices, million, USD 2000)
1980
346,000
million, USD 2000
1995
485,000
million, USD 2000
… AND THE
DEVELOPMENT
IS EXPECTED TO
CONTINUE …
2018
1,400,000
million, USD 2000
Source IMF, World Bank and DI-projection
2010
920,000
million, USD 2000
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Several driving forces behind the African growth engine
African growth is more stable and credible now than in previous growth waves because it is based on numerous underlying trends. Until the year 2000, various African countries would periodically experience high levels of growth, but the cause
was nearly always increasing commodity prices. When the world market price for
copper or cocoa fell again so would the country’s growth rate.
Growth fuelled by more
than raw materials
Even today, exports of raw materials and natural resources are important elements
in the African growth adventure, but they are now accompanied by increasing inward FDI and increasing demand by the African countries’ own markets. Altogether, it means that a series of self-reinforcing trends have started accumulating, and
this may forge high and stable growth rates in many African countries for several
years ahead.
African consumers are charging ahead
One of the most important forces behind growth in Africa is a pronounced change
in many of the continent’s consumer markets.
One third of Africa’s
population is middle class
While local consumers would previously only really be relevant for local shopkeepers, the markets now reflect a larger degree of variety. The middle and upper income segments are growing fast; and a third of the African populations are currently considered middle class. At the same time, the lower income segments are
dwindling.
The African consumer is moving up the income ladder
Consumer segments by income groups in USD PPP
Per cent
100
> $ 20,000
$ 10,000 – $ 20,000
$ 5,000 – $ 10,000
$ 2,000 – $ 5,000
< $ 2,000
80
60
40
20
0
Source McKinsey Global Institute, 2010
2000
2008
2020
By 2008, about 85 million households in Africa reached an annual income of more
than USD 5,000. This income marks a significant limit since, at this level, people
begin to use about half of their income on other things than food. By 2020, 128
million households, corresponding to 52 per cent of all households, are expected
to reach this level.
128 million households will
soon demand new products
and services
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The increasing incomes in Africa are generating demand for a long list of products
and services. Consumers increasingly demand quality and branded goods. At the
same time, prices are important since low prices may signal low quality and on the
other hand it is limited how much the lower income segments can pay.
Some countries have particularly interesting consumer markets. Nigeria and South
Africa are large countries and in the forefront in all segments with annual income of
more than USD 2,000. Countries such as Kenya, Sudan and Angola also have major groups in the upper income segments.
70 African cities with a
population of over one
million
In many places, however, the purchasing power of ordinary citizens is still so low
that the market for classic Danish quality products is limited. Developments are
fast, though, and a significant proportion of the middle class is concentrated around
Africa’s financial centres including Lagos, Nairobi and Johannesburg. Seventy African cities currently have a population of over a million, and in Lagos, for example,
the population is nearly three times that of the whole of Denmark.
At the same time, Africa is one of the continents in which most people are migrating
to the cities. About 40 per cent of the continent’s population live in urban areas;
and this percentage is expected to increase rapidly over the coming years.
In 2050, the population south of the Sahara is expected to reach
2 billion with 1.2 billion living in cities. Of these, 300 million will
earn more than USD 20 per day, resulting in a market of USD
2 trillion.
In 2008-2011, African cities grew on average by 3.5 per cent annually, and in some
countries, the tendency is even stronger. Led by Lagos, Nigeria, which is the world’s
seventh fastest growing city, urbanisation will be one of the strong trends that will
fuel the development of the African consumer markets over the coming years.
Urbanisation supports the
development of consumer
markets
Urbanisation strengthens the African consumer markets for several reasons. One
reason is that a major part of the middle class and the higher income segments will
be moving to the cities – an urban dweller’s consumption is often twice as high as
that of a farmer – and the average income in the cities is 80 per cent higher than
the national average.
Urbanisation is also important for the development of the African consumer markets because it is easier to reach the consumers in cities. The majority of Africans
used to be spread over a large continent with poor infrastructure that made the
development of a distribution network very difficult. But distribution channels in
the cities are developing fast, and several large supermarket chains are expanding
significantly. In Nigeria alone, the number of international shops opening on the
market is increasing by 36 per cent annually.
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84 per cent of the African consumers expect to be far better or somewhat better off in two years
In two years I expect my family to be …
Far better off than today
Somewhat better off than today
Same as today
Somewhat worse off than today
Much worse off than today
Source McKinsey ACIC 2011 survey
0
10
20
30
40
50
60 Per cent
Another interesting trend is the high degree of optimism among Africans. African
consumers are generally highly optimistic regarding the future. As many as 84 per
cent expect to be far, or somewhat, better off two years from now than today. Most
optimistic are the Ghanaians with 97 per cent expecting their family to be far, or
somewhat, better off in two years than now. The same tendency applies to many of
the other Sub-Saharan countries while North African countries are less optimistic.
This is not surprising in the light of the political unrest of recent years in the North
African region.
Optimistic consumers
The high degree of optimism is undoubtedly a consequence of many of the other predominating trends in Africa today: higher household incomes, high growth
rates, and a young population with a median age of just 18.
Optimism highest in Sub-Saharan Africa
Respondents answering they expect to be far, or somewhat, better off in two years from today
Ghana
Nigeria
Senegal
Angola
Ethiopia
South Africa
Kenya
Algeria
Egypt
Morocco
Source McKinsey ACIC 2011 survey
0
20
40
60
80
100 Per cent
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Mapping Africa's natural resource wealth
Selected countries and commodities
PERCENTAGE OF
WORLD’S PRODUCTION
ESTIMATED ANNUAL
EXPORT REVENUES
Nigeria
AVERAGE ANNUAL REVENUE
POTENTIAL FROM NEW PROJECTS*
Angola
Oil Exports
US$ 100 BN
annual
US$ 70 BN
annual
US$BN,
constant
2011 dollars
Per cent
2011 GDP
30.7%
9%
US$
1.6 BN
Gold
Ghana, Tanzania,
Mali, Guinea and
Burkina Faso
Iron ore
Guinea
147.8%
US$
1.7 BN
8%
Iron ore and
petroleum
Liberia
Bauxite
Guinea
15.0%
53%
US$
3.5 BN
21%
Cobalt
Industrial diamonds
Democratic Rebublic of Congo
Gas, gold and nickel
Tanzania**
16%
Uranium
Namibia and Niger
27.3%
22%
US$
3.5 BN
Diamonds
Botswana
Gas and coal
Mozambique
77%
46%
21%
Platinum
Chromite
South Africa
Manganese
* Estimates are intended to show order of magnitude. Revenue projections are highly sensitive
to assumptions about prices, phasing of production, and underlying production and capital costs
** Data represents annual revenue at peak production
Sources Africa Progress Panel Report 2013
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Major demand for African raw materials
While the steep increase in domestic demand is a relatively new factor, the external demand for African raw materials is a wellknown story. The new aspect is that
demand does not only come from Europe, but also from growth nations including
India and China, which are hungry for natural resources such as oil and minerals.
This means that world market prices are expected to continue to and ensure higher
income for the resourcerich African countries.
Africa's natural resource wealth is not just made up of oil, gas, and minerals. The
world’s large growth countries demand increasing amounts of food; and if Africa is able to develop its agriculture, the continent has a major potential for future growth. Agriculture in Africa is unproductive compared with other parts of the
world, and has not taken advantage of new knowledge and technology. At the same
time, more than half of the world’s uncultivated farmland is in Africa. The exploitation of these resources contains major opportunities. Finally, there is only little processing of African foods in Africa, and there is a great potential in the development
of a competitive food industry.
Major potential in African
agriculture
Slow productivity growth in the African agricultural sector
Development in productivity of cereal yields per hectare from 1961-2012
Cereal yield (ton per hectare)
6
5
EU
4
3
Southeast Asia
2
1
0
Africa
Sub-Saharan Africa
1962
1967
1972
1977
1982
1987
1992
1997
Source World Bank
2002
2007
2012
60 per cent of the world’s uncultivated farmland is African.
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Dramatic increase in inward FDI
A third trend fuelling growth is inward foreign direct investment. There has been a
pronounced increase in inward FDI in Africa since 2000. After stagnation in 2008,
investment picked up again when it turned out that Africa was not seriously affected by the financial crisis.
Raw materials,
telecommunication and the
financial sector
Apart from raw materials, the telecommunication and financial sectors are the
most attractive targets for non-African investors. There is also some interest in the
retail sector due to the advance of the African consumer markets.
Major Chinese investment
in the service sector
China has been a particularly remarkable investor in Africa in recent years. Contrary to general perception, the majority of Chinese investment is not directed at the
raw materials sector, but at the service sector. In addition, the Chinese have invested in agriculture and industry; and this trend will presumably be intensified with
the development of industrial estates aimed at attracting production companies, in
countries such as Nigeria, Ghana, Kenya and South Africa.
It is difficult to calculate the total Chinese investment in Africa since not all FDI is
officially registered. The figure on the next page, however, presents an estimate of
the official and unofficial parts of Chinese FDI in Africa.
In recent years, China has channelled a lot of FDI to particularly Zimbabwe, Ghana
and Ethiopia.
Trade between China and the African countries has also increased in recent years.
China bought more than 10 per cent of Africa’s total exports in 2011, and this is
15 times as much as in 2001. In 2012, the overall trade between China and the African countries amounted to USD 198 billion, an increase of 20 per cent from the
previous year.
Investment flows into Africa
Development in total inward FDI holding in Africa
USDbn
600
500
400
300
200
100
Source UNCTAD
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
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China has taken an interest in Africa
Number of Chinese projects and their value in Africa
USDbn
60
Number of projects
300
50
250
40
200
30
150
20
100
10
50
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
CASE: Can Europe learn from China’s involvement in Africa?
Chinese FDI in Africa often generates negative news in the western world. Stories speak of the overexploitation of African raw materials without sufficient
compensation to the local populations, the use of Chinese labour rather than
local labour, and a lack of respect for the environment and people in general.
If, however, you ask the individual Kenyan or Zambian of their perception of the
Chinese, you would rarely get such a one-dimensional picture. First, the Chinese have built a visible infrastructure that has significantly improved the lives
of many Africans and created a basis for further development. The western
donors have rather focused on other forms of aid such as budgetary support,
anti-corruption and the development of a state structure. While the donors believe these types of development aid are more effective, they are less visible for
the individual African citizen.
Secondly, the Chinese intention to trade with the African countries is highly
appreciated. Many Africans feel that this approach is more dignified than the
donor-recipient relations that exist with the western world. The aid from western countries may be presented as donations, but there are also conditions
and conditions attached.
An important point is that the African states increasingly demand trade and
investment and, to a lesser extent, donations. This means that the western
donors, including the EU, should not be afraid of integrating trade and aid – on
the contrary. Naturally, European involvement should be based on European
values with focus on cooperation and social and environmental sustainability.
0
Number of projects
Official total value
Unofficial total value
Source AidData
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Major differences in economy, growth and business climate
Comparison of economic growth, business climate and total size of economy
Economic growth (2008-2012), per cent
60
Ethiopia
Ghana
Nigeria
50
Angola
40
Egypt
30
Morocco
Congo, Dem
South Africa
Algeria
20
Côte d'Ivoire
10
Kenya
0
Sudan
EU-28 average
-10
0
20
40
60
80
100
Business Climate (index 1-100)
Note The size of the circle indicates the total size of the economy (GDP/PPP), 2012
Source World Bank, IMF and DI calculations
Conditions for African growth
The conditions, on which growth in Africa has been based in the past decade, have
also changed significantly. In many cases, it is a self-reinforcing process under which
improved conditions create the foundation for increased growth and vice versa.
Major differences across
the continent
Several African countries
range above BRIC in terms
of business climate
Diversity characterises Africa
In general, Africa is characterised by major economic and political differences
among the countries. In South Africa, for example, the average income is ten times
higher than in neighbouring Mozambique. Congo, Benin and Angola are among the
group of countries in the world in which the World Bank assesses it is the hardest to
do business. In contrast, the business climate in countries such as Ghana and Botswana is assessed to be better than in several European countries including Italy
and the Czech Republic.
Some countries have business climates that are so favourable that they outrank
many European and Asian countries. Many countries, however, are lagging behind
with less business-friendly conditions, and African countries still dominate the lowest ranks on the World Bank’s Doing Business Index.
There are, however, indications that changes are underway. In 2011/2012, 98 per
cent of the sub-Saharan countries implemented at least two reforms that benefitted the business climate.
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CASE: African countries compete for the favour of businesses
Rwanda is the leading country in Africa in terms of reforms of the business
climate. In the past few years, Rwanda has focused on improving its business
climate in order to invite FDI and speed up the country’s industrial development. Over the past five years, the country has implemented 22 reforms aimed
at making it easier to start a business, initiate exports, get access to financing, and several other business-friendly approaches. In this way, Rwanda has
moved from a rank as number 143 of 189 countries in 2009 to number 32 in
the 2014 World Bank Doing Business Index. With this position, Rwanda has
overtaken countries such as Belgium (36) and France (38).
Among other African countries struggling to improve their business climates,
Burundi has implemented 16 reforms over the past five years and the Ivory
Coast 9 reforms in the same period.
Diversity is characteristic of the African countries
Population
Size of population 2013, UN
Level of income
GDP per capita, 2013, IMF
Industrialisation
Value increment in production sector/GDP 2011,
World Bank
Internationalisation
Trade/GDP 2011, World Bank
Business Climate
World Bank’s Doing Business Index 2014
174
million
93,000
Nigeria
Seychelles
USD
22,344
USD
215
Equatorial Guinea
Malawi
43.8%
2.4%
Swaziland
Sierra Leone
154.6%
35.6%
Lesotho
Central African
Republic
No.
20
No.
189
Mauritius
Chad
110
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Minor improvements to corruption, infrastructure and political stability
The prevalence of corruption and fraud has generally declined in several African
countries in recent years. Overall, Africa is the region that has improved its position
the most, according to Transparency International’s Corruption Perceptions Index
(CPI). The improvement is, however, from a low level. This particularly applies to
Rwanda whose CPI score has increased by 28 points since 2006. This means that
Rwanda has a lower perceived level of corruption than European countries such as
Italy, the Czech Republic and Turkey. Looking at the whole group of sub-Saharan
countries, corruption is, however, still a major problem.
Africa has fought corruption, but is still the world’s most corrupt region
Change of average CPI score 2006-2013
CPI score 2013
Note The CPI score is an index
(0-100) with high values indicating a
low level of bribery and corruption.
Source Transparency International
and DI calculations
Africa
32.7
Latin America
37.2
Central and
Eastern Europe
49.7
Asia
38.6
Middle East
40.9
OECD
68.6
-3
-2
-1
0
1
2
3
4
Despite continued high levels of corruption across the continent, the development
reflects an actual intention of several African governments to fight corruption, with
selected countries as the frontrunners.
In addition to enhancements of the business climate and the level of corruption,
the African infrastructure has also improved although developments started at a
very low level. There have also been fewer conflicts. The 1960s saw 21 successful
coups d’état in Africa. In comparison, there have only been five successful coups
since 2000. Political stability has also improved with far more peaceful elections
across the continent.
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CASE: The new African giants
The many positive changes in Africa have also led to a distinct development
of the African business community. Previously, only few African companies
were visible outside their domestic market or in a position to measure up to the
global elite of large corporations. This has changed with a number of African
companies reaching a substantial size and experiencing constant high growth
rates. Most large African companies still have their roots in South Africa, but
companies of other nationalities are breathing down their necks. Many of the
com-panies are primarily working in the natural resource sector, but in keeping
with developments, more sectors are being represented.
Annual revenue, USDbn
Sonatrach
Oil and gas
72.0
A.P. Moller-Maersk
Transport and energy
60.2
Sonangol
Oil
33.3
Sasol
Energy and chemicals
17.5
MTN Group
Telecommunication
15.0
The Bidvest Group
Service, trade and distribution
14.6
Eskom
Electricity
14.1
Shoprite Holdings
Trade
8.9
Vodacom Group
Telecommunication
8.2
Imperial Holdings
Industry
8.0
De Beers Consolidated Mines
Mining
7.4
0
10
Note Revenue figures are from 2011 or 2011/2012.
A.P. Moller-Maersk inserted as benchmark
Source The African Report and A.P. Moller – Maersk
20
30
40
50
60
70
80
112
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The world’s youngest continent
More than half of Africa’s population is below the age of 24, and the population is
growing rapidly. By 2050, Africa will have a population of 2 billion and have overtaken both China and India. At the same time, Africa’s demographic development
is such that the vast majority of people are of working age. Compared with other
regions, the African countries also have few children and old people to support in
this period.
Africa’s labour force will be the largest in the world in 2040
Expected development of labour force 1950-2045
Million
1,500
Africa
1,200
India
China
900
600
Europe
300
Source UN - World Population Prospects
A unique opportunity for
economic and social
development
0
1955
1965
1975
1985
1995
2005
2015
2025
2035
2045
This development offers a unique opportunity for economic and social development if the African countries succeed in creating a sufficient number of new jobs.
You could say that Africa has the last, major labour resource in the world, which
means that Africa has a unique potential as a major unexploited labour production
location. If this opportunity is to be brought to fruition, and Africa is to become a
real alternative to other production destinations, a further improvement is required
in business climates, infrastructure, the level of education, and access to crossborder trading.
Threats to the African growth adventure
Unemployed youth may
create unrest
Many of the trends that create opportunities for the African countries also have
a downside. The large young population could turn out to be a ticking time bomb
under the stability in countries unable to generate a sufficient number of new jobs.
With many young people migrating to the cities hoping to find a job, the infrastructure is under heavy pressure while this migration may also cause increasing problems of slums with poor living conditions and social tensions.
At the same time, the authoritarian, repressive, undemocratic and generally ineffective governments of many countries may halt the positive development. Unrest
in one land can rapidly infect the neighbouring countries making it vital that all
countries join the progress.
Many countries do not have
inflation and exchange rate
developments under control
Inflation and exchange rate fluctuations are also risks affecting the African countries. Although inflation following the increasing oil and food prices in 2008 has decreased, it is still at a high level around 7 per cent. Earlier this year, Morgan Stanley
included South Africa in the “Fragile Five” group along with Turkey, Brazil, India
and Indonesia due to the risk connected to the exchange rate.
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The future of EU-Africa relations
In spite of Africa’s new partners such as China, India, Brazil, and South Korea, the
EU is still a key actor. The EU continues to be Africa’s largest aid donor as well as
the continent’s single largest trading partner.
In April 2014, the two partners will meet at the 4th Africa-EU Summit to carry out a
high level political dialogue. The Summit will follow up on the Joint Africa-EU Strategy from 2007, which focuses on a number of issues. Prominent topics in the discussions at the April summit are certain to be development aid and trade.
EU-Africa trade increasing – but at a slow pace
The EU is still the single largest trading partner for Africa. There are, however, vast
differences in how much the various EU member states trade with Africa. In general, the EU-15 countries export more to Africa than the EU-28 countries with Belgium and the Netherlands in the lead. In fact, the average exports per average citizen in Belgium have been more than 20 times higher than the average exports per
average citizen in Poland over the past five years.
The EU is Africa's single
largest trading partner
Great European differences in exports to Africa
Average exports to Africa 2008-2012 per average citizen 2008-2012, Euro
Belgium
Netherlands
Sweden
France
Portugal
Malta
Luxembourg
Italy
Finland
Spain
Germany
Ireland
Estonia
Slovenia
United Kingdom
Austria
Denmark
Greece
Latvia
Czech Republic
Hungary
Bulgaria
Croatia
Lithuania
Cyprus
Romania
Slovak Republic
Poland
EU15
EU28
Source Eurostat and DI calculations
0
200
400
600
800
1,000
EU exports to Africa from the 28 member states have more than doubled in the period 2000 – 2012. Again, some member states are clearly in the lead – some building on top of already large exports to Africa such as Portugal and the Netherlands,
others starting from a lower level such as Poland.
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EU exports to Africa doubled since 2000
Index 100 = 2000
Austria
600
Belgium
Denmark
Spain
France
Netherlands
Poland
Portugal
EU15
Source Eurostat and DI calculations
500
400
300
200
100
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Looking at imports of African goods to Europe, the picture is much the same. Total
imports have more than doubled in the period, but import growth for the individual
member states is highly diversified. The Netherlands and Portugal have increased
their imports from Africa by a factor three to four during the period, as have Denmark and Sweden, whereas Hungary’s imports from Africa have actually decreased
in the same period.
EU imports from Africa doubled since 2000
Index 100 = 2000
Austria
Sweden
Belgium
Belgium
Denmark
Denmark
Spain
France
France
United Kingdom
Netherlands
Hungary
Poland
Poland
Portugal
Portugal
EU15
EU27
Source Eurostat and DI calculations
600
500
400
300
200
100
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
GLOBAL BENCHMARK REPORT 2014 – AFRICA: OPEN FOR BUSINE SS
115
Deadline for EU-Africa trade negotiations approaching
The year 2014 marks a shift in trade policy between the EU and Africa. First, revisions of the EU’s Generalised Scheme of Preferences (GSP), under which developing country exporters face lower duties on exports to the EU, came into force as
of January 1. The new GSP significantly reduces the number of beneficiaries with
the aim of focusing on those countries that are most in need, i.e. the poorest countries. Since a number of African countries are now counted as upper middle income
countries, they will no longer qualify for GSP.
The EU and the different African regions are currently going through the final
rounds of the negotiations of Economic Partnership Agreements (EPAs). The EPAs
are aimed at promoting trade between the EU and the African regions and include
initiatives related to trade development, sustainable growth and poverty reduction.
Countries that no longer fall under GSP should therefore be covered by the EPAs
in stead. However, reaching an agreement in the different regions and between the
regions and the EU has proven to be complicated.
CASE: European donors are rethinking aid and trade
Sida, the Swedish aid agency, is currently working with a vision of making the private sector as close a partner to Swedish development aid as governments and
civil society. Based on this objective, Sida has already developed a number of innovations in development aid. One example of how the vision has been transformed into reality is a project with the Swedish bus and truck manufacturer Volvo. The two partners have established a programme to train car mechanics in
Ethiopia, a country with large gaps in the supply of skilled labour. Sida also supports the development and test of new products and services for the poor, private
sector contributions to peace building, and a number of other interventions. With
plans to integrate private sector aid into all its strategies, Sida will continue to develop new ideas for cooperation with business over the coming years.
Several other European countries have taken concrete steps and launched new
strategies in 2013 for working closer with the business world:
> UK Secretary of State for International Development Justine Greening announced three priorities for development: 1) Lowering barriers to trade and
investment, 2) promoting entrepreneurs and businesspeople in developing
countries, and 3) greater investment by UK businesses.
> In a new policy by the Netherlands, “A World to Gain”, three types of relationships will be pursued: “aid relationships” guided by altruism for fragile and
post-conflict states, “trade relationships” with other wealthy countries, and
“transition relationships”, which link aid with commercial policies and are
guided by enlightened self-interest.
> The German government has an announced commitment to “strengthening
the linkage between foreign trade and development cooperation”, and it is a
priority for German businesses to play a stronger role in official development
cooperation.
Economic Partnership
Agreements to promote
trade and support
development
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The European Commission has set a deadline of October 1, 2014 for regions to
conclude, sign, and start implementing the agreements. If the deadline is not met,
African countries that are no longer eligible for GSP will lose some or all of their
preferential access to the European market. Furthermore, the prospects of losing
this access with serious consequences for exports and growth may prompt some
countries to split from their regional grouping and instead negotiate individual
trade deals with the EU.
Therefore, there is a strong interest from all sides in ensuring that the EPAs are finalised before the deadline. However, it is still uncertain whether it will be possible
to identify acceptable compromises with all regions before October 2014.
EU aid to Africa
Between 2007 and 2012, the EU donated more than EUR 24 billion to Africa in official development assistance. In light of the great advances made by many African
countries in recent years, and the African countries’ increased interest in trade and
investments, the role of development aid is diminishing although, an amount of this
scale is still significant, especially to some countries. Furthermore, while African
leaders have put industrialisation high on their agendas over the past few years, the
EU has largely maintained a focus on aid for social sectors.
EU aid to focus more on
supporting inclusive and
sustainable growth than
before
In an effort to adjust to the changing circumstances, the EU developed the aid reform strategy Agenda for Change in 2011. Alongside a focus on human rights, democracy and governance, the Agenda for Change prioritises inclusive and sustainable growth for human development, including job creation driven by the private
sector.
Following this, the EU is trying to work closer with business and other private sector partners. For many years, business was not considered a relevant partner in development. Rather, this was a field for public donors and civil society organisations
only. Similarly, the issue of job creation was not considered as important as support
to social sectors such as health and education.
However, the rise of several countries from developing country status to developed
or emerging economies has proven that job creation driven by the private sector
is inseparable from longterm development objectives. Without it, improving the
health and education level of a country is unsustainable in the long run. Therefore,
the role of job creation and the private sector as a partner in development have
been added to the agenda of almost all important international development meetings and fora over the past few years.
GLOBAL BENCHMARK REPORT 2014 – AFRICA: OPEN FOR BUSINE SS
CASE: A new development agenda post-2015 – beyond the Millennium
Development Goals
In September 2000 world leaders came together at United Nations Headquarters in New York to adopt the United Nations Millennium Declaration. They
each committed their nations to a new global partnership to reduce extreme
poverty by setting out a series of time-bound targets with a deadline of 2015
that have become known as the Millennium Development Goals.
1
2
3
4
5
6
7
8
Eradicate extreme poverty and hunger
Achieve universal primary education
Promote gender equality and empower women
Reduce child mortality
Improve maternal health
Combat hiv/aids, malaria and other diseases
Ensure environmental sustainability
Global partnership for development
However, the reality is that not all MDGs will be reached before 2015. Also, the
achievement of the MDGs has been uneven among and within countries. Africa
is one of the continents that lags behind. In fact, Africa as a whole is off-track
on five out of the eight MDGs.
While the deadline of 2015 draws closer, the world is debating what should
come after the MDGs. The MDGs have been widely praised for their ability to
make the world come together and collaborate on achieving these eight goals.
However, the drawback of this is that focus has been pulled away from other
important issues, which are not prominent among the eight goals.
One example is the issue of job creation. Even though it is an important part of
fighting extreme poverty (MDG1), it has not received sufficient attention from
donors. While some countries whose leaders have had a strong focus on job
creation are well on track to reaching the goal (e.g. several countries in Asia),
the unemployment rate remains much the same – or has increased – in many
African countries.
This is one of the reasons why the High-level Panel on the Post-2015 Development Agenda has included the following as one of five transformative shifts
that the post-2015 development agenda should build on:
Transform economies for jobs and inclusive growth “Diversified economies,
with equal opportunities for all, can unleash the dynamism that creates jobs
and livelihoods … We should make it easier for people to invest, start-up a
business, and trade”.
The EU is currently working on a new Communication, which will set the framework
for strengthening the role of the private sector in achieving inclusive and sustainable growth in developing countries in relation to EU development aid over the coming years. It is important that this Communication is adjusted to the current state
of the world and flexible enough to be workable for several years to come. Furthermore, the EU should look to some of the member countries for inspiration on how
to work with the business sector.
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GLOBAL BENCHMARK REPORT 2014 – AFRICA: OPEN FOR BUSINE SS
DI RECOMMENDS
African countries need growth, income, infrastructure, goods, and services. European companies can offer all this. If development aid is structured in a way so that it
leverages business activities in the best possible way, positive development effects
would be enormous.
With that in mind, DI recommends the following:
The post-2015 framework:
>>As recommended by the High Level Panel on the post-2015 development
agenda, the post-2015 framework should have a strong focus on transforming economies for jobs and inclusive growth. The entire post-2015 framework
should be based on the notion that poverty is best fought by allowing people
to lift themselves out of poverty through employment driven by the private
sector.
A better enabling environment for business
and job creation:
>>The EU should consult with the European private sector to identify concrete
barriers for trade with, and investment in developing countries. The EU should
fight these barriers through financial support to business environment reforms and by applying policy pressure on partner governments.
>>The EU should strengthen the support to business membership organizations
in developing countries to build their capacity and ensure that they can be a
strong voice for businesses.
>>The EU should strengthen the support to public private dialogue. This should
be done through financial support and policy pressure on partner governments.
Using trade as a catalyst for job creation and development:
>>The EU should support regional integration in Africa and support efforts to remove trade barriers between African countries.
>>The EU should speed up efforts to finalise Economic Partnership Agreements
with all African regions.
Using the private sector as “delivery channel”
for development:
>>The EU should increasingly promote and support private sector engagement
in the delivery of all types of services. In many sectors, there is an untapped
potential for marketbased solutions that are more sustainable in the long run
than conventional public service delivery mechanisms. The EU should further
promote and support new innovative business models through new financial
instruments and policy support.
GLOBAL BENCHMARK REPORT 2014 – AFRICA: OPEN FOR BUSINE SS
New financial instruments for business development and job
creation:
>>The EU should develop relevant financial instruments (grants, loans, guarantees) enabling European companies to partner with companies in developing
countries in order to develop capacity and transfer knowledge and technology.
>>The EU should develop programmes that would create incentives for European companies to engage local SMEs in their value chain in connection with an
investment in a developing country. This is particularly relevant for infrastructure projects and mining projects, but also in other industries.
A better trained African workforce:
>>There is a need for more and better vocational training and education in Africa. The EU should ensure the involvement of employers in the supply of all
types of education in order to ensure relevance for businesses.
>>The EU should establish incentives and financial instruments to support apprenticeships in connection with investments by European companies in developing countries.
DI and Africa
DI has been actively involved in Africa on behalf of, and in cooperation with Danish businesses since the early 1990s. At that time, DI entered into dialogue with
the Danish development aid agency, Danida, to discuss how the Danish business
community could be involved in developing the business sectors of Danida’s partner countries. This marked the beginning of a long and constructive dialogue on
the development of private sector programmes and various financing instruments,
which are now an integrated part of Danish aid policy.
DI has also been active in the global dialogue on business and development on
its own and as a member of organizations such as the European Business Council
on Africa and the Mediterranean (EBCAM), BUSINESSEUROPE and Business and
Industry Advisory Committee to the OECD (BIAC). Currently, DI's focus is on contributing to the dialogue on the post-2015 development agenda and the issue of
development effectiveness.
Furthermore, since 1996, DI has provided consulting to more than 250 Danish
companies on how to develop their businesses in numerous African countries. The
generated expertise includes everything from discussion on initial considerations,
across strategy development, to the implementation of new and innovative business concepts. This knowledge makes DI one of the organisations in Denmark
with the most extensive experience in business development directed at the base
of the income pyramid. For many years, DI has also been initiator and coorganiser
of delegations to selected African countries.
Finally, since 1996, DI has been a close partner to more than 20 African business
organisations. Through capacity building, DI has contributed to making the African business organisations professional voices for the business sector in their
countries. DI has helped gather sister organisations in regional networks to promote cooperation aimed at improving business conditions across national borders.
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GLOBAL BENCHMARK REPORT 2014 – X X X X
Global Benchmark Report
123 METHODOLOGY, DEFINITIONS
AND SOURCES
127 DESCRIPTION OF SOURCES
131 SUMMARY OF BENCHMARKS
137 INDEX TO BENCHMARKS
121
GLOBAL BENCHMARK REPORT 2014 – X X X
GLOBAL BENCHMARK REPORT 2014 – METHODOLOGY, DEFINITIONS AND SOURCE S
123
METHODOLOGY, DEFINITIONS
AND SOURCES
In this report we have benchmarked the global performance and general business
conditions of 33 OECD member states in terms of their utilisation of the opportunities offered by globalisation. All the members of the OECD except for Luxembourg
are benchmarked.
Benchmarking
33 OECD countries
The comparison is based on 87 measurable benchmarks divided into five pillars:
Level of Globalisation, Productivity and Innovation, Qualified Labour, Public Economy and Costs.
87 benchmarks across
five pillars
For each of the 87 benchmarks, the countries have been ranked according to how
well they perform in international competition and whether they have the proper
conditions and prerequisites to exploit the opportunities offered by globalisation.
Data for the BRIC countries (Brazil, Russia, India, and China) is included whenever
available. With their high growth and increasing purchasing power, these countries
have growing significance in global competition, and it is interesting to compare
them with the OECD countries. They are not, however, included in rankings and
overall results.
Data from BRIC countries
Calculations of average
Most charts show an OECD average and an average for eurozone countries. The average is only calculated on the basis of countries for which data is available. Data is
weighted for GDP at PPP using the following formula:
G = Average
i = 1,…,I. Number of OECD member states for which data exists
gdpi = GDP for country i
Vi = Data value for country i
For a few benchmarks, for which data exists for less than two thirds of the OECD
member states, an overall OECD average is not calculated. Similarly, there is no
average for the eurozone in the few cases where data is unavailable for the largest
euro-countries.
Average for the OECD
and eurozone
GLOBAL BENCHMARK REPORT 2014 – METHODOLOGY, DEFINITIONS AND SOURCE S
124
Average rank of countries
Within each of the five pillars of benchmarks, we have calculated the average rank
of each country. Since data does not exist for all countries, this calculation requires
several steps. First we calculate an average rank for each country based on the
benchmarks that include data for the country in question. This average is used to
create a relative ranking for the country in benchmarks for which there is no data
for the country. Then we rank again and calculate an average ranking in the whole
section.
In the few cases where a benchmark includes data for less than two thirds of the
OECD countries, this benchmark will not be used in the calculation of the average
for the pillar.
When two (or more) countries obtain the same ranking, they are shown with the
same ranking corresponding to the highest possible ranking.
Overall average
The summary on page 12 includes an overall average of the countries’ ranks in the
five pillars called The Global Benchmark Report’s Competitiveness Index 2014. It
is calculated as a simple average of the countries’ ranks in each of the five pillars.
The purpose is to present an overall ranking of the OECD countries and not just
their ranks in the individual pillars and benc
Fundamental pillars of competitiveness
Revised structure
Last year, the structure of the report was revised such that it is aligned with five fundamental pillars of competitiveness. Together these five pillars constitute the foundation for creating open and prosperous nations capable of creating and sustaining
growth and balance. Thus, the comparison is based on 87 benchmarks divided into
Level of Globalisation, Productivity and Innovation, Qualified Labour, Public Economy and Costs. Furthermore, it should be noted that the two benchmarks GDP
growth and GDP per capita in the summary only contribute to the greater picture of
globalisation and are not part of the global competitiveness index ranks.
Choice of data and sources
Recognised sources
The benchmarks have been selected with a view to providing as good a picture as
possible of the countries’ competitiveness and general business conditions. Data
has been drawn from internationally recognised sources and is internationally comparable. The sources of each benchmark can be found in the figures and in the list
of tables at the end of the report. See a list and a description of sources on the following pages.
In cases where historical data is not available for each country, the last known value
is used. Not all 33 OECD countries have been members of the OECD for the whole
period. Israel, Chile, Estonia and Slovenia joined in 2010. There countries are nevertheless included in the period.
Benchmark 2.26 (Quality of electrical supply) is new in the Global Benchmark Report 2014.
GLOBAL BENCHMARK REPORT 2014 – METHODOLOGY, DEFINITIONS AND SOURCE S
125
Because new data was not available during the preparation of the Global Benchmark Report 2014, 2.12 (Growth expectations among entrepreneurs) and 2.13
(Entrepreneurial activity) are identical with the benchmarks of last year.
Metadata for each individual benchmark has been prepared. It explains what the
benchmark shows, why it is of relevance to a country's international competitiveness and provides a thorough description of the source. Metadata is available in
the PDF version of the Global Benchmark Report 2014, which can be downloaded
from di.dk/gbr.
Further information
126
GLOBAL BENCHMARK REPORT 2014 – DE SCRIPTION OF SOURCE S
GLOBAL BENCHMARK REPORT 2014 – DE SCRIPTION OF SOURCE S
127
DESCRIPTION OF SOURCES
The African Report is a magazine with focus on African economy and politics.
www.theafricanreport.com
Africa Progress Panel is a panel consisting of ten high level members with great
insight in the African region. They are working towards a more sustainable and
equitable development in Africa and publish an annual report with different topics.
www.africaprogresspanel.org
AidData is a research and innovation collaboration providing easy accessible information on development financing.
www.aiddata.org
BLS (Bureau of Labour Statistics) is the US government’s premier research institute focusing on labour market and economics.
www.bls.gov
Carlsberg Group is a Danish multinational brewery and the fourth largest brewery in the world.
www.bls.gov
Cato Institute is an independent think tank focusing on individual liberty, free
markets, and peace. Cato issues an annual publication, Economic Freedom of the
World, in cooperation with the Fraser Institute in Canada and more than 70 other
think tanks from across the globe.
www.cato.org
The Confederation of Danish Employers (DA) is the main organisation for 14
employer associations in the Danish private labour market in manufacturing,
trade, transport, service and construction. DA regularly publishes statistics about
international wage developments.
intstat.da.dk
The Conference Board is a global, independent business organisation. It publishes financial reports and analyses business trends.
www.conference-board.org
Danida is Denmark’s official development agency and part of the Danish Ministry
of Foreign Affairs.
www.um.dk/da/danida
The Danish Ministry of Business and Growth seeks to improve the conditions
for growth in Denmark. The Ministry conducts economic analyses and suggests
policy initiatives in areas imperative to economic growth. The Ministry publishes
an annual account of Danish competitiveness called “Denmark in the global economy”.
www.evm.dk
The Danish Ministry of Taxation consists of the Department and the Danish Tax
Authority (SKAT). The Department works as staff function for the entire organisation and holds the main leadership. SKAT collects income, business and corporate
taxes.
www.skm.dk
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GLOBAL BENCHMARK REPORT 2014 – DE SCRIPTION OF SOURCE S
The Danish Patent and Trademark Office issues patent and design rights, and
registers trademarks and utility models.
www.ip-center.dkpto.dk
Dell is a multinational computer technology company based in the United States.
www.dell.com
DI's company panel consists of 2,100 member companies. Four times per year,
panel members respond to questionnaires on the company’s financial state, employee situation and growth opportunities supplemented by various theme questions.
www.di.dk
The Economist is a weekly magazine with focus on economics, politics and financial matters.
www.economist.com
Energiforskning.dk is a portal with information on research and development
programmes in energy technology.
www.energiforskning.dk
The European Commission is the executive body of the European Union. Among
other publications, the Commission publishes Taxation Trends in the EU.
www.ec.europa.eu
The European Patent Office is the executive arm of the European Patent Organisation.
www.epo.org
Eurostat is the statistical body of the European Commission, producing data for
the European Union.
www.epp.eurostat.ec.europa.eu
EVCA (European Private Equity and Venture Capital Association) is an association of European equity funds.
www.evca.eu
GEM (Global Entrepreneurship Monitor) is a non-profit academic research consortium focusing on international research on entrepreneurship.
www.gemconsortium.org
IEA, the International Energy Agency, is an intergovernmental organisation, which
acts as energy policy advisor to 28 member countries. The agency issues the annual Key World Energy Statistics publication with detailed data on the world’s energy consumption.
www.iea.org
IFU (Investment Fund for Developing Countries) is providing consulting and venture capital for Danish companies wishing to start up business and partnerships
in developing countries.
www.ifu.dk
IMD, the International Institute for Management Development, located in Lausanne, Switzerland, is one of the world’s leading management schools. It is the
publisher of the World Competitiveness Yearbook.
www.imd.ch
IMF, the International Monetary Fund is an organisation of 188 countries, working
to promote global monetary cooperation.
www.imf.org
Innovation Union Scoreboard tracks innovation performance in a broad range
of countries. The publication is issued by PRO INNO Europe, which is an initiative
under the European Commission’s Directorate-General for Enterprise and Industry. The objective of PRO INNO Europe is to be a venue for analyses related to
innovation policies in Europe.
www.proinno-europe.eu
GLOBAL BENCHMARK REPORT 2014 – DE SCRIPTION OF SOURCE S
129
KPMG is a leading audit and consultancy firm represented in 146 countries.
www.kpmg.com/Global
McKinsey Global Institute is the economic and business research unit of the
American management and consulting company McKinsey & Company.
www.mckinsey.com
A.P. Moller – Maersk Group is a Danish business conglomerate with activities
primarily in transport and energy.
www.maersk.com
Morgan Stanley is an American multinational company providing financial services.
www.morganstanley.com
Nationalbanken (the National Bank of Denmark) is Denmark’s central bank.
www.nationalbanken.dk
OECD (Organisation for Economic Co-operation and Development), based in
Paris, is an economically oriented organisation for cooperation between democratic countries with a market economy. The OECD issues various publications
and operates an online database.
www.oecd.org
OECD.stat is the statistics bank of the OECD. It has data from member states as
well as non-member states.
www.stats.oecd.org
PricewaterhouseCoopers (PwC) is a global audit and consultancy firm.
www.pwc.com
Produktion360 is an internet portal about management, organisation and technological challenges in production, food and life science companies. The IT company Columbus is behind the initiative.
www.p360.dk
Siemens is a German multinational engineering and electronics company.
www.siemens.com
Statistics Denmark is the official statistical bureau of Denmark.
www.dst.dk
Transparency International is an organisation working to eradicate corruption.
www.transparency.org
UN (United Nations) is a world organisation consisting of 193 member countries.
The organisation plays an important role in global development politics, environmental collaboration, the fight for human rights and negation of peace.
UNCTAD (United Nations Conference on Trade and Development) is a part of UN
that is responsible of the development and focuses on trade.
www.unctad.org
WDI (World Development Indicators) is the World Bank’s bank of statistics and
consists of data for development countries.
www.data.worldbank.org
WEF (World Economic Forum) is an independent international organisation committed to improving the situation in the world by engaging leaders in partnerships
to shape global, regional, and industrial agendas. WEF publishes the annual Global Competitiveness Report.
www.weforum.org
The World Bank’s “Doing Business” report provides a status of the conditions for
operating a business in 189 countries.
www.doingbusiness.org
World Bank is an international bank working for reconstruction and development. The objective is to fight poverty by financing states.
www.worldbank.org
GLOBAL BENCHMARK REPORT 2014 – X X X
GLOBAL BENCHMARK REPORT 2014 – SUMMARY OF BENCHMARKS
131
SUMMARY OF BENCHMARKS
Benchmark
No. 1
No. 2
No. 3
Page
1.00
Level of globalisation
Ireland
Chile
Switzerland
1.01
Growth in exports, 2009-2013 (average)
Estonia
South Korea
Slovak Republic
22
1.02
Exports as a percentage of GDP, 2013
Ireland
Slovak Republic
Hungary
22
1.03
Export performance, 2009-2013 (average)
Poland
Israel
Slovak Republic
23
1.04
Upmarket exports to EU15, 2008-2012 (average)
Switzerland
Japan
Ireland
23
1.05
Exports to emerging markets
(non-OECD countries), 2012
South Korea
Japan
Australia
24
1.06
Foreign direct investment holdings as a
percentage of GDP, 2012
Belgium
Ireland
Switzerland
24
1.07
Direct investment holdings abroad as a
percentage of GDP, 2012
Belgium
Switzerland
Ireland
25
1.08 Foreign direct investments, inflow 2008-2012
(average)
Belgium
Ireland
Chile
25
1.09 Foreign direct investments, outflow 2008-2012
(average)
Belgium
Switzerland
Ireland
26
1.10 Direct investment holdings in emerging markets,
2011
Mexico
Slovenia
Chile
26
1.11
Freedom to trade internationally, 2011
Ireland
United Kingdom
New Zealand
27
1.12
Efficient customs authorities, 2013
Sweden
Ireland
Finland
27
1.13
Attitudes toward globalisation, 2013
Ireland
Sweden
Israel
28
1.14
Cultural openness, 2013
Ireland
Sweden
Israel
28
1.15 International experience for senior managers,
2013
1.16
Image abroad, 2013
Switzerland
Chile
Sweden
Poland
29
Germany
Sweden
29
GLOBAL BENCHMARK REPORT 2014 – SUMMARY OF BENCHMARKS
132
Benchmark
No. 1
No. 2
No. 3
Switzerland
Sweden
Netherlands
Investment as a percentage of GDP, 2013
Australia
Estonia
South Korea
32
2.02
Public sector investments as a percentage
of GDP, 2011
Poland
South Korea
Estonia
32
2.03
Labour productivity, 2013
Norway
United States
Belgium
33
2.04
Growth in labour productivity, 2009-2013 (average)
Poland
Ireland
South Korea
33
2.05
Total research and development expenditure as a
percentage of GDP, 2011
Israel
South Korea
Finland
34
2.06
Public expenditure on research and development
as a percentage of GDP, 2011
Iceland
Austria
South Korea
34
2.07
Quality of scientific research institutions, 2012-2013
(average)
Israel
Switzerland
United Kingdom
35
2.08
University/industry research collaboration,
2012-2013 (average)
Switzerland
Finland
United States
35
2.09
European patent applications, 2012
Switzerland
Sweden
Finland
36
2.10
Triadic patent families, 2011
Japan
Switzerland
Sweden
36
2.11
Innovation performance, 2012
Switzerland
Sweden
Germany
37
2.12
Growth expectations among entrepreneurs, 2012
Turkey
Australia
Chile
37
2.13
Entrepreneurial activity, 2012
Chile
Estonia
United States
38
2.14
Framework conditions for entrepreneurship, 2013
New Zealand
Canada
Australia
38
2.15
Average time to complete the procedure of closing
a business, 2013
Ireland
Japan
Canada
39
2.16
Venture capital investments as a percentage of
GDP, 2009-2012 (average)
Denmark
Switzerland
Sweden
39
2.17
Gazelle enterprises, 2010
Czech Republic
Estonia
France
40
2.18
Mentality of society supporting competitiveness,
2013
United States
Switzerland
Israel
40
2.19
Flexibility and adaptability, 2013
Ireland
Israel
Poland
41
2.20
Fixed broadband subscribers, 2012
Switzerland
Nederlands
Denmark
41
2.21
E-commerce, 2012
Iceland
Norway
Sweden
42
2.22
Economic freedom, 2011
New Zealand
Switzerland
Finland
42
2.23
Burden of government regulation, 2012-2013
(average)
Finland
Estonia
New Zealand
43
2.24
Quality of infrastructure, 2012-2013 (average)
Nederlands
Finland
France
43
2.25
Energy intensity, 2011
Ireland
Switzerland
United Kingdom
44
2.26
Quality of electricity supply, 2012-2013 (average)
Switzerland
Netherlands
Austria
44
2.00
Productivity and innovation
2.01
Page
GLOBAL BENCHMARK REPORT 2014 – SUMMARY OF BENCHMARKS
Benchmark
133
No. 1
No. 2
No. 3
Page
3.00
Qualified labour
Canada
Switzerland
South Korea
3.01
Labour market participation rate, 2012
Iceland
Switzerland
Sweden
48
3.02
Labour market participation rate for the
55 to 64-year-olds, 2012
Iceland
Sweden
New Zealand
48
3.03
Unemployment, 2013
South Korea
Norway
Japan
49
3.04
Average annual working hours per employed person,
2012
Mexico
South Korea
Greece
49
3.05
Share of employees with tertiary education in the
private sector, 2012
Ireland
Belgium
Finland
50
3.06
Labour regulations, 2013
Iceland
Denmark
Switzerland
50
3.07
Job mobility, 2012
Chile
South Korea
Turkey
51
3.08
Employee motivation, 2013
Denmark
Switzerland
Ireland
51
3.09
Financial incentives to work, 2011
Australia
Greece
Turkey
52
3.10
Equal opportunities, 2013
Norway
Sweden
Canada
52
3.11
Expenditure on educational institutions as a
percentage of GDP, 2010
South Korea
United States
Norway
53
3.12
Expenditure on tertiary education as a
percentage of GDP, 2010
United States
Canada
South Korea
53
3.13
Intended instruction time in public institutions
per year for 7 to 14-year-olds (average), 2011
Chile
Australia
France
54
3.14
OECD Pisa study, Reading skills, 2012
Japan
South Korea
Finland
54
3.15
OECD Pisa study, Mathematical qualifications,
2012
South Korea
Japan
Switzerland
55
3.16
OECD Pisa study, Scientific qualifications, 2012
Japan
Finland
Estonia
55
3.17
Share of 25 to 34-year-olds with upper secondary
education, 2011
South Korea
Czech Republic
Slovak Republic
56
3.18
Share of 25 to 34-year-olds with tertiary education,
2011
South Korea
Japan
Canada
56
3.19
Age by completion of tertiary education, 2011
Belgium
Nederlands
Turkey
57
3.20
Share of graduates by subject, 2011
South Korea
Germany
Greece
57
3.21
Personal gain on further education, 2009
United States
Ireland
Czech Republic
58
3.22
Share of foreign students at tertiary education
institutions, 2011
New Zealand
Switzerland
Australia
58
3.23
Attractive business environment for foreign
highly skilled people, 2013
Switzerland
United States
Australia
59
3.24
Completed PhDs in science and engineering, 2011
Switzerland
Germany
United Kingdom
59
3.25
Adult participation in education and learning, 2012
Denmark
Switzerland
IcelandB 6060
GLOBAL BENCHMARK REPORT 2014 – SUMMARY OF BENCHMARKS
134
Page
No. 1
No. 2
No. 3
4.00
Benchmark
Public economy
Switzerland
South Korea
Estonia
4.01
Public spending as a percentage of GDP, 2012
Switzerland
Mexico
Chile
64
4.02
Public primary expenditure as a percentage
of GDP, 2011
South Korea
Switzerland
Turkey
64
4.03
Structural budget balance, 2013
South Korea
Greece
Italy
65
4.04
Public gross debt as a percentage of GDP, 2013
Estonia
Norway
Australia
65
4.05
Public net debt as a percentage of GDP, 2013
Norway
Finland
South Korea
66
4.06
Growth expenditures as percentage of primary
expenses, 2011
South Korea
Poland
Switzerland
66
4.07
Government-funded research, development
and demonstration in energy technologies, 2012
Finland
Hungary
Canada
67
4.08
Government purchase of goods and services,
2012
United Kingdom
Finland
Iceland
67
4.09
E-government usage by enterprises, 2013
Finland
Iceland
France
68
4.10
Bribery and corruption, 2013
Denmark
New Zealand
Finland
68
No. 1
No. 2
No. 3
Switzerland
Chile
Poland
Mexico
Chile
United States
72
Benchmark
5.00 Costs
Page
Page
5.01
Total tax revenue as a percentage of GDP, 2012
5.02
Marginal tax rate for medium wage earners,
including indirect taxes, 2012
Chile
Mexico
Switzerland
72
5.03
Marginal tax rate for high wage earners,
including indirect taxes, 2012
Chile
South Korea
Mexico
73
5.04
Nominal corporate tax rate, 2013
Ireland
Slovenia
Poland
73
5.05
Actual corporate tax rate, 2012
Belgium
Canada
Slovak Republic
74
5.06
Annual inflation, 2009-2013 (average)
Japan
Switzerland
Ireland
74
5.07
Access to capital markets, 2013
Poland
Switzerland
Sweden
75
5.08
Hourly compensation costs in manufacturing,
2012
Poland
Hungary
Slovak Republic
75
5.09 Annual growth in unit labour costs, 2009-2013
(average)
Greece
Ireland
5.10
Spain
France
Yield of environmental taxes as a percentage
of GDP, 2011
Spain
Slovak Republic
76
76
GLOBAL BENCHMARK REPORT 2014
135
136
GLOBAL BENCHMARK REPORT 2014 – INDEX TO BENCHMARKS
GLOBAL BENCHMARK REPORT 2014 – INDEX TO BENCHMARKS
137
INDEX TO BENCHMARKS
A
Adult participation in education and learning
> 3.25
60
Attractive business environment for foreign highly skilled people
> 3.23
59
B
> 4.10
Bribery and corruption
68
> 2.20
Broadband subscribers, fixed
41
> 4.03
Budget balance, structural
Burden of government regulation
65
> 2.23
43
C
> 5.07
Capital markets, access to
75
> 2.15
Closing a business, average time to complete the procedure of
Compensation costs in manufacturing, hourly
> 5.08
75
> 5.05
Corporate tax rate, actual
Corporate tax rate, nominal
74
> 5.04
73
> 1.14
Cultural openness
Customs authorities, efficient
39
28
> 1.12
27
D
Direct investment holding abroad as a percentage of GDP
Direct investment holding in emerging markets
> 1.07
> 1.10
25
26
E
E-commerce
> 2.21
Economic freedom
42
> 2.22
E-government usage by enterprises
42
> 4.09
68
> 2.26
Electricity supply, quality
44
> 3.08
Employee motivation
51
Employees in the private sector, share with tertiary education
Energy intensity
> 3.05
> 2.25
Entrepreneurial activity
Equal opportunities
44
> 2.13
Environmental taxes as a percentage of GDP, yield of
50
38
> 5.10
76
> 3.10
52
Expenditure on educational institutions as a percentage of GDP
Expenditure on tertiary education as a percentage of GDP
> 3.11
> 3.12
53
53
GLOBAL BENCHMARK REPORT 2014 – INDEX TO BENCHMARKS
138
E
> 1.03
Export performance
Exports as a percentage of GDP
23
> 1.02
22
Exports to emerging markets (non-OECD countries)
> 1.05
24
> 1.01
Exports, growth in
22
F
> 3.09
Financial incentives to work
52
> 2.19
Flexibility and adaptability
41
> 1.06
Foreign direct investment holdings as a percentage of GDP
Foreign direct investments, inflow (average)
> 1.08
25
> 1.09
Foreign direct investments, outflow (average)
26
> 3.22
Foreign students at tertiary education institutions, share of
Framework conditions, for entrepreneurship
Freedom to trade internationally
24
58
> 2.14
38
> 1.11
27
G
> 2.17
Gazelle enterprises
Globalisation, attitudes toward
40
> 1.13
Government purchase of goods and services
Growth expectations among entrepreneurs
28
> 4.08
67
> 2.12
37
Growth expenditures as a percentage of primary expenditure
> 4.06
66
H
Hours worked per person in employment, annual average
> 3.04
49
I
> 1.16
Image abroad
Inflation, annual
29
> 5.06
74
> 2.24
Infrastructure, quality
Innovation performance
43
> 2.11
37
Intended instruction time in public institutions per year for 7 to 14-year-olds
International experience for senior managers
Investments as a percentage of GDP
> 1.15
> 3.13
54
29
> 2.01
32
J
Job mobility
> 3.07
51
L
Labour market participation rate
> 3.01
48
Labour market participation rate for 55 to 64-year-olds
Labour productivity
48
> 2.03
Labour productivity, growth in
Labour regulations
> 3.02
33
> 2.04
33
> 3.06
50
M
Marginal tax rate for high wage earners, including indirect taxes
> 5.03
Marginal tax rate for medium wage earners, including indirect taxes
Mathematical qualifications, OECD's PISA Study
Mentality of society supporting competitiveness
> 3.15
> 2.18
> 5.02
73
72
55
40
GLOBAL BENCHMARK REPORT 2014 – INDEX TO BENCHMARKS
139
P
Patent applications, European
Patent families, triadic
> 2.09
36
> 2.10
Personal gain on further education
36
> 3.21
> 3.24
PhDs in science and engineering, completed
59
> 4.04
Public gross debt as a percentage of GDP
Public net debt as a percentage of GDP
58
65
> 4.05
Public primary expenditure as a percent of GDP
66
> 4.02
> 2.02
Public sector investments as a percentage of GDP
Public spending as a percentage of GDP
64
32
> 4.01
64
R
Reading skills, OECD's PISA Study
> 3.14
54
Research and development expenditures as a percentage of GDP, total
> 2.05
34
Research and development, public expenditure as a percentage of GDP
> 2.06
34
Research, development and demonstration in energy technologies, publicly funded
> 4.07
67
S
> 3.16
Scientific qualifications, OECD's PISA Study
Scientific research institutions, quality of
55
> 2.07
35
T
Tax revenue as a percentage of GDP, total
Tertiary education, age by completion of
> 5.01
72
> 3.19
Tertiary education, share of 25 to 34-year-olds with
Tertiary education, share of graduates by subject
57
> 3.18
56
> 3.20
57
U
Unemployment
> 3.03
49
Unit labour costs, annual growth in
> 5.09
University/industry research collaboration
Upmarket exports to EU15
76
> 2.08
35
> 1.04
23
Upper secondary education, share of 25 to 34-year-olds with
> 3.17
56
V
Venture capital investments as a percentage of GDP
> 2.16
39
For the tenth consecutive year, the Global Benchmark Report 2014
examines how the global challenge is met in the OECD countries.
The assessment is based on 87 benchmarks across five pillars comprising Level of globalisation, Productivity and innovation, Qualified
labour, Public economy and Costs. Together these pillars constitute
the foundation for creating open and prosperous nations capable of
creating and sustaining growth and balance. The report highlights
strengths and weaknesses of each OECD country in facing international competition, providing a picture of each country’s ability to develop attractive business environments and utilise opportunities presented by globalisation.
DI – Confederation of Danish Industry
H.C. Andersens Boulevard 18 1787 Copenhagen V Phone 3377 3377 [email protected] di.dk
Ready for globalisation?
For further information on the Global Benchmark Report see di.dk/
gbr. The website provides a unique opportunity to download a
PDF-version of the report where you can read more about how the individual benchmarks are prepared and why they are relevant in international competition. All graphs and figures are available for download intended for your own presentations and analyses.
GLOBAL BENCHMARK REPORT
The conditions for doing business in the global economy are constantly changing – presenting new challenges and opportunities.
DI ANALYSIS
Ready for globalisation?
DI ANALYSIS
Ready for globalisation?
GLOBAL
BENCHMARK
REPORT
Including themes on global investment flows and Africa
examines how the global challenge is met in the OECD countries.
The assessment is based on 87 benchmarks across five pillars comprising Level of globalisation, Productivity and innovation, Qualified
labour, Public economy and Costs. Together these pillars constitute
the foundation for creating open and prosperous nations capable of
creating and sustaining growth and balance. The report highlights
strengths and weaknesses of each OECD country in facing international competition, providing a picture of each country’s ability to develop attractive business environments and utilise opportunities presented by globalisation.
DI – Confederation of Danish Industry
H.C. Andersens Boulevard 18 1787 Copenhagen V Phone 3377 3377 [email protected] di.dk
Ready for globalisation?
For further information on the Global Benchmark Report see di.dk/
gbr. The website provides a unique opportunity to download a
PDF-version of the report where you can read more about how the individual benchmarks are prepared and why they are relevant in international competition. All graphs and figures are available for download intended for your own presentations and analyses.
GLOBAL BENCHMARK REPORT
The conditions for doing business in the global economy are constantly changing – presenting new challenges and opportunities.
DI ANALYSIS
Ready for globalisation?
DI ANALYSIS
Ready for globalisation?
GLOBAL
BENCHMARK
REPORT
Including themes on global investment flows and Africa
READY
FOR
GLOBALISATION
Global benchmark report 2014
2
GLOBAL BENCHMARK REPORT 2014
Published by the Confederation of Danish Industry
Edited by Kathrine Klitskov, Mathias Secher, Marie Gad,
Michael Meineche, Nanna Bøgesvang Olesen and Mads Dal Jørgensen
Printed by Zeuner Grafisk as
ISSN: 1901-6948
1000.3.14
GLOBAL BENCHMARK REPORT 2014 – FOREWORD
FOREWORD
Businesses across the EU are beginning to see signs that a badly needed confidence
is returning to the economy as an indication that the European economy could return
to moderate growth in 2014. But the situation remains fragile. In order for Europe to
emerge stronger from the financial crisis and restore long-term growth, we need to
do much more to strengthen the fundamental determinants of competitiveness. We
need a reduction of financial, trade and labour market imbalances in all the European
countries in order to build a strong foundation for future growth. And we must be much
better at combining national and European reforms so they become mutually reinforcing. A continued focus on fiscal consolidation and growth enhancing structural reforms
is key to improving Europe’s international competitiveness, growth and employment
prospects.
With its rich data and insightful assessments, DI’s Global Benchmark Report provides
a useful overview of the national policies that ultimately determine Europe’s overall
competitiveness. It can help each and every European member state to identify its
strengths and weaknesses in facing international competition.
BUSINESSEUROPE strongly supports this continued effort to provide facts and figures
for a fruitful dialogue on best practices. The DI Global Benchmark Report complements our own annual European Reform Barometer. We hope both publications can
inform and inspire policymakers to work on the difficult task of designing and implementing policies that will support businesses in their efforts to make the best of the opportunities presented by global markets and help return the EU economy to stronger
growth and full employment.
March 2014
Markus J. Beyrer
Director General, BUSINESSEUROPE
3
4
GLOBAL BENCHMARK REPORT 2014
GLOBAL BENCHMARK REPORT 2014 – PREFACE
PREFACE
Economic recovery in the wake of the financial crisis is slow and uneven. Forecasts predict
some acceleration of growth in 2014 and 2015, though still hesitant. However, we have yet
to realise these expectations. In the current context, governments must avoid complacency in preparing nations for the future economic landscape. Clear and credible strategies
are needed to make the growth path irreversible and sustainable. These strategies require
a strong commitment to long overdue structural reforms. It is DI’s intention that policymakers and business leaders can make use of the Global Benchmark Report to identify
strengths and weaknesses of their nations and apply these insights in the pursuit of creating open and prosperous nations capable of creating and sustaining growing economies in
balanced societies.
The Global Benchmark Report 2014 is the tenth in a series of reports presenting DI’s annual assessment of how the global challenge is met in the OECD member states. Across five
pillars comprising level of globalisation, productivity and innovation, qualified labour, public
economy and costs, each nation is benchmarked on the basis of 87 indicators that support
the common aspiration for growth and prosperity. The report provides a snapshot of each
country’s ability to develop attractive business environments and seize opportunities presented by globalisation.
The conditions for doing business in the global economy are constantly changing – presenting new challenges and opportunities. Therefore, the two theme chapters of the Global
Benchmark Report address how to make the most of these challenges and opportunities.
The first theme chapter focuses on the struggle to attract foreign direct investment, an issue
of growing concern in several OECD member states. Globalisation has increased foreign
direct investment flows and new, viable destinations for investment have emerged putting
pressure on the business and investment climates in several OECD countries. Foreign direct investment introduces new technologies and offers something unique in terms of innovation and productivity. It is vital to continually improve conditions that attract and retain
foreign companies.
The second theme chapter highlights opportunities of tapping into the vast and growing
African market and emphasises the major development results that can be achieved from
combining aid and trade promotion.
March 2014
Karsten Dybvad
CEO, Confederation of Danish Industry (DI)
5
6
GLOBAL BENCHMARK REPORT 2014
GLOBAL BENCHMARK REPORT 2014 – CONTENT
CONTENT
9
Performance in the global arena
18 Benchmarking
20 Level of globalisation
30 Productivity and innovation
46 Qualified labour
62 Public economy
70 Costs
78
Theme chapters
80 New trends in global investment flows
96 Africa: Open for business
123
Methodology, definitions and sources
127
Description of sources
131
Summary of benchmarks
137
Index to benchmarks
7
GROWTH
Seizing opportunities presented by globalisation
Pillars
Developing high productivity and innovation
Having access to qualified and motivated labour
Sustaining a balanced and efficient public sector
Maintaining a competitive cost level
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
9
PERFORMANCE IN
THE GLOBAL ARENA
For the tenth consecutive year, the Global Benchmark Report examines how the
global challenge is met in the OECD member states. The report highlights strengths
and weaknesses of each OECD member state in facing international competition
and gives a picture of each country’s ability to develop attractive business environments and utilise the opportunities presented by globalisation. The Global Benchmark Report is an annually recurring publication intended as a benchmarking tool
for business leaders and policymakers to identify obstacles and opportunities presented in the global business arena.
This year, the report also includes two chapters on “New trends in global investment flows” and "Africa: Open for business". The first theme chapter focuses on
the struggle of attracting companies and their investment, an issue of growing concern in several OECD member states. Foreign investment introduces new technologies and offers something unique in terms of innovation and productivity. The second chapter highlights opportunities of tapping into the vast and growing African
market and emphasizes the major development results that can be achieved from
combining aid and trade promotion.
International benchmarking
The report compares the performance of 33 OECD member states and their business environments. When possible, data from Brazil, Russia, India and China is
included. The report is based upon five fundamental pillars of competitiveness. Together these five pillars constitute the foundation for creating open and prosperous
nations capable of creating and sustaining growing economies in balanced societies. Thus, the comparison is based on 87 benchmarks divided into Level of globalisation, Productivity and innovation, Qualified labour, Public economy and Costs.
Level of
globalisation
Productivity and
innovation
Qualified
labour
Public
economy
87 benchmarks
Costs
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
10
An agenda for growth
Optimism is carefully returning to the global economy creating a slow recovery in
business confidence and economic activity. However, the recovery remains precarious. Macroeconomic policies are under acute pressure in several OECD countries
that still face many challenges including low growth, high fiscal deficits, high debt
and high unemployment. For the OECD member states, success across the five pillars that form the basis of this report is a prerequisite for future growth and prosperity.
Again, Chile excels as the OECD country with the highest average GDP growth in
the period 2009-2013. The Eurozone has been especially challenged by economic
decline over the past five years. Among the BRIC nations, China and India have recorded remarkable growth in spite of the global crisis.
GDP growth, 2009-2013 (average)
EUROZONE
OECD
Chile
Turkey
Israel
South Korea
Poland
Australia
Mexico
New Zealand
Canada
Sweden
United States
Switzerland
Slovak Republic
Norway
Germany
Estonia
Austria
Japan
Belgium
France
United Kingdom
Czech Republic
Denmark
Netherlands
Finland
Hungary
Iceland
Ireland
Spain
Portugal
Italy
Slovenia
Greece
China
India
Brazil
Russia
-6
-4
Source OECD Economic Outlook No. 94 and DI calculations
Behind the benchmark
-2
0
2
4
6
8
10
Per cent
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
GDP per capita, Purchasing power parity, 2013
EUROZONE
11
OECD
Norway
United States
Switzerland
Canada
Australia
Austria
Netherlands
Ireland
Sweden
Iceland
Germany
Belgium
Denmark
United Kingdom
Japan
Finland
France
Israel
South Korea
New Zealand
Spain
Italy
Slovenia
Czech Republic
Slovak Republic
Greece
Portugal
Estonia
Poland
Hungary
Chile
Mexico
Turkey
Russia
Brazil
China
India
0
10,000
20,000
30,000
40,000
50,000
60,000 USD
Source IMF, World Economic Outlook October 2013
Behind the benchmark
The most prosperous members of the OECD continue to be Norway, United States
and Switzerland. The Norwegian first place ranking is mainly due to the country's
major oil production. Despite high growth for several years, the BRIC countries still
have low per capita GDP.
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
12
Competitiveness index of the Global Benchmark Report 2014
Based on a competitiveness index, the Global Benchmark Report provides an overview of how the OECD countries are ranked in terms of competitiveness – and
not only within the single pillars. This comprehensive index captures results from
benchmarks divided across the five pillars of national competitiveness.
Competitiveness index of the Global Benchmark Report, 2014
Average rank of OECD countries across all five pillars* in the Global Benchmark Report
Switzerland
South Korea
Sweden
Ireland
Canada
Chile
Australia
Estonia
United States
Netherlands
United Kingdom
Finland
Denmark
New Zealand
Germany
Israel
Norway
Iceland
Austria
Czech Republic
Japan
Poland
Slovak Republic
Belgium
Portugal
Hungary
Spain
France
Slovenia
Turkey
Mexico
Greece
Italy
* All pillars have equal weights
1
2
2
4
5
6
7
8
8
10
10
12
13
14
15
16
16
18
19
19
21
21
23
24
25
26
27
28
29
29
31
32
33
(1)
(2)
(3)
(8)
(4)
(7)
(5)
(13)
(9)
(6)
(15)
(12)
(10)
(17)
(11)
(19)
(18)
(14)
(16)
(21)
(20)
(23)
(22)
(26)
(24)
(28)
(24)
(30)
(28)
(27)
(31)
(32)
(33)
0
5
10
Note The numbers in the brackets indicate the countries’ ranks in the competitiveness index for 2013.
The coloured circle specifies if the country has either improved, worsened or kept its position.
15
20
25
30
The overall average ranks of countries (1-33)
Switzerland tops the competitiveness index yet again
Yet again, Switzerland wins the title as the most competitive OECD member state
based on the benchmarks in the Global Benchmark Report. Sweden and South Korea take the runner-up positions. Greece and Italy are placed at the bottom as the
least competitive OECD member states.
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
13
1. Level of globalisation
Several OECD member states are still struggling with weak domestic demand. Improved access to major international export markets can help countries tap into
global economic growth. The process of globalisation cultivates interaction between countries and increases international sales. In this first pillar, a nation's level
of globalisation is determined by the degree of global market involvement in terms
of exports, foreign direct investment, global mindset among citizens and businesses, and the extent of cultural openness, to mention a few. The members of the
OECD should strive to seize the opportunities offered by globalisation in order to
create future growth.
Ireland has the position as the OECD country with the highest Level of globalisation. The Irish lead is based on several top rankings including the largest share of
exports relative to GDP, highest freedom to trade internationally, efficient customs
authorities, highest cultural openness, and a population with the most positive attitude towards globalisation. Chile ranks second.
Ireland no. 1
in Level of globalisation
2. Productivity and innovation
The stage of development varies across the OECD, and so does the specific need
for development in productivity and innovation. The most advanced countries
strongly rely on the design and development of cutting-edge innovations in order to
maintain their competitive advantage. Countries less advanced can still reap benefits from adopting existing technologies. This pillar measures a nation's level of
productivity and innovation by addressing labour productivity, investment activity,
the institutional environment and infrastructure. The goal is for each OECD country
to develop high productivity and product quality.
Switzerland excels with the highest levels of Productivity and innovation. The country has particularly strong university/industry research collaboration and is leading
in both patent applications and innovation performance. Switzerland has been successful in attracting several businesses in sectors with high patent activity. Finally,
Switzerland has the most widespread use of fixed broadband subscriptions and is
one of the most energy efficient countries in the OECD. Sweden is the runner-up.
Switzerland no. 1
in Productivity
and innovation
3. Qualified labour
A well-educated workforce contributes significantly to a nation's economic value
creation through productivity and business innovation. It is therefore of paramount
importance that the business conditions of society support education and R&D and
that businesses have access to employees with the desired competences. In this
pillar, the availability of qualified labour in the OECD member states is determined
by measuring investment in education, levels of educational attainment, business
conditions provided by society, and labour market participation.
Canada tops the Qualified labour pillar with a highly educated population and
strong focus on tertiary education. Furthermore, Canadian senior managers assess
that the country's legislation on equal opportunities supports economic growth.
Switzerland and South Korea together rank second with a series of solid performances.
Canada no. 1
in Qualified labour
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
14
4. Public economy
Among other lessons, the financial crisis and the following European debt crisis
have taught the world the importance of monitoring the health of a country's public sector. A country's economic robustness is dependent not only on a strong and
thriving private sector but also an efficient and balanced public sector. Therefore,
among other indicators, this fourth pillar assesses budget balance, public debt,
public expenditure, and corruption levels.
Switzerland no. 1
in Public economy
Switzerland excels as the OECD member with the best average ranking in Public
economy. The country has the lowest public expenditure as a proportion of GDP.
Additionally, Switzerland is one of the only OECD member states with a structural
surplus on its public budgets, and the Swiss public sector is among the smallest in
OECD. South Korea is the runner-up.
5. Costs
The final pillar of the Global Benchmark Report is Costs. The competitiveness of
businesses in a global economy depends on whether productivity and the quality of
the product offset the costs of production. Production costs and taxes are therefore
important indicators of competitiveness. In this pillar, the level of costs in the OECD
countries is determined by benchmarks that measure taxes, consumer prices and
compensation costs. Maintaining a competitive cost level is the fifth and final component of creating growth.
Switzerland no. 1
in Costs
Switzerland is the most competitive country in terms of Costs. This rank is earned
as a result of low marginal tax rates for especially medium wage earners and low
inflation. Furthermore, Swiss businesses have easy access to capital markets, and
this minimises financial costs and helps to stimulate economic growth. Chile holds
second place.
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
15
New trends in global investment flows
For the first time ever, in 2012 less foreign direct investment (FDI) went to OECD
member states than to the world’s other countries. The distinct shift is a natural consequence of the fact that, for many years, an increasing proportion of the
world’s FDI has sidestepped the OECD. Most of the capital, however, still comes
from the OECD, and as a result, many OECD countries have developed a gap between their outward and inward FDI with outbound FDI increasingly exceeding inbound FDI.
Many OECD member states
have developed a gap in FDI
The trend is particularly evident in EU-15, where the gap has nearly tripled in the
past decade and currently constitutes 15 per cent of the countries’ overall GDP. Although many countries have experienced this development, the scope varies greatly as well as the underlying reasons for the development of the investment gap.
The situation is particularly problematic for countries experiencing a declining inflow since FDI can raise both employment and productivity wherever it occurs. It is
therefore important for all countries to be able to attract FDI.
In general, the pattern of the global FDI flows indicates that several affluent OECD
member states have difficulties attracting and maintaining businesses and jobs.
However, it is possible to reverse the trend and increase a country’s attractiveness
as a FDI destination. This involves reducing administrative burdens, better interaction between private and public investment, and enhanced direct financial incentives to invest.
The FDI gap has grown significantly in EU-15
EU-15 outward FDI stock less inward FDI stock
Per cent of GDP
18
16
14
12
10
8
6
4
2
0
Source OECD and DI
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
16
Africa: Open for business
Potential for European
companies in Africa
Over the past decade, Africa has developed from being an extremely poor continent with dark prospects for the future to becoming the region with the highest
growth rates in the world. This provides a potential for European companies, but
also affects Europe’s involvement as an aid donor and trade partner for Africa.
The high African growth rates are thanks to a strong increase in inward foreign direct investment and major demand for African raw materials from growth countries
such as China, India and Turkey.
Contributing directly to the growth and attracting FDI, the African consumer has
become a significant player. African consumers demand a wealth of new products
and services and often pay for them through their mobile telephones. This generates business opportunities that many companies have gradually spotted.
Business conditions have also improved significantly in the African countries. Some
countries are even competing to implement most business-friendly reforms in order to be attractive for FDI. It is, however, important to realise that there are major
differences across the continent. Not all countries have been able to achieve skyhigh growth rates, and a group of African countries are still dominating the bottom
of all kinds of ranking from corruption to education.
Some European countries have had strong trade relations with Africa over many
years, and the EU is still Africa’s greatest trading partner. There are, however, major
differences as to how much the individual countries trade with Africa, and it is particularly the EU-15 member states that have high trade with Africa while the new
member states are lagging behind.
At the same time, several donor countries and African partner countries have
spotted the advantages of co-thinking aid and trade cooperation and in this way
achieved synergic effects between public development aid and private investment.
Historically, as Africa’s largest donor, the EU has placed the highest priority on oth-
Africa will be world champion in economic growth in the next five years
Expected average annual GDP growth, 2013-2018
Sub-Saharan Africa
Africa
Asia
* G7 are Canada, France,
Germany, Italy, Japan,
UK and USA.
Note Africa includes Northern
Africa
Source IMF, World Economic
Outlook, Database, October 2013
Middle East
Central and Eastern Europe
G7*
0
1
2
3
4
5
6 Per cent
GLOBAL BENCHMARK REPORT 2014 – PERFORMANCE IN THE GLOBAL ARENA
er types of aid that aid with focus on job creation and growth. There are signs,
however, that in future the EU will place greater emphasis on industrialisation and
private sector development with focus on job creation. The chapter ends with a
number of recommendations for how the development aid can be structured so
that it harmonises most efficiently with the activities of businesses with a view to
optimising both development and business effects.
17
GLOBAL BENCHMARK REPORT 2014 – X X X X
Global Benchmark Report
GLOBAL BENCHMARK REPORT 2014 – X X X
1.00 Level of globalisation
Average ranks of countries
Ireland
Chile
Switzerland
Sweden
Netherlands
Estonia
Israel
United Kingdom
Belgium
Australia
Austria
Denmark
South Korea
Germany
Hungary
United States
Canada
New Zealand
Finland
Portugal
Mexico
Iceland
Czech Republic
Norway
Turkey
Slovak Republic
Poland
Spain
Slovenia
France
Japan
Italy
Greece
1
2
3
4
5
6
7
8
9
10
11
11
13
14
15
16
17
18
19
19
21
22
23
23
25
26
27
28
29
30
31
32
33
Ireland tops the list in
terms of average ranking in
the benchmarks for Level
of globalisation.
(1)
(2)
(3)
(5)
(4)
(7)
(6)
(8)
(10)
(12)
(14)
(9)
(11)
(13)
(18)
(16)
(15)
(21)
(19)
(20)
(23)
(17)
(29)
(22)
(26)
(27)
(24)
(25)
(28)
(30)
(31)
(32)
(33)
0
5
10
15
20
25
30
The average ranks of countries
in the Level of globalisation pillar
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
21
LEVEL OF GLOBALISATION
Several OECD countries are still struggling with weak domestic demand.
Improved access to major international export markets can help countries
tap into global economic growth. The process of globalisation cultivates interaction between countries and increases international sales. In order to
take advantage of the many new opportunities presented by globalisation,
great demands are placed on the global outlook of citizens, companies and
policy makers. A positive attitude towards globalisation and openness towards foreign ideas and cultures are prerequisites for success.
The top three countries in Level of globalisation, Ireland, Chile and Switzerland, have
retained the same positions as last year.
Ireland is the OECD country with the highest rank in Level of globalisation. The Irish
lead is based on several top rankings including the largest share of exports relative to
GDP, highest degree of freedom to trade internationally, efficient customs authorities,
highest degree of cultural openness and a population with the most positive attitude
towards globalisation.
Chile is second with a series of solid performances. The country has the most positive
image abroad and excels in terms of both attracting foreign investments and investing
abroad.
Switzerland ranks third. The country has the highest share of upmarket exports to
EU15, Swiss senior managers have the highest degree of international experience and,
additionally, Switzerland is a major investor abroad.
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
22
1.01 Growth in exports, 2009-2013 (average)
EUROZONE
OECD
Estonia
South Korea
Slovak Republic
Turkey
Mexico
Poland
Australia
Czech Republic
Iceland
Spain
United States
Portugal
Hungary
Germany
New Zealand
Netherlands
Israel
Ireland
Switzerland
United Kingdom
France
Belgium
Austria
Sweden
Slovenia
Italy
Canada
Denmark
Japan
Norway
Finland
Greece
Export growth is an expression of
how successful countries are at
converting international business
opportunities into increased sales.
As a consequence of the financial
crisis, many countries have experienced major export setbacks, and
this decline is only slowly recuperated.
Estonia, South Korea and the Slovak
Republic top this benchmark.
China
India
Brazil
Behind the benchmark
Source OECD Economic Outlook No. 94 and
DI calculations
-4
-2
0
2
4
6
8
10
Average annual real growth in per cent
1.02 Exports as a percentage of GDP, 2013
OECD
EUROZONE
A country’s export percentage indicates to which degree the country
participates in the international division of labour. Small countries typically have a higher export percentage than large countries because
the domestic market is too small
to support a highly specialised production.
Ireland
Slovak Republic
Hungary
Estonia
Netherlands
Belgium
Czech Republic
Slovenia
Iceland
Austria
South Korea
Denmark
Switzerland
Germany
Poland
Sweden
Portugal
Finland
Norway
Spain
Israel
Mexico
United Kingdom
Italy
Canada
Greece
New Zealand
France
Turkey
Australia
Japan
United States
Behind the benchmark
Ireland continues to be the country with the largest export as a percentage of GDP. Ireland is followed
by the Slovak Republic and Hungary. Ireland has been able to attract
international companies that sell a
large proportion of their production
outside the Irish domestic market.
Note Exports should be viewed in relation to
total production, but in international comparisons it is often most practical to use GDP
(production adjusted for product taxes and
consumption in production).
Source OECD Economic Outlook No. 94 and
DI calculations
0
20
40
60
80
100
120
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
23
1.03 Export performance, 2009-2013 (average)
EUROZONE OECD
Poland
Israel
Slovak Republic
Iceland
Estonia
Hungary
Turkey
Mexico
Portugal
South Korea
Germany
Czech Republic
Switzerland
Spain
Slovenia
United States
Ireland
Sweden
United Kingdom
Netherlands
Chile
Denmark
Austria
New Zealand
Australia
Greece
France
Italy
Canada
Norway
Finland
Belgium
Japan
Export performance indicates
whether a country’s exports increase
more or less than the general import
growth on the export markets.
Positive values indicate that market
shares are won abroad while negative values mean loss of market
shares. If exports are parallel with
imports on the export markets, the
country’s export performance will
equal zero.
Poland is the top scorer this year
with exports in the period 20092013 that have developed significantly faster than the imports of its
export markets.
India and China stand out among
the BRIC countries. For several
years, they have both won market
shares to a much higher degree than
all the OECD countries.
India
China
Russia
Brazil
Behind the benchmark
Source OECD Economic Outlook No. 94 and
DI calculations
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
Export index divided by market index
1.04 Upmarket exports to EU15, 2008-2012 (average)
EUROZONE
OECD
Switzerland
Japan
Ireland
United States
Israel
Australia
Canada
Denmark
Austria
Mexico
Sweden
South Korea
Estonia
United Kingdom
New Zealand
Hungary
Czech Republic
Slovak Republic
Germany
Netherlands
Italy
Portugal
Belgium
Slovenia
Greece
France
Finland
Turkey
Spain
Poland
Iceland
Chile
Norway
Companies in high-cost countries
often focus on upmarket products
which, due to their quality, design
or service concept, are able to earn
a higher price than corresponding
products from other countries.
85 per cent of Swiss exports to the
EU15 are upmarket products, and
this again earns Switzerland a clear
first place, with Japan and Ireland
taking the two following rankings.
Note Upmarket exports are defined as
exported products that achieve a price at
least 15 per cent higher than the average
price for the product in the EU15 states.
India
Brazil
China
Russia
Behind the benchmark
Source Eurostat and DI calculations
0
10
20
30
40
50
60
70
80
90
Per cent of total exports of goods
to EU15
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
24
1.05 Exports to emerging markets (non-OECD countries), 2012
EUROZONE
OECD
South Korea
Japan
Australia
Turkey
Chile
New Zealand
Greece
Estonia
United States
Israel
Finland
Italy (2011)
Slovenia
France
United Kingdom
Switzerland
Germany
Spain
Hungary
Portugal
Poland
Sweden
Austria
Denmark
Belgium
Netherlands
Iceland
Czech Republic
Slovak Republic
Canada
Mexico
Ireland
Norway
Behind the benchmark
Several markets outside the OECD,
including the BRIC markets, have
a high export potential due to the
size of their populations, increasing
middle classes and economic growth
potential. A positive development is
closely linked to the ability to reach
these markets.
South Korea, Japan and Australia
are once again at the top. This
should be viewed in the light of their
proximity to high-growth markets in
Asia, particularly China.
Note Data only includes goods exports.
Source OECD.Stat and DI calculations
0
10
20
30
40
50
60
70
Per cent of total exports of goods
1.06 Foreign direct investment holdings as a percentage of GDP, 2012
OECD
EUROZONE
Belgium
Ireland
Switzerland
Iceland
Estonia
Hungary
Chile
Netherlands
Sweden
Czech Republic
Slovak Republic
Portugal
United Kingdom
New Zealand
Denmark
Poland
Spain (2011)
France
Austria
Australia
Norway
Finland (2010)
Canada (2011)
Slovenia
Israel (2011)
Mexico
United States (2011)
Turkey
Germany
Italy
Greece
South Korea
Japan (2011)
Globalisation is characterised by increasing investment across national borders. This development should
be viewed in the light of a wish to
strengthen ties with foreign customers and benefit from favourable production conditions in other parts of
the world.
The holdings of foreign direct investment indicate the attractiveness of a
country’s general business conditions
such as taxes, access to raw materials, wages and level of education.
Belgium is the OECD country where
FDI holdings take up the greatest
share of the economy. Ireland and
Switzerland come next.
Brazil
Russia
India (2009)
China
Behind the benchmark
Source UNCTAD
0
50
100
150
200
250
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
25
1.07 Direct investment holdings abroad as a percentage of GDP, 2012
OECD
EUROZONE
Belgium
Switzerland
Ireland
Netherlands
Sweden
Iceland
United Kingdom
Denmark
France
Finland
Austria
Spain
Germany
Norway
Canada
Chile
Portugal
United States
Israel
Italy
Hungary
Australia
Estonia
Japan
Slovenia
Greece
South Korea
Poland
Mexico
New Zealand
Czech Republic
Slovak Republic
Turkey
Direct investment abroad is an indication that the country is an active
participant in the international division of labour. It can also, however,
be an indication that businesses
prefer to invest in countries other
than their own.
Belgium takes the lead regarding
investment abroad.
Russia
Brazil
India
China
Behind the benchmark
Source UNCTAD
0
50
100
150
200
250
Per cent of GDP
1.08 Foreign direct investments, inflow 2008-2012 (average)
OECD
EUROZONE
Belgium
Ireland
Chile
Estonia
Hungary
Iceland
Israel
Australia
Norway
Switzerland
Sweden
Czech Republic
United Kingdom
Poland
Portugal
Canada
Slovak Republic
Spain
Mexico
Turkey
Austria
New Zealand
United States
France
Netherlands
Slovenia
South Korea
Germany
Greece
Finland
Italy
Denmark
Japan
The ability to attract foreign investment is central for domestic companies in a globalised world economy
and vital for economic growth in
society. A high investment flow indicates that foreign investors anticipate a major growth potential.
Belgium has clearly recorded the
highest average inflow of FDI in
the past 5 years corresponding to
almost 18 per cent of GDP. Ireland
and Chile take the following two
places.
Russia
Brazil
India
China
Behind the benchmark
Source UNCTAD
0
5
10
15
20
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
26
1.09 Foreign direct investments, outflow 2008-2012 (average)
OECD
EUROZONE
Belgium
Switzerland
Ireland
Chile
Sweden
Netherlands
Norway
Austria
United Kingdom
Canada
France
Hungary
Finland
South Korea
Denmark
Germany
Israel
Estonia
United States
Spain
Italy
Japan
Australia
Mexico
Portugal
Poland
Czech Republic
Slovak Republic
Slovenia
Greece
Turkey
New Zealand
Iceland
Outflow of direct investment is
a sign that a country is an active
participant in the international
division of labour and aims to take
part in growth found outside of the
country. It can, however, also be a
sign that companies prefer to invest
abroad rather than in their own
country.
Belgium has the largest outflow
of direct investment followed by
Switzerland and Ireland.
Russia
China
India
Brazil
Source UNCTAD
Behind the benchmark -10
-5
0
5
10
15
Per cent of GDP
1.10 Direct investment holding in emerging markets, 2012
EUROZONE
OECD
Mexico (2011)
Slovenia
Chile
Estonia
Greece
Korea
Hungary
Turkey
Japan
Norway
Austria
Switzerland
United States
Israel (2011)
Canada
Australia (2011)
Ireland
Poland
Portugal
United Kingdom
Spain
Italy
Czech Republic
Slovak Republic
New Zealand
Denmark
Netherlands
Germany (2011)
Belgium
France
Sweden
Finland
Iceland
Behind the benchmark
An increasing share of direct investments takes place in markets outside the OECD. Such investments
can be explained by low production
costs, but another important goal
is to get hold of a share of the high
growth in several of these markets.
Mexico has the greatest share of its
direct investment holding in emerging markets. Slovenia and Chile are
runners-up.
Note Emerging markets are markets outside
the OECD.
Source OECD.Stat and DI calculations
0
20
40
60
80
100
Per cent of total investments
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
27
1.11 Freedom to trade internationally, 2011
OECD
EUROZONE
Ireland
United Kingdom
New Zealand
Netherlands
Finland
Estonia
Denmark
Chile
Belgium
Portugal
Slovak Republic
Sweden
France
Israel
Germany
Austria
Spain
Italy
Hungary
Czech Republic
United States
Australia
Canada
South Korea
Greece
Slovenia
Poland
Norway
Turkey
Switzerland
Japan
Mexico
Iceland
Cato’s index for international freedom of trade measures the degree
to which general business conditions
in the country support internationalisation and the export and import
activities of companies. The index
focuses on aspects such as customs barriers and other trade barriers, as well as barriers to foreign
investment.
Freedom to trade creates a broader
sales potential for companies. In
addition, the freedom to trade contributes to stimulating competitiveness due to the presence of foreign
goods and services.
Ireland takes first place closely followed by the United Kingdom and
New Zealand.
Brazil
China
India
Russia
Behind the benchmark
Note High values indicate few barriers for
international trade and FDI.
Source Cato Institute, Economic Freedom
of the World, 2013
0
1
2
3
4
5
6
7
8
9
10
Index 0 -10
1.12 Efficient customs authorities, 2013
EUROZONE OECD
Sweden
Ireland
Finland
New Zealand
Norway
Denmark
Austria
Netherlands
Germany
United Kingdom
Australia
Switzerland
Belgium
Canada
United States
Chile
Estonia
Slovenia
Japan
South Korea
France
Spain
Czech Republic
Israel
Portugal
Iceland
Hungary
Turkey
Italy
Mexico
Greece
Slovak Republic
Poland
Efficient customs authorities ensure
smooth trade across national
borders and are a vital
China
India
Russia
Brazil
Note High values indicate that local senior
managers find the country’s customs authorities efficient.
Behind the benchmark
precondition for international
business activities. In a period of
increasing digitalisation and growing
numbers of IT-based reporting
systems, it is important that these
work optimally and do not constitute
a barrier for imports and exports.
Sweden has conquered the top rank
followed by Ireland and Finland.
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0 -10
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
28
1.13 Attitudes toward globalisation, 2013
OECD
EUROZONE
Ireland
Sweden
Israel
Denmark
Chile
Netherlands
Australia
Turkey
Mexico
Finland
South Korea
Norway
Switzerland
Germany
Iceland
Canada
United Kingdom
Japan
United States
Portugal
Italy
Estonia
Czech Republic
New Zealand
Belgium
Slovak Republic
Austria
Greece
Spain
Slovenia
Poland
France
Hungary
A positive attitude to globalisation in
society helps to promote the ability
of businesses to benefit from the
opportunities of globalisation and
continuously adapt to the changes
needed in international competition.
Ireland, Sweden and Israel hold the
top 3 positions in that order.
Note This benchmark indicates the degree
to which local senior managers assess that
there is a positive attitude to globalisation
in society.
India
China
Brazil
Russia
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0 -10
1.14 Cultural openness, 2013
EUROZONE
OECD
Ireland
Sweden
Israel
Netherlands
Canada
Australia
Portugal
Chile
New Zealand
United Kingdom
Denmark
Belgium
United States
Poland
Mexico
Turkey
Austria
Spain
Switzerland
Norway
Germany
Iceland
Italy
Finland
Greece
Czech Republic
South Korea
Slovak Republic
Estonia
Japan
Hungary
France
Slovenia
Globalisation gives companies access
to new partners across the globe.
Therefore, adaptation and acceptance of foreign ideas and cultures are
important in order to take an active
part in globalisation and exploit its
benefits. This applies for instance to
the ability to attract foreign investment and highly skilled workers.
Ireland is once again in first place.
China, Brazil and India have a high
degree of openness – at a level with
the best OECD countries.
Note This benchmark indicates the degree
to which local senior managers assess that
society is open to foreign ideas.
China
Brazil
India
Russia
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0 -10
GLOBAL BENCHMARK REPORT 2014 – LEVEL OF GLOBALISATION
29
1.15 International experience for senior managers, 2013
OECD
EUROZONE
Switzerland
Sweden
Poland
Netherlands
Ireland
Germany
Belgium
Finland
Mexico
Austria
Denmark
Israel
Hungary
United Kingdom
Chile
United States
Turkey
Canada
Greece
Norway
Czech Republic
Australia
France
South Korea
New Zealand
Slovak Republic
Italy
Iceland
Estonia
Portugal
Slovenia
Spain
Japan
A high degree of international experience of senior managers is vital
when strategic decisions have to be
made on global issues, and when
employees across national borders
have to be managed as efficiently as
possible.
Brazil
India
China
Russia
Note A high value indicates that senior
managers generally have major international
experience.
Behind the benchmark
Switzerland is still number one in
this benchmark. The country is
headquarters of many global corporations and organisations, and
is characterised by an attractive
business environment, including
a favourable tax system for highly
educated people.
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0 -10
1.16 Image abroad, 2013
OECD
EUROZONE
Chile
Germany
Sweden
South Korea
Switzerland
Canada
Austria
Australia
Ireland
New Zealand
Netherlands
Denmark
United States
Japan
Finland
Norway
United Kingdom
Estonia
Turkey
Iceland
Czech Republic
Slovak Republic
Israel
Belgium
Slovenia
Italy
Mexico
France
Spain
Portugal
Poland
Greece
Hungary
A positive image abroad can help to
promote exports and international
relations and contribute to attracting
investment to the country. A country's image abroad is affected by many
different factors including sports
performances, tourist attractions,
major events, business strengths and
the international commitment of the
country.
Chile, Germany and Sweden top the
benchmark this year.
Note This benchmark shows to which degree
local senior managers assess that the image
abroad of their country helps to promote
international business developments.
Brazil
China
India
Russia
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0 -10
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
30
2.00 Productivity and innovation
Average ranks of countries
Switzerland
Sweden
Netherlands
United States
Finland
Denmark
Australia
Ireland
Canada
United Kingdom
Iceland
Germany
South Korea
Norway
Japan
Belgium
New Zealand
Austria
France
Estonia
Israel
Portugal
Spain
Czech Republic
Chile
Slovenia
Poland
Hungary
Turkey
Slovak Republic
Italy
Mexico
Greece
1
2
3
3
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
25
27
28
29
30
31
32
33
Switzerland is most
successful in terms of average
ranking in benchmarks for
Productivity and innovation.
(1)
(2)
(3)
(5)
(9)
(6)
(4)
(10)
(8)
(11)
(7)
(12)
(13)
(14)
(17)
(16)
(19)
(15)
(18)
(20)
(21)
(22)
(23)
(24)
(25)
(26)
(27)
(27)
(29)
(29)
(31)
(32)
(33)
0
5
10
15
20
25
30
The average ranks of countries
in the Productivity and innovation
pillar
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
31
PRODUCTIVITY AND INNOVATION
The level of development varies across the OECD, and so does the specific
need for development in the areas of productivity and innovation. The most
advanced countries are strongly reliant on the design and development of
cutting-edge innovations in order to maintain their competitive advantage.
Countries less advanced can still reap benefits from adopting existing technologies. Developing a country's level of productivity and innovation includes prioritizing investment in research and development, taking out patents and facilitating entrepreneurship.
Switzerland excels as the country with the highest levels of Productivity and innovation. The country has particularly strong university/industry research collaboration
and is leading in both patent applications and innovation performance. Switzerland
has been successful in attracting businesses in sectors with high patent activity. Finally, Switzerland has the most widespread use of fixed broadband subscriptions and is
one of the most energy efficient countries in the OECD.
Sweden is the runner-up in Productivity and innovation, and good rankings include
high patent activity including European patent applications and triadic patent families. The country also has a high level of innovation performance.
The Netherlands earns third place as a result of the high quality of infrastructure, efficient supply of electricity, and a large number of fixed broadband subscribers.
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
32
2.01 Investments as a percentage of GDP, 2013
EUROZONE
OECD
Australia
Estonia
South Korea
Norway
Chile
Canada
Mexico
Czech Republic
Austria
Belgium
Switzerland
Japan
New Zealand
Poland
Turkey
France
United States
Finland
Sweden
Israel
Slovak Republic
Spain
Germany
Italy
Denmark
Hungary
Slovenia
Netherlands
Portugal
United Kingdom
Iceland
Greece
Ireland
Investment is an important driving
force behind productivity gains and
growth. Many factors are involved in
the level of investment in the various
countries, including economic development, access to financing and general business conditions.
Investment in new equipment, means
of transport, buildings and information technology makes production
more efficient. Investment in research
and innovation supports the development of new products while investment in infrastructure and energy supply provides more efficient conditions
for businesses.
Australia takes the lead with investments corresponding to almost a third
of the country's GDP. Far ahead of
both the OECD countries and the other BRIC countries, China has an impressive investment share of almost
50 per cent of GDP.
Note Investment covers private sector investment, public sector investment and housing
investment.
China
India
Russia
Brazil
Behind the benchmark
Source IMF, World Economic Outlook
October 2013
0
10
20
30
40
50
Per cent
2.02 Public sector investments as percentage of GDP, 2011
EUROZONE
OECD
Public sector investment can
contribute to enhancing growth in
the private sector. Investment in
infrastructure and information technology, for example, may contribute
to increased mobility, flexibility and
productivity.
Poland
South Korea
Estonia
Czech Republic
Slovenia
Sweden
Poland, South Korea and Estonia
have the highest proportions of
public investment in relation to GDP
among the OECD countries.
Netherlands
Japan
Norway
Comparisons of public sector investment across countries are influenced by the fact that some countries have developed the public
sector at a much earlier stage than
others, and currently do not need
investment at the same scale.
Furthermore, the definition of public
investment differs among the countries suggesting cautious interpretation of the figure.
Hungary
France
Spain
Portugal
Ireland
Finland
Slovak Republic
Switzerland
Denmark
Italy
Iceland
Israel
Belgium
Germany
Greece
Austria
Russia (2009)
Behind the benchmark
Source IMF, World Economic Outlook
October 2013
0
1
2
3
4
5
6
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
33
2.03 Labour productivity, 2013
EUROZONE OECD
Norway
United States
Belgium
Netherlands
France
Germany
Ireland
Australia
Sweden
Austria
Denmark
United Kingdom
Canada
Iceland
Switzerland
Spain
Japan
Finland
Italy
New Zealand
Slovenia
Israel
Slovak Republic
Greece
South Korea
Czech Republic
Portugal
Poland
Hungary
Estonia
Turkey
Mexico
Chile
Wealth creation in a society is closely connected with labour productivity.
Brazil
Source The Conference Board Total Economy
Database, January 2014
Behind the benchmark
Norway tops the list with the highest
productivity per working hour.
Norway’s considerable production
per working hour is particularly
ascribed to oil and therefore less a
reflection of labour productivity on
the Norwegian mainland. The
United States, Belgium and the
Netherlands are runners-up with
labour productivity significantly above the OECD average. This
shows that these countries are
capable of generating high pros
perity per working hour.
0
10
20
30
40
50
60
70
80
USD per working hour (PPP)
2.04 Growth in labour productivity, 2009-2013 (average)
EUROZONE
OECD
Poland
Ireland
South Korea
Estonia
Spain
Japan
Slovak Republic
New Zealand
Australia
United States
Mexico
Iceland
Denmark
Portugal
Sweden
Canada
Chile
Norway
France
Austria
Germany
Turkey
Belgium
Finland
Italy
Switzerland
Hungary
Czech Republic
Israel
Netherlands
United Kingdom
Slovenia
Greece
Countries with a low level of productivity will often develop faster than
countries with a high productivity level because the aforementioned countries can more easily improve their
productivity through imports of modern capital equipment and reorganisation of their production structure.
Brazil
Source The Conference Board Total Economy
Database, January 2014
Behind the benchmark
Poland, Ireland and South Korea win
the three top ranks and, accordingly, have recorded the highest average
growth in labour productivity over the
past five years.
-3
-2
-1
0
1
2
3
4
Average annual growth in GDP
per working hour in per cent
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
34
2.05 Total research and development expenditure as a percentage of GDP, 2011
EUROZONE
OECD
Israel
South Korea
Finland
Japan
Sweden
Iceland (2009)
Denmark
Germany
Switzerland (2008)
United States
Austria
Slovenia
Estonia
France
Australia (2010)
Belgium
Netherlands (2010)
Czech Republic
United Kingdom
Canada
Ireland
Norway
Portugal
Spain
New Zealand
Italy
Hungary
Turkey
Poland
Slovak Republic
Mexico
Chile (2010)
Investment in research and development is a vital parameter in global
competition. This applies to private
as well as public investments.
For the fourth consecutive year,
Israel captures the top position with
slightly more than four per cent of
GDP invested in research and development. Several global companies have chosen to locate research
centres in Israel.
China
Russia
Behind the benchmark
Source OECD.Stat, Main Science and
Technology Indicators
0
1
2
3
4
5
Per cent of GDP
2.06 Public expenditure on research and development as a percentage of GDP, 2011
EUROZONE OECD
Iceland (2009)
Austria
South Korea
Finland
Sweden
United States
Denmark
Germany (2010)
France (2010)
Estonia
Slovenia
Norway
Netherlands (2009)
Portugal (2010)
Czech Republic
Canada (2010)
Israel (2009)
Spain (2010)
United Kingdom
Japan
New Zealand
Italy (2010)
Ireland
Belgium (2009)
Hungary
Poland
Slovak Republic
Mexico
Turkey
Chile (2010)
In order to ensure a high level of
knowledge in society, it is vital that
public funds for research and development have high priority.
Iceland holds the first place followed
by Austria and South Korea.
Note Countries with only older available data
(2009 and 2010) may have an unfairly high
ranking compared with countries with 2011
data due to the probability of cuts in R&D
budgets as a consequence of the financial
crisis.
Russia
China
Behind the benchmark 0.0
Source OECD.Stat, Main Science and
Technology Indicators
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
35
2.07 Quality of scientific research institutions, 2012-2013 (average)
EUROZONE
OECD
Israel
Switzerland
United Kingdom
Belgium
United States
Germany
Netherlands
Australia
Japan
Finland
France
Ireland
Sweden
Canada
Denmark
New Zealand
Portugal
Hungary
Norway
Austria
South Korea
Estonia
Czech Republic
Iceland
Slovenia
Spain
Italy
Chile
Mexico
Poland
Turkey
Slovak Republic
Grækenland
High quality in scientific institutions
is central to a high level of research
and makes it easier to attract foreign
students and scientists as well as
foreign investment in R&D.
Israel has the top rank this year.
Israel’s position has to do with its
massive investment in R&D in recent
years.
Note High index values indicate that senior
managers in the country assess that the local
scientific research institutions are among the
best in the world in their specific field.
India
China
Brazil
Russia
Behind the benchmark
Source WEF 2013-2014, survey
1
2
3
4
5
6
7
Index 1-7
2.08 University/industry research collaboration, 2012-2013 (average)
OECD
EUROZONE
Switzerland
Finland
United States
United Kingdom
Belgium
Israel
Germany
Sweden
Netherlands
Ireland
Norway
Australia
Japan
Canada
New Zealand
Denmark
Austria
Iceland
South Korea
Portugal
France
Czech Republic
Estonia
Chile
Hungary
Mexico
Spain
Turkey
Slovenia
Italy
Poland
Slovak Republic
Greece
Strong research collaboration between universities and industry is
essential in order to guarantee relevant research for both businesses
and society. It is also an important
path for the transfer of new knowledge between businesses and universities.
Switzerland takes the rank as number one followed by Finland and the
United States.
According to senior managers, these
countries have the best research collaboration between universities and
industry.
Note High index values indicate that senior
managers in the country assess that research
collaboration between universities and
industry is widespread.
China
India
Brazil
Russia
Behind the benchmark
Source WEF 2013-2014, survey
1
2
3
4
5
6
7
Index 1-7
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
36
2.09 European patent applications, 2012
OECD
EUROZONE
Switzerland
Sweden
Finland
Germany
Netherlands
Denmark
Austria
Japan
Belgium
France
Iceland
Israel
Ireland
South Korea
United States
Norway
United Kingdom
Canada
Italy
Slovenia
Australia
Spain
Estonia
New Zealand
Czech Republic
Hungary
Poland
Portugal
Greece
Slovak Republic
Turkey
Chile
Mexico
The number of European patent
applications is an indicator of the
degree to which companies in the
country perceive the European countries as key markets for their innovative products and processes.
Similar to previous years, Switzerland
is in a superior position ahead of all
other OECD countries with the highest number of patent applications
per million inhabitants. Switzerland
has attracted many businesses in the
most patent-active sectors, including the pharmaceutical industry. The
appeal is mainly due to the combination of low tax rates, researcher programmes, corporate law, infrastructure and location.
Note A European patent is achieved through
application to the European Patent Office
(EPO). Following submission of application,
the patents must be designated in the individual country at the national patent authorities. The figures here only indicate submission of applications to EPO and do not say
which EU member states were designated
afterwards.
China
Russia
Brazil
India
Behind the benchmark
Source European Patent Office, IMF, and DI
calculations
0
100
200
300
400
500
600
700
800
900
Applications per million inhabitants
2.10 Triadic patent families, 2011
EUROZONE
OECD
Japan
Switzerland
Sweden
Germany
Finland
Netherlands
Denmark
United States
Israel
Austria
South Korea
France
Belgium
United Kingdom
Norway
Ireland
Canada
Italy
Australia
New Zealand
Iceland
Spain
Slovenia
Hungary
Estonia
Czech Republic
Portugal
Slovak Republic
Greece
Chile
Poland
Turkey
Mexico
A triadic patent is a patent that is
taken out at the same time in the
United States, Japan and the EU.
The triadic patents are taken out to
ensure broad international protection in three of the world’s major
markets.
It should be noted that global companies increasingly also take out
patents in one or several BRIC countries and in other emerging markets.
Similar to preceding years, Japan,
Switzerland and Sweden top the list
of this type of patent. One of the
reasons is that all three countries
are knowledge societies with focus
on sectors with frequent patenting
such as the IT and telecom industry, the pharmaceutical industry and
high technology in general.
China
Russia
Brazil
India
Behind the benchmark
Source OECD.Stat, IMF World Economic
Outlook October 2013 and DI calculations
0
10
20
30
40
50
60
70
80
90
100
110
Patents per million inhabitants
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
37
2.11 Innovation performance, 2012
OECD EUROZONE
In a world of tough international
competition, the continual innovation and development of products,
processes and services are a precondition for creating growth and prosperity in society.
Switzerland
Sweden
Germany
Denmark
Finland
The European Innovation Scoreboard
tracks 25 socio-economic and
company-specific factors that are
central to the ability of companies to be innovative. These factors
include number of patents, innovation expenditure and the launch of
new products and services by small
companies.
Netherlands
Belgium
Iceland
United Kingdom
Austria
Ireland
Switzerland takes the innovation
prize again this year.
France
Slovenia
Estonia
Norway
Italy
Spain
Portugal
Czech Republic
Greece
Slovak Republic
Hungary
Poland
Turkey
Behind the benchmark
Source European Innovation Scoreboard,
Summary Innovation Index 2012
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Index 0-1
2.12 Growth expectations among entrepreneurs, 2012
EUROZONE
OECD
Turkey
Australia (2011)
Chile (2011)
Czech Republic (2011)
Estonia
South Korea
Iceland (2010)
Japan
Slovak Republic
Hungary
Ireland
Denmark
United Kingdom
United States
Poland
Portugal
Germany
France
Slovenia
Israel
Belgium
Mexico
Finland
Netherlands
Norway
Italy
Sweden
Switzerland
Greece
Austria
Spain
The most important job creation
takes place among small and, in
particular, newly established businesses. It is vital that entrepreneurs
are able to grow and develop their
enterprises. The entrepreneurs’ own
expectations for their growth are an
indication of their future situation.
Since growth expectations often
work as a mental benchmark for
the individual entrepreneur, there
is often close correlation between
expectations and reality.
Turkey holds first place with the
highest growth expectations among
the country's entrepreneurs.
Note The share of entrepreneurs who expect
to take on at least five new employees in the
next five years. Entrepreneurs are defined as
people in the 18-64 age group who are either
in the process of starting a business or are
actually operating a newly established firm
(maximum 3.5 years old). This data was also
included in the Global Benchmark Report
2013. Additional information is provided in
the section on methodology.
Russia
China
Brazil
Behind the benchmark
Source GEM 2013
0
10
20
30
40
50
Per cent
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
38
2.13 Entrepreneurial activity, 2012
OECD
EUROZONE
Chile
Estonia
United States
Turkey
Iceland (2010)
Australia (2011)
Netherlands
Slovak Republic
Austria
Poland
Hungary
United Kingdom
Portugal
Czech Republic (2011)
Norway
South Korea
Israel
Greece
Sweden
Ireland
Finland
Switzerland
Spain
Slovenia
Denmark
Germany
Belgium
France
Italy
Japan
Entrepreneurial activity is an important precondition for economic
growth.
Chile ranks highest on the list again
this year followed by Estonia and the
United States as the countries with
the greatest share of new entrepreneurs in the OECD.
It is normal to distinguish between
entrepreneurship driven by necessity and entrepreneurship driven by
opportunity. Countries such as Chile
and Estonia with a relatively low
level of prosperity typically have a
large share of entrepreneurs driven
by necessity.
Note The share of the population in the
18-64 age group which is either in the process
of starting a business or is actually operating
a newly established firm (maximum 3.5 years
old). This data was also included in the Global
Benchmark Report 2013. Additional information is provided in the section on methodology.
Brazil
China
Russia
Behind the benchmark
Source GEM 2013
0
5
10
15
20
25
Per cent
2.14 Framework conditions for entrepreneurship, 2013
EUROZONE
OECD
New Zealand
Canada
Australia
Portugal
Slovenia
Belgium
Netherlands
Finland
Ireland
Denmark
Sweden
Hungary
France
Iceland
Norway
Estonia
South Korea
United States
Israel
Greece
United Kingdom
Chile
Turkey
Italy
Mexico
Poland
Switzerland
Slovak Republic
Germany
Japan
Austria
Czech Republic
Spain
In order to support the establishment of new businesses it is important that the structures and legislation of society provide good
conditions for entrepreneurship.
Again this year, New Zealand wins
most points and gets the maximum
score (100 per cent). Canada and
Australia are close to 100 per cent in
second and third place.
Note This benchmark is an indicator of the
scope of procedures, time and costs required
for a small or medium-sized enterprise to get
started and to function formally. New Zealand
has the best business conditions for entrepreneurship and is therefore assigned a score of
100 per cent. The other countries are benchmarked in relation to New Zealand.
Russia
China
India
Brazil
Behind the benchmark
Source World Bank, Doing Business 2014
0
10
20
30
40
50
60
70
80
90
100
Per cent
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
39
2.15 Average time to complete the procedure of closing a business, 2013
OECD
EUROZONE
Entrepreneurs who start a new
business after bankruptcy or closure grow faster than other newly
established businesses. This is why
it should be easy to close the old
business and get started again with
a new one after bankruptcy.
Ireland
Japan
Canada
Belgium
Finland
Norway
Australia
Denmark
Iceland
United Kingdom
Austria
Netherlands
Germany
New Zealand
South Korea
Spain
United States
Italy
Mexico
France
Hungary
Israel
Portugal
Slovenia
Sweden
Czech Republic
Estonia
Poland
Switzerland
Chile
Turkey
Greece
Slovak Republic
In Ireland it takes less than six
months to close a business and
once again this puts Ireland in the
top position in this indicator.
It is important to create a comeagain-culture in society in order to
encourage entrepreneurs to start
again after a bankruptcy or closure.
The procedures of closing a business generally take longer in the
BRIC countries. Particularly in
India where it takes more than four
years, on average, to complete the
closing of a business.
Note The estimated time it takes to handle a
bankruptcy case and close/reorganise a bankrupt company from presumed information
about the company.
China
Russia
Brazil
India
Behind the benchmark
Source World Bank, Doing Business 2014
0
1
2
3
4
5
Years
2.16 Venture capital investments as a percentage of GDP, 2009-2012 (average)
EUROZONE
Access to risk capital is essential
for entrepreneurs in order to realise
their ideas and start their own business. Venture capital is particularly
important for entrepreneurs for
whom return on investment lies relatively far into the future.
Denmark
Switzerland
Sweden
Finland
These enterprises are often based
on technology and knowledge that
it takes a long time to develop, but
which, on the other hand, are vital
for productivity. Therefore, access to
venture capital is not only important
for the individual entrepreneur, but
also for the general improvement of
productivity in society.
Norway
Ireland
Belgium
Hungary
United Kingdom
This year, Denmark is the country
with the best access to risk capital
as seen as an average over the
period 2009-2012.
France
Netherlands
Germany
Portugal
Austria
Spain
Italy
Czech Republic
Greece
Note Data shows the level of seed and early
stage investments.
Poland
Source Eurostat and DI calculations
Behind the benchmark 0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
40
2.17 Gazelle enterprises, 2010
Manufacturing
Service
Czech Republic
Gazelles are the subset of high-growth
enterprises up to five years old with
average annualised growth greater
than 20 per cent over a three-year
period and at least 10 employees.
Estonia (2009)
France
Gazelles are an indication of how
favourable the environment in which
the enterprises operate is. Countries
such as the Czech Republic and Estonia have a very low starting point,
and therefore it is relatively easy for
them to achieve a higher proportion
of gazelles.
Canada (2009)
Israel
Portugal
Hungary
Slovenia (2009)
Sweden
New Zealand
Italy
* Data for Denmark is gleaned from
Statistics Denmark and is based on
market sectors while the OECD has categorised data according to service and
manufacturing. Data therefore is not
directly comparable, but gives an indication of levels. The ranking is based on
manufacturing enterprises.
Spain
Denmark*
United States
Source OECD, Entrepreneurship at a
Glance, 2013 and Statistics Denmark
Behind the benchmark 0.0
0.2
0.4
0.6
0.8
1.0
1.2
Share of enterprises with 10 or more
employees, per cent
2.18 Mentality of society supporting competitiveness, 2013
OECD
EUROZONE
United States
Switzerland
Israel
Ireland
Sweden
Canada
Australia
Chile
Germany
New Zealand
United Kingdom
Netherlands
Estonia
Finland
Norway
South Korea
Iceland
Denmark
Turkey
Mexico
Japan
Belgium
Austria
Greece
Slovak Republic
Czech Republic
Portugal
Italy
France
Slovenia
Poland
Spain
Hungary
Strong competitiveness contributes
to increasing the incentive to qualify
further and achieve good results both
individually and at company-level.
For the tenth consecutive year,
the United States is the country
assessed to have the most competitive mentality. American society
is permeated by a strong competitive mentality that is cultivated
already in the educational system
with tracking and privileges for the
best pupils. This continues onto the
labour market where schemes such
as “the employee of the month” help
to promote competition among the
employees of a company.
Note This indicator shows to which degree
senior managers in the country assess the
mentality of society to support competition.
India
China
Brazil
Russia
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0-10
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
41
2.19 Flexibility and adaptability, 2013
OECD
EUROZONE
Ireland
Israel
Poland
Turkey
Sweden
United States
Iceland
Denmark
New Zealand
Canada
Switzerland
Mexico
Portugal
Australia
South Korea
United Kingdom
Netherlands
Estonia
Slovak Republic
Greece
Norway
Italy
Finland
Belgium
Chile
Czech Republic
Germany
Austria
Japan
Spain
Hungary
France
Slovenien
Changing market conditions are
companions of globalisation. This
means that businesses must be
flexible and adaptable if they are to
succeed in global competition.
Ireland tops the list this year as the
country with the greatest flexibility
and adaptability.
Brazilian and Indian flexibility and
adaptability are assessed to be over
the level of the average performance
in both the OECD countries and the
Eurozone.
Note This benchmark shows to which degree
senior managers in the country assess that
the local population displays flexibility and
adaptability in the face of challenge.
Brazil
India
China
Russia
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0-10
2.20 Fixed broadband subscribers, 2012
OECD
EUROZONE
Switzerland
Netherlands
Denmark
South Korea
France
Norway
Iceland
United Kingdom
Germany
Belgium
Canada
Sweden
Finland
United States
New Zealand
Japan
Australia
Austria
Israel
Spain
Estonia
Slovenia
Greece
Ireland
Portugal
Italy
Hungary
Czech Republic
Poland
Slovak Republic
Chile
Mexico
Turkey
Behind the benchmark
The number of fixed broadband
connections is an indicator of the
degree to which the individual citizen has access to a good and fast
Internet connection.
IT and high-speed connections in
both the private and public sector
help boost productivity and enhance
international competitiveness. The
spread of high-speed Internet in
sparsely populated areas can reduce
gaps between different parts of a
country and enhance economic
development.
In order to ensure this, the EU
has prioritised the rollout of the
extremely fast next-generation
access network. The European
Commission’s 2020-target aims at
speeds of 30 megabit per second for
all and 100 megabit per second for
more than half of all households.
Switzerland, the Netherlands and
Denmark take the top three positions.
Source OECD Broadband Statistics,
2012
0
5
10
15
20
25
30
35
40
45
Broadband subscribers per 100
inhabitants
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
42
2.21 E-commerce, 2012
EUROZONE
E-commerce is a central element in
modern, digital society. It minimises
sales costs and makes everyday life
easier for companies as well as for
citizens. Online sales make it easier to sell products across large distances and across national borders.
The share of companies that sell
products online is therefore an indicator of the degree of digitalisation
in a country, and suggests the competitiveness of the private sector.
Iceland
Norway
Sweden
Denmark
Czech Republic
Belgium
Ireland
Germany
Iceland tops the chart this year with
35 per cent of its companies selling
products online.
Netherlands
United Kingdom
Only 14.5 per cent of Internet users
in the EU purchased products online
from another EU member state in
2012.
Finland
Portugal
Slovenia
Spain
Slovak Republic
Austria
Estonia
France
Hungary
Poland
Turkey (2010)
Note Financial sector is not included.
Enterprises with ten employees or more
selling at least 1 per cent of turnover online
Greece
Italy
Source Eurostat
Behind the benchmark
0
5
10
15
25
20
30
35
40
Percentage of enterprises that have
received orders online in the past year
2.22 Economic freedom, 2011
EUROZONE
OECD
New Zealand
Switzerland
Finland
Canada
Australia
Chile
United Kingdom
Denmark
Estonia
United States
Germany
Ireland
Austria
Hungary
Sweden
Netherlands
Norway
Spain
Japan
South Korea
Slovak Republic
France
Iceland
Belgium
Portugal
Israel
Czech Republic
Poland
Turkey
Italy
Greece
Mexico
Slovenia
Economic freedom promotes dynamism and growth in society and
creates the basis for an efficient use
of the country’s resources.
Cato's index for economic freedom
measures a number of socio-economic provisions that support the
initiative, entrepreneurship and
freedom of individuals.
For the fifth consecutive year, New
Zealand takes top rank as the best
provider of economic freedom. New
Zealand excels with a well-functioning legal system, good access
to capital and a low level of government regulation. Switzerland and
Finland are followers-up.
Brazil
China
India
Russia
Behind the benchmark
Note High values indicate high economic
freedom.
Source Cato Institute, Economic Freedom of
the World 2013
0
1
2
3
4
5
6
7
8
9
Index 0-10
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
43
2.23 Burden of government regulation, 2012-2013 (average)
OECD
EUROZONE
Finland
Estonia
New Zealand
Switzerland
Sweden
Chile
Netherlands
Ireland
Iceland
United Kingdom
Canada
Germany
Norway
Turkey
United States
Japan
Austria
South Korea
Denmark
Israel
Mexico
Spain
Australia
France
Portugal
Poland
Belgium
Czech Republic
Slovenia
Slovak Republic
Hungary
Greece
Italy
A reduction of the administrative burdens of industry presents a major
potential for releasing resources and
promoting competitiveness.
During the recession, governments
around the world have become more
aware of the benefits of rule simplification and have launched ambitious
goals.
Finland, Estonia and New Zealand are
assessed to have the least administrative hardship for industry. Among the
BRIC countries, Brazil has the most
widespread red tape.
Note High values indicate that senior
managers in the country perceive that the
government imposes major administrative
burdens on businesses.
China
India
Russia
Brazil
Behind the benchmark
Source WEF 2013-2014, survey
1
2
3
4
5
6
7
Index 1-7
2.24 Quality of infrastructure, 2012-2013 (average)
OECD
EUROZONE
Netherlands
Finland
France
Switzerland
Germany
Spain
Japan
South Korea
Iceland*
Belgium
United States
Canada
Sweden
United Kingdom
Portugal
Austria
Denmark
New Zealand
Ireland
Australia
Norway
Czech Republic
Chile
Turkey
Slovenia
Estonia
Italy
Israel
Greece
Mexico
Hungary
Slovak Republic
Poland
High mobility is important for the
competitiveness of a country. Good
quality infrastructure increases productivity and attracts international
investment. Well-developed infrastructure reduces the effects of
large distances between regions,
integrates the national market,
and connects it to other countries
and regions at low cost. A well-integrated infrastructure network
is a prerequisite for the access of
less-developed municipalities to
core economic activities, and can
thereby contribute to reducing economic inequalities across communities and stimulating economic
growth.
The Netherlands takes the top position followed by Finland and France.
* Iceland is without assessment of railway
infrastructure since there is less than 50
kilometres of railway in the country.
Note High values indicate that senior
managers perceive the infrastructure of the
country as well-functioning compared with
international standards. In this benchmark,
the quality of a country’s infrastructure is
determined on the basis of an average of
assessments of road, rail, maritime and aviation infrastructures.
China
India
Russia
Brazil
Behind the benchmark
Source WEF 2013-2014, survey
1
2
3
4
5
6
7
Index 1-7
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
44
2.25 Energy intensity, 2011
EUROZONE
OECD
Ireland
Switzerland
United Kingdom
Denmark
Italy
Portugal
Spain
Austria
Germany
Greece
Israel
Turkey
Japan
Netherlands
Norway
Chile
France
Mexico
Australia
Hungary
Slovenia
Poland
Slovak Republic
Sweden
Belgium
New Zealand
Czech Republic
United States
South Korea
Canada
Finland
Estonia
Iceland
Energy intensity is a benchmark of
the amount of energy used for society’s production. Here it is calculated
as million tons of oil equivalents relative to GDP. Low energy intensity
means that only little energy is used
in production, indicating high energy
efficiency.
For the fifth consecutive year, Ireland
tops the chart as the most energy efficient country along with Switzerland.
Data goes back to 2011 when many
countries were badly affected by the
recession and therefore reported
decreasing production, including
decreasing energy-intensive production.
The variety of energy intensities can
be partly explained by the industrial
structure of the countries. Countries
with much heavy industry have higher
energy intensity than countries with a
large proportion of service companies.
Note Calculated as total primary energy
supply (million tons of oil equivalents) per
billion GDP units (PPP) in fixed USD 2005prices.
Brazil
India
China
Russia
Behind the benchmark
Source IEA, Key World Energy Statistics
2013
0.0
0.1
0.2
0.3
0.4
0.5
0.6
Million TOE relative to GDP
(PPP, bn. 2005 USD)
2.26 Quality of electricity supply, 2012-2013 (average)
OECD
EUROZONE
Switzerland
Netherlands
Austria
Finland
Denmark
Iceland
United Kingdom
France
Norway
Sweden
Canada
Ireland
Czech Republic
Belgium
Portugal
Spain
Slovenia
Australia
United States
Slovak Republic
Germany
New Zealand
Japan
Italy
South Korea
Israel
Hungary
Poland
Greece
Chile
Estonia
Turkey
Mexico
In order to operate a business efficiently, energy supply should be
reliable, stable and sustainable at
affordable prices. Therefore, an efficient supply of electricity will help
increase productivity and facilitate
the production process in a country.
High quality of electricity supply is
part of a well-developed infrastructure. A well-integrated infrastructure is also a precondition for the
access of less developed municipalities to core economic activities, and thereby contributes to
reducing economic inequalities
across communities and stimulate
economic growth.
Switzerland is assessed to have to
highest quality of electricity supply
in the OECD. However, it should
be noted that the average quality
is high and several countries have
an assessment close to that of
Switzerland.
Note High values indicate that senior
managers perceive the quality of electricity
supply of the country as high compared with
international standards.
China
Brazil
Russia
India
Behind the benchmark
Source WEF 2013-2014, survey
1
2
3
4
5
6
7
Index 1-7
GLOBAL BENCHMARK REPORT 2014 – PRODUCTIVITY AND INNOVATION
45
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
46
3.00 Qualified labour
Average ranks of countries
Canada
South Korea
Switzerland
Australia
United Kingdom
Finland
Ireland
New Zealand
United States
Norway
Sweden
Japan
Denmark
Netherlands
Estonia
Austria
Iceland
Chile
Germany
Israel
France
Belgium
Poland
Czech Republic
Spain
Mexico
Portugal
Slovenia
Greece
Hungary
Turkey
Italy
Slovak Republic
1
2
2
4
5
6
6
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
Canada tops the list in terms
of average ranking in the
benchmarks for Qualified
labour.
(1)
(3)
(2)
(5)
(14)
(6)
(9)
(4)
(7)
(13)
(8)
(10)
(10)
(10)
(17)
(16)
(15)
(19)
(18)
(22)
(21)
(20)
(24)
(23)
(25)
(26)
(27)
(28)
(31)
(30)
(32)
(33)
(29)
0
5
10
15
20
25
30
The average ranks of countries
in the Qualified labour pillar
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
47
QUALIFIED LABOUR
A well-educated workforce contributes significantly to a nation's economic
value creation through productivity and business innovation. Accordingly, it
is very important that business conditions in society support education and
R&D, and businesses have access to employees with the required competences.
To ensure these conditions, it is necessary to place high priority on education
and create an attractive labour market.
Canada tops the Qualified labour pillar with a highly educated population and strong
focus on tertiary education. To a major degree, Canadian senior managers also assess
that the country's legislation on equal opportunities supports economic growth.
Switzerland and South Korea share second place this year. Switzerland has a high labour market participation rate. Swiss workers have high motivation and work satisfaction, an attractive business environment for foreign highly skilled labour, and the largest number of completed PhDs in science and engineering.
South Korea's rank is mainly due to a low unemployment rate and a number of strong
rankings in education including expenditure on educational institutions, basic competences among 15-year-olds, and share of 25 to 34-year-olds with upper secondary and
tertiary education.
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
48
3.01 Labour market participation rate, 2012
EUROZONE OECD
Iceland
Switzerland
Sweden
Netherlands
Denmark
Norway
Canada
New Zealand
Germany
United Kingdom
Australia
Austria
Finland
Spain
Estonia
Portugal
Japan
United States
Czech Republic
Israel
France
Slovenia
Slovak Republic
Ireland
Greece
Belgium
Poland
South Korea
Chile
Italy
Mexico
Hungary
Turkey
The labour market participation
rate is the share of the population of
working age (between 15 and 64)
that is active in the labour market.
A high participation rate means that
many participate in the labour market and accordingly contribute to
the growth and prosperity of society.
This figure, however, should be compared with the account of annual
working hours that is presented in
benchmark 3.04.
Iceland captures the top position
yet again in front of Switzerland
and Sweden.
China (2010)
Russia
Brazil (2011)
India (2010)
Behind the benchmark
Source OECD, Labour Force Statistics 2013
and DI calculations
0
10
20
30
40
50
60
70
80
90
Per cent
3.02 Labour market participation rate for 55 to 64-year-olds, 2012
OECD
EUROZONE
Iceland
Sweden
New Zealand
Switzerland
Norway
Japan
Israel
Germany
Estonia
Chile
South Korea
United States
Denmark
Canada
Australia
Finland
Netherlands
United Kingdom
Mexico
Ireland
Spain
Portugal
Czech Republic
Slovak Republic
France
Austria
Italy
Greece
Poland
Belgium
Hungary
Slovenia
Turkey
In many countries, people between
55 and 64 have a lower participation
rate than the rest of the population
of working age. In light of the demographic challenge that most countries are facing, it is, however, important to retain the older workers in the
labour market as long as possible.
Similar to the general labour market
participation rate, Iceland tops the
chart of labour market participation
for people in the 55-64 age group.
China (2010)
India (2010)
Brazil (2011)
Russia
Behind the benchmark
Source OECD, Labour Force Statistics 2013
and DI calculations
0
10
20
30
40
50
60
70
80
90
Per cent
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
49
3.03 Unemployment, 2013
OECD
EUROZONE
South Korea
Norway
Japan
Switzerland
Austria
Mexico
Germany
Iceland
Australia
Chile
New Zealand
Netherlands
Israel
Czech Republic
Denmark
Canada
United States
United Kingdom
Sweden
Finland
Estonia
Belgium
Turkey
Hungary
Poland
France
Slovenia
Italy
Ireland
Slovak Republic
Portugal
Spain
Greece
A high unemployment rate signifies
an imbalance between the supply of
labour in a society and the demand
of employers.
Unemployment can vary within various sectors and across educational
levels and geography.
South Korea has the lowest unemployment of the OECD countries
followed by Norway and Japan.
Note An international unemployment
concept has been used. It is based on random
sample surveys and includes everyone who
does not have a job, but wants one and
is looking for one. Data may thus include
students etc. Data is based on the latest
forecast from the end of 2013.
Russia
Behind the benchmark
Source OECD Economic Outlook No. 94
0
5
10
15
20
25
30
Per cent
3.04 Average annual working hours per employed person, 2012
OECD
EUROZONE
Mexico
South Korea (2011)
Greece
Chile
Poland
Israel
Estonia
Hungary
Turkey
Czech Republic
United States
Slovak Republic
Italy
Japan
New Zealand
Australia
Canada
Iceland
Austria
Portugal
Spain
Finland
United Kingdom
Slovenia
Switzerland (2011)
Sweden
Belgium
Denmark
Ireland
France
Norway
Germany
Netherlands
It is essential for the competitiveness of businesses to get as many
working hours as possible out of
the workforce that is available to
them. In this, the marginal tax rate is
important since a high marginal tax
rate reduces people’s incentive to
work harder.
Mexico tops the list, followed by
South Korea and Greece.
It is worth noticing that Russia has
average working hours that are significantly higher than the average
of OECD and Eurozone.
Source OECD, Labour Force Statistics 2013
and DI calculations
Russia
Behind the benchmark
0
500
1,000
1,500
2,000
2,500 Hours
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
50
3.05 Share of employees with tertiary education in the private sector 2012
EUROZONE
The share of highly qualified people
in the private sector is an indicator
of the extent to which companies
utilise labour educated at the
country’s universities.
Ireland
Belgium
Finland
United Kingdom
The share of highly qualified workers
also reflects to which degree companies are based on research, development and innovation with a view
to creating new products that can
be sold domestically and abroad.
Furthermore, a large proportion of
highly educated labour in the private
sector can contribute to increasing
the country’s productivity.
Spain
Estonia
France
Norway
Sweden
Netherlands
Ireland tops the list with more than a
third of highly qualified people working in the private sector.
Iceland
Germany
Denmark
Slovenia
Poland
Greece
Hungary
Austria
Czech Republic
Slovak Republic
Portugal
Source The Danish Ministry of Business
and Growth, Report on Growth and
Competitiveness 2013
Italy
Behind the benchmark
0
5
10
15
20
25
30
40
35
Per cent
3.06 Labour regulations, 2013
OECD
EUROZONE
Iceland
Denmark
Switzerland
Estonia
Canada
United Kingdom
Ireland
Hungary
United States
New Zealand
Israel
Chile
Turkey
Greece
Norway
South Korea
Poland
Japan
Netherlands
Mexico
Austria
Sweden
Germany
Portugal
Czech Republic
Finland
Spain
Australia
France
Italy
Slovak Republic
Belgium
Slovenia
A low degree of labour market regulation means that businesses can
quickly adjust to changing market
conditions. This gives flexibility and
enhances competitiveness.
Iceland tops the list and Denmark is
the runner-up.
In Southern Europe and in several
BRIC countries, labour market regulation is considered a major challenge.
Note High values indicate that senior
managers assess that the labour market
regulations in the country are a barrier to the
operation of their business. The indicator
tracks labour market regulations in general
including regulation of employment, layoffs
and minimum wages.
China
Russia
India
Brazil
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0-10
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
51
3.07 Job mobility, 2012
OECD
EUROZONE
Job mobility is vital for growth in
society since a flexible and mobile
labour market encourages workers to move according to the need
for labour. High job mobility is an
expression of a dynamic labour market that can solve the challenges of a
constantly changing labour market.
Chile
South Korea
Turkey
Australia
Mexico
Iceland
Denmark
Sweden
Canada
Finland
Estonia
Norway
Switzerland
Austria
United Kingdom
Netherlands
Spain
France
Germany
Hungary
Ireland
Belgium
Poland
Slovenia
Portugal
Czech Republic
Italy
Slovak Republic
Greece
Some of the job mobility can be
referred to the continuous creation
of new jobs and closing down of others. Job mobility helps to promote
productivity since less productive
jobs are closed down during such a
process. High job mobility improves
the chances of people, who lose
their job, to be quickly employed by
another company in need of labour.
Chile is the OECD country with the
highest job mobility.
Brazil (2009
Behind the benchmark
Source OECD.Stat and DI calculations
0
5
10
15
20
25
35
30
40
Per cent of employees with less than
one year's employment in the same job
3.08 Employee motivation, 2013
OECD
EUROZONE
Denmark
Switzerland
Ireland
Austria
Japan
Norway
Sweden
Germany
Iceland
Netherlands
Finland
Israel
United States
Canada
New Zealand
Mexico
Turkey
Belgium
United Kingdom
Australia
Chile
Czech Republic
Estonia
South Korea
Slovak Republic
France
Italy
Hungary
Greece
Portugal
Poland
Slovenia
Spain
Motivation and work satisfaction
contribute to increasing productivity, reducing sickness absenteeism and, generally, creating
dedicated employees. A good occupational environment with exciting
and challenging tasks can also help
to attract employees with highly
sought-after qualifications.
For a couple of years, Switzerland
and Denmark have taken turns
topping the benchmark. They have
exchanged places again this year
with Denmark taking the lead.
Note High values indicate that senior
managers in the country find the motivation among the employees of the company
to be high.
China
Brazil
India
Russia
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0-10
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
52
3.09 Financial incentives to work, 2011
OECD
EUROZONE
Australia
Greece
Turkey
New Zealand
South Korea
United Kingdom
United States
Poland
Chile
Sweden
Estonia
Hungary
Belgium
Italy
Spain
Austria
Ireland
Finland
Canada
Japan
Norway
Czech Republic
Germany
Iceland
Slovak Republic
France
Netherlands
Denmark
Slovenia
Israel
Portugal
Switzerland
Behind the benchmark
Businesses need easy and flexible
access to qualified labour in order
to be competitive. A prerequisite is
that the citizens of a country have
a financial incentive to go to work.
The financial incentive depends on
factors such as level of taxes and
income transfers – the higher the
marginal tax rate and transfers, the
lower the financial incentive to work.
Australia, Greece and Turkey are
the countries in which the financial
gain of having a job instead of being
unemployed is greatest.
Note The indicator shows how large a share
of an income a newly unemployed person
can receive on average in the form of public
benefits, calculated after tax. The share is
an average for newly unemployed people
based on six different family types and three
different levels of wages.
Source OECD, Tax benefit models and DI
calculations
0
10
20
30
40
50
60
70
80
90
Per cent of income
3.10 Equal opportunities, 2013
OECD
EUROZONE
Norway
Sweden
Canada
Iceland
Finland
Ireland
Denmark
Israel
Switzerland
Chile
United States
Australia
Japan
Netherlands
New Zealand
United Kingdom
Mexico
Belgium
Turkey
Poland
France
Spain
Portugal
Estonia
Germany
Czech Republic
Greece
South Korea
Austria
Slovenia
Slovak Republic
Hungary
Italy
Equal opportunities for all, irrespective of age, gender, culture and religion are important prerequisites for
a well-functioning society. The institutional framework for equality is
central in order to exploit the human
resources of society in the best
possible way and support economic
and social growth.
The Nordic countries are generally
characterised by a high degree of
equality and equal opportunities.
In Brazil, senior managers assess
that the country’s legislation on
equal opportunities supports
economic growth to a degree that
corresponds to both Eurozone and
OECD averages.
Note This indicator suggests the degree to
which local senior managers assess that the
country’s legislation on equal opportunities
supports economic growth.
Brazil
India
China
Russia
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0-10
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
53
3.11 Expenditure on educational institutions as a percentage of GDP, 2010
Primary and secondary school
South Korea
United States
Norway*
Denmark
New Zealand*
Canada
Ireland
Iceland
United Kingdom
Finland
Australia
Israel
Belgium
Netherlands
Chile
Sweden
France
Estonia*
Mexico
Portugal
Switzerland*
Slovenia
Austria
Poland
Spain
Germany (2009)
Japan
Italy
Czech Republic
Slovak Republic
Hungary*
Turkey*/**
Tertiary school
Making education a priority is key
to ensuring a high level of quality in
the educational system and subsequently the qualifications of the
labour force of tomorrow. The development in this area depends on
several factors, including demography (the proportion of young
people between the age of 6 and
25), the share of the population
enrolled in education and contribution per pupil.
South Korea, the United States and
Norway have the highest expenditure on education as a percentage
of GDP. The United States and
South Korea have major private
co-financing in education, particularly in tertiary education and this
is part of the explanation for their
high rank.
Brazil
Russia
India (2009)
*
**
OECD
Eurozone
Behind the benchmark
Only public expenditure
Data for tertiary school is from 2006
Note Research funds are not deducted.
Source OECD Education at a Glance 2013
0
1
2
3
4
5
6
7
8
Per cent of GDP
3.12 Expenditure on tertiary education as a percentage of GDP, 2010
Loans
Subsidies
Government expenditure
Private expenditure
United States
Canada
South Korea
Chile
Finland**
Denmark
Sweden
Netherlands
Norway
Israel
Australia
Estonia
New Zealand
Ireland**
Japan
Austria*
France**
Poland
Portugal**
Belgium**
Mexico
United Kingdom
Spain
Switzerland**/****
Germany (2009)
Slovenia**
Iceland***
Czech Republic*
Italy**
Slovak Republic
Hungary**/****
Making education a priority is key to
ensuring a high level of quality in the
educational system and subsequently
the qualifications of the labour force
of tomorrow.
It is important to stress, though, that
quality for the outlay is a prerequisite.
The United States, Canada, and
South Korea are among the countries with the highest expenditure on
tertiary education as a percentage of
GDP. The United States and South
Korea have major private co-financing in education, particularly in
tertiary education and this is a part of
the explanation for their high rank.
*
**
***
****
Russia**/***
India (2009)**/***/****
Brazil****
Note Research funds are not deducted.
OECD
Eurozone
Behind the benchmark
No government expenditure
No data for government expenditure
for loans
No data for government for subsidies
No data for private expenditure
Source OECD Education at a Glance 2013
and DI calculations
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
54
3.13 Intended instruction time in public institutions per year for 7 to 14-year-olds
(average), 2011
OECD
EUROZONE
Primary schooling is an important
contributor in providing pupils with
basic competences needed for their
continuing education, such as reading and mathematical skills. The
planned instruction time for pupils
in the 7-14 age group is an indicator
of the level of education in the country, and of the degree to which funding for education is spent on instruction time. A high level of instruction
time helps to increase the level of
competence.
Chile
Australia
France
Israel
Netherlands
Spain
Italy
Mexico
Portugal
Canada
Ireland
Belgium
Iceland
Turkey
Austria
Denmark
Japan
Slovak Republic
Germany
Norway
Greece
Hungary
Sweden
Slovenia
Czech Republic
South Korea
Poland
Finland
Estonia
Chile tops the chart with most
instruction time for this age group.
The country has gone through a
comprehensive reform of its school
system with all-day school having
replaced half-day school.
Note Average of planned annual lessons for
7 to 14-year-olds.
Source OECD Education at a Glance 2013
and DI calculations
Russia
Behind the benchmark 400
500
600
700
800
900
1,000
1,100 Hours
3.14 OECD Pisa study, Reading skills, 2012
EUROZONE OECD
Japan
South Korea
Finland
Ireland
Canada
Poland
Estonia
New Zealand
Australia
Netherlands
Belgium
Switzerland
Germany
France
Norway
United Kingdom
United States
Denmark
Czech Republic
Italy
Austria
Hungary
Spain
Portugal
Israel
Sweden
Iceland
Slovenia
Greece
Turkey
Slovak Republic
Chile
Mexico
Every three years, the OECD’s Programme for International Student
Assessment (PISA) assesses the
qualifications of 15-year-olds in
reading, mathematics and science.
Mastering these basic competences
is important in order to continue
in the educational system.
This benchmark shows the result
for reading skills.
The Japanese teenagers have
achieved the highest score followed
by South Korea and Finland.
China’s Shanghai region impresses
by passing all OECD countries in
reading skills.
China (Shanghai)
Russia
Brazil
Behind the benchmark 350
Source OECD PISA 2012
400
450
500
550
600
PISA score
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
55
3.15 OECD Pisa study, Mathematical qualifications, 2012
OECD
EUROZONE
South Korea
Japan
Switzerland
Netherlands
Estonia
Finland
Canada
Poland
Belgium
Germany
Austria
Australia
Ireland
Slovenia
Denmark
New Zealand
Czech Republic
France
United Kingdom
Iceland
Norway
Portugal
Italy
Spain
Slovak Republic
United States
Sweden
Hungary
Israel
Greece
Turkey
Chile
Mexico
Every three years, the OECD’s Programme for International Student
Assessment (PISA) assesses the
qualifications of 15-year-olds in
reading, mathematics and science.
Mastering these basic competences
is important in order to continue in
the educational system.
This benchmark shows the result for
mathematical qualifications.
In this benchmark, the South
Korean teenagers have achieved the
highest score followed by Japan and
Switzerland. South Korea is known
for its high priority on education.
China’s Shanghai region also
impresses in mathematics by passing all OECD countries.
China (Shanghai)
Russia
Brazil
Behind the benchmark
Source OECD PISA 2012
350
400
450
500
550
600
650
PISA score
3.16 OECD Pisa study, Scientific qualifications, 2012
OECD EUROZONE
Japan
Finland
Estonia
South Korea
Poland
Canada
Germany
Netherlands
Ireland
Australia
New Zealand
Switzerland
Slovenia
United Kingdom
Czech Republic
Austria
Belgium
France
Denmark
United States
Spain
Norway
Hungary
Italy
Portugal
Sweden
Iceland
Slovak Republic
Israel
Greece
Turkey
Chile
Mexico
Every three years, the OECD’s Programme for International Student
Assessment (PISA) assesses the
qualifications of 15-year-olds in
reading, mathematics and science.
Mastering these basic competences
is important in order to continue in
the educational system.
This benchmark shows the result
for scientific qualifications.
Japan takes the top position, ahead
of Finland and Estonia. Once again,
the young people from China’s
Shanghai region pass all OECD
countries.
China (Shanghai)
Russia
Brazil
Behind the benchmark
Source OECD PISA 2012
350
400
450
500
550
600
PISA score
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
56
3.17 Share of 25 to 34-year-olds with upper secondary education, 2011
EUROZONE
OECD
South Korea
Czech Republic
Slovak Republic
Poland
Slovenia
Canada
Sweden
Finland
Israel
Switzerland
United States
Austria
Chile
Hungary
Germany
Estonia
Ireland
Australia
United Kingdom
Norway
France
Belgium
Netherlands
New Zealand
Denmark
Greece
Iceland
Italy
Spain
Portugal
Mexico
Turkey
A high level of education is a prerequisite for competitiveness in a
globalised world. This is why it is
important that, as a minimum, a
very large proportion of the population have upper secondary education.
South Korea wins first place. Nearly
98 per cent of the population have
completed upper secondary education.
Note It is difficult to compare across countries
for this benchmark. The OECD partially uses
random sampling, and therefore the ranking
is not comparable with last year’s chart.
Russia
Brazil
Behind the benchmark
Source OECD Education at a Glance 2013
0
20
40
60
80
100
Per cent
3.18 Share of 25 to 34-year-olds with tertiary education*, 2011
EUROZONE
OECD
South Korea
Japan
Canada
Ireland
United Kingdom
Norway
New Zealand
Israel
Australia
United States
France
Sweden
Belgium
Chile
Switzerland
Netherlands
Finland
Iceland
Poland
Spain
Estonia
Denmark
Slovenia
Greece
Hungary
Germany
Portugal
Slovak Republic
Czech Republic
Mexico
Austria
Italy
Turkey
Since education plays a still more
important role in the globalised
world, a well-educated workforce
is crucial for a country’s ability to
compete in the global marketplace.
For the fourth consecutive year,
South Korea wins this category ahead
of Japan and thus underlines its
strong position in education.
* Tertiary education includes long-cycle,
medium-cycle and short-cycle higher
education.
Note It is difficult to compare across countries
for this benchmark. The OECD partially uses
random sampling, and therefore the ranking
is not comparable with last year’s chart.
Russia
Brazil
China (2010)
Behind the benchmark
Source OECD Education at a Glance 2013
0
10
20
30
40
50
60
70
Per cent
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
57
3.19 Age by completion of tertiary education, 2011
EUROZONE
Fast completion of tertiary education helps to ensure a large workforce, high tax income and low
government expenditure. This is
particularly important at a time
when the workforce in many
European countries will be diminishing in coming years due to an
ageing population.
Belgium
Netherlands
Turkey
Estonia
Slovak Republic
Belgium, the Netherlands and
Turkey continue to top the list as
the countries in which most young
people have completed tertiary
education when they are 25 years
old.
United Kingdom
Spain
Hungary
Czech Republic
Portugal
Poland
Italy
Norway
Slovenia
Denmark
Austria
Germany
Note Includes first completed tertiary
education (including bachelor degrees) but
excludes certain short-cycle educational
programmes.
Switzerland
Finland
Sweden
Behind the benchmark
Source Danish Ministry of Business and
Growth, Report on growth and competitiveness 2013
0
10
20
30
40
50
60
70
80
90
Percentage of students who are 25
or younger at completion of tertiary
education
3.20 Share of graduates by subject, 2011
Engineering, manufacturing
and construction
Life sciences, physical sciences,
math/statistics and computing
Health and Welfare
Social sciences, business,
law and services
Humanities, art and education
Not known/unspecified
South Korea
Germany
Greece
Finland
France (2009)
Austria
Estonia
Spain
Japan
Mexico
Czech Republic
Portugal
Sweden
Slovenia
United Kingdom
Belgium
Italy
Switzerland
Ireland
Slovak Republic
Canada
Denmark
Turkey
Hungary
Israel
New Zealand
Chile
Australia
Poland
Norway
Iceland (2010)
United States
Netherlands
In the context of shrinking national
budgets and economic downturn,
it is important that countries invest
in the fields of education that are
needed in the labour market. As
a consequence of the increasing
demand for labour with education in science and engineering,
a large share of graduates with a
background in these subjects is
crucial for a country’s international
competitiveness. Access to competent science graduates is central for
companies choosing to establish in a
globalised world.
South Korea has the largest share of
scientific and engineering graduates
followed by Germany and Greece.
Graduates with these competences
are particularly attractive to many
companies.
Russia
Brazil
Note Data includes medium-cycle and longcycle higher education.
Eurozone
OECD
Behind the benchmark
Source OECD.Stat and DI calculations
0
10
20
30
40
50
60
70
80
90
100
Per cent
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
58
3.21 Personal gain on further education, 2009
OECD
EUROZONE
The personal gain in completing
higher education in the form of
higher income plays a major role
in convincing young people to take
further education.
United States
Ireland
Czech Republic
Slovenia
Poland (2008)
The United States is in the forefront
followed by Ireland and the Czech
Republic.
Slovak Republic
Portugal
United Kingdom
Hungary
Austria
South Korea
Canada
Spain
France
Australia
Israel
Finland
Japan (2007)
Netherlands (2008)
Estonia
Italy (2008)
Belgium
Germany
Norway
Greece
Note Average personal net present value for
men and women completing tertiary education.
Sweden
Denmark
New Zealand
Behind the benchmark
Source OECD Education at a Glance 2013
and DI calculations
0
50,000
100,000
150,000
200,000
250,000
300,000 USD (net present value)
3.22 Share of foreign students at tertiary education institutions, 2011
EUROZONE
OECD
New Zealand
Switzerland
Australia
United Kingdom
Austria
Canada
France
Ireland
Denmark
Belgium
Sweden
Germany
Czech Republic
Netherlands
Norway
Iceland
Portugal
Spain
Finland
Greece
Hungary
Slovak Republic
Japan
Estonia
Italy
Slovenia
South Korea
Poland
Israel
Chile
Turkey
The share of foreign students in
tertiary education is an expression
of the degree to which universities
take part in international knowledge-sharing and have the ability to
attract students from other countries.
In general, it is easier for Englishspeaking countries to attract international students. New Zealand,
Australia and the United Kingdom
are among the leading four in this
benchmark. New Zealand and
Australia have massively targeted
education as a source of income.
This year Switzerland comes in
second. The country has one of the
highest percentages of international faculty staff per capita in the
world, partly due to the fact that 40
per cent of the country’s PhD candidates, who count as faculty, are
non-Swiss.
Russia
China
Brazil
Behind the benchmark
Source OECD Education at a Glance 2013
0
5
10
15
20
25
30
Per cent of all students
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
59
3.23 Attractive business environment for foreign highly skilled people, 2013
OECD
EUROZONE
Switzerland
United States
Australia
United Kingdom
Canada
Netherlands
Ireland
Norway
Chile
Austria
New Zealand
Poland
Mexico
Germany
Belgium
Sweden
Turkey
South Korea
Denmark
Czech Republic
France
Israel
Estonia
Finland
Spain
Japan
Portugal
Hungary
Slovak Republic
Italy
Iceland
Greece
Slovenia
In step with the tendency in many
countries that more elderly people
retire from the labour market than
there are young people to enter it,
the financing of public expenditure
becomes an increasing challenge.
Brazil
China
India
Russia
Note Low values indicate that the country’s
senior managers find the business environment for non-national professionals poor.
Behind the benchmark
In order to cope with this challenge,
the ability to attract and retain
non-national labour becomes an
important factor. With their unique
knowledge, highly skilled non-nationals contribute to increasing
productivity in businesses,
enhanced competitiveness and
increased growth.
Once again, Switzerland wins the
category as the country that seems
most attractive to highly qualified foreign labour, followed by the
United States and Australia.
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0-10
3.24 Completed PhDs in science and engineering, 2011
EUROZONE
OECD
Education of competent researchers
is an essential competitive parameter in order to attract and retain
private investment in R&D. It also
strengthens the competitiveness of
businesses generally and is a precondition for strong public research. In
particular, this applies to researchers
in science and engineering.
Switzerland
Germany
United Kingdom
France (2010)
Denmark
Ireland
Finland
Switzerland has yet again taken the
top spot with a significant lead over
the rest of the OECD countries.
Austria
Sweden
Norway
Czech Republic
Slovenia
Belgium
Netherlands
Italy
Spain
Estonia
United States
Portugal
Iceland (2010)
Greece
Japan
Poland (2009)
Hungary
Turkey
Source Eurostat and DI calculations
Behind the benchmark
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
Completed PhDs in 2011 in science and engineering
per 1,000 inhabitants in the age between 25 and 34
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
60
3.25 Adult participation in education and learning, 2012
OECD
EUROZONE
In a globalised world, it is important
continuously to adjust the skills of
the workforce according to the needs
of industry and society in general.
Denmark
Switzerland
Iceland
A continuing focus on job-related
training and lifelong learning is a
vital part of the enhancement of the
competences of the workforce.
Sweden
Finland
Norway
Denmark is still the absolute winner
of this benchmark. According to this
survey, more than 30 per cent of the
population in the 25-64 age group
have participated in job-related
education and training within the last
month. The Danish rank should be
viewed in the light of a long tradition
for in-service training in Denmark,
but has also to do with the fact that
relatively many young Danes do not
complete their education before the
age of 25.
Netherlands
United Kingdom
Austria
Slovenia
Estonia
Czech Republic
Spain
Portugal
Germany
Ireland
Belgium
Italy
France
Poland
Turkey
Slovak Republic
Greece
Note The figure covers all types of training
and education. In some countries, it also
includes students who start late.
Hungary
Source Eurostat, EU Labour Force Survey
Behind the benchmark
0
5
10
15
20
25
30
35
Percentage of population between the
age of 25 and 64 who indicate they have
attended education or training in the past
four weeks
GLOBAL BENCHMARK REPORT 2014 – QUALIFIED LABOUR
61
GLOBAL BENCHMARK REPORT 2014 – PUBLIC ECONOMY
62
4.00 Public economy
Average ranks of countries
Switzerland
South Korea
Estonia
Finland
Chile
Norway
New Zealand
Sweden
Australia
Denmark
Slovak Republic
Czech Republic
Germany
Iceland
Poland
Canada
Netherlands
Austria
Hungary
Slovenia
Israel
United States
Turkey
United Kingdom
France
Ireland
Mexico
Japan
Italy
Portugal
Spain
Greece
Belgium
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
25
27
28
29
30
31
32
33
Switzerland is most
successful in terms of
average ranking in the
benchmarks for Public
economy.
(1)
(2)
(3)
(6)
(7)
(4)
(9)
(8)
(5)
(10)
(11)
(12)
(13)
(14)
(16)
(18)
(19)
(15)
(20)
(17)
(23)
(22)
(21)
(24)
(28)
(32)
(27)
(26)
(29)
(24)
(30)
(31)
(33)
0
5
10
15
20
25
30
The average ranks of countries in the
Public economy pillar
GLOBAL BENCHMARK REPORT 2014 – PUBLIC ECONOMY
PUBLIC ECONOMY
Among other lessons, the financial crisis and the following European debt
crisis have taught the world how important it is to monitor the health of a
country's public sector. A country's economic robustness is dependent not
only on a strong and prosperous private sector but also on an efficient and
balanced public sector. Among other factors, the fourth pillar assesses budget
balance, public debt, public expenditure, and corruption levels.
Switzerland excels as the OECD country with the best average ranking in Public economy. The country has the lowest public expenditure as a share of GDP. Additionally,
Switzerland is one of few OECD countries with a structural surplus on its public budgets and the Swiss public sector is among the smallest in the OECD.
South Korea ranks second with the largest structural surplus on its public budgets.
Furthermore, South Korea places the highest priority on investing government funds in
areas most likely to generate future growth, such as education and R&D.
Estonia is in third place. The country has the lowest public gross debt as a percentage
of GDP as well as frequent use of the Internet for communication between the public
and private sectors.
63
GLOBAL BENCHMARK REPORT 2014 – PUBLIC ECONOMY
64
4.01 Public spending as a percentage of GDP, 2012
OECD
EUROZONE
Switzerland
Mexico
Chile
Turkey
United States
South Korea
Slovak Republic
Greece
Poland
Ireland
Portugal
Australia
Austria
Estonia
Germany
New Zealand
Italy
Spain
Hungary
Japan
Czech Republic
Slovenia
Norway
Canada
United Kingdom
Israel
France
Belgium
Finland
Iceland
Sweden
Netherlands
Denmark
Public spending covers a range of
different services, which are central
in supporting the business community, for example childcare, education and research. But the public
sector is financed by taxes that
decrease wealth in society, and at
the same time the public and private
sectors are competing for the same
workers.
Switzerland, Mexico and Chile have
the lowest public spending as a
percentage of GDP.
There is some uncertainty linked to
comparability across countries.
China
Russia
Behind the benchmark
Source OECD.Stat
0
5
10
15
20
25
30
Per cent of GDP
4.02 Public primary expenditure as a percentage of GDP, 2011
OECD
EUROZONE
Public primary expenditure is
expenditure excluding interest
payment on public debt and is
therefore an indication of the size of
the public sector. Since the public
sector is financed by taxes that
reduce the prosperity of society,
there is an upper limit for the size
of the public sector if the country
wishes to be a dynamic business
community.
South Korea
Switzerland
Turkey
Slovak Republic
Estonia
Israel
Japan
Poland
Czech Republic
Iceland
South Korea, Switzerland and
Turkey have the lowest public
primary expenditure among the
OECD countries (measured as a
percentage of GDP).
Germany
Norway
Spain
Ireland
There is some uncertainty linked
to comparability across countries.
This uncertainty is mainly due to
differences in the degree to which
social transfers are disbursed in net
or gross values – i.e. whether they
are taxed or not.
Greece
United Kingdom
Italy
Portugal
Hungary
Netherlands
Austria
Slovenia
Belgium
Sweden
France
Finland
Denmark
Russia (2008)
Source OECD.Stat and DI calculations
Behind the benchmark
0
10
20
30
40
50
60
70
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – PUBLIC ECONOMY
65
4.03 Structural budget balance, 2013
OECD
EUROZONE
Public deficits and public borrowing
affect the growth potential of businesses, including demand and
access to financing. Furthermore,
public deficits contribute to creating
uncertainty regarding the future,
and this often has negative consequences for the investment level of
businesses.
South Korea
Greece
Italy
Switzerland
Germany
Sweden
Denmark
Norway
New Zealand
Finland
Austria
Netherlands
Czech Republic
Iceland
Belgium
Hungary
Portugal
Australia
France
Canada
Spain
Ireland
Poland
United States
United Kingdom
Japan
South Korea, Greece, Italy,
Switzerland and Germany were the
only OECD countries with structural
surpluses on their public budgets
in 2013.
* Data from IMF.
Note The structural budget balance shows
the public budget balance adjusted for the
cyclical situation and special temporary
factors (such as temporary high/low public
income from stock or non-recurring income/
expenses).
Russia*
China*
Brazil*
India*
Behind the benchmark
Source OECD Economic Outlook No. 94 and
IMF World Economic Outlook October 2013
-10
-8
-6
-4
-2
0
2
Per cent of GDP
4.04 Public gross debt as a percentage of GDP, 2013
EUROZONE
OECD
Estonia
Norway
Australia
South Korea
New Zealand
Switzerland
Sweden
Czech Republic
Denmark
Slovak Republic
Poland
Finland
Israel
Slovenia
Germany
Netherlands
Austria
Hungary
Canada
Spain
United States
Belgium
United Kingdom
France
Iceland
Ireland
Portugal
Italy
Greece
Japan
Behind the benchmark
The size of the public debt is significant for the government’s freedom
of economic action. A country with
high debt is burdened with significant interest payments. Public gross
debt primarily covers the liabilities
of the public sector.
Estonia, Norway and Australia had
the lowest public gross debt in
2013.
Note Public financial gross debt.
Source OECD Economic Outlook No. 94
0
40
80
120
160
200
240
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – PUBLIC ECONOMY
66
4.05 Public net debt as a percentage of GDP, 2013
EUROZONE OECD
Public net debt comprises all financial assets and liabilities in the
public sector. The size of public
debt is a determining factor in a
state’s ability to act economically. A
country with high debt is burdened
with sizeable interest payments.
Norway
Finland
South Korea
Estonia
Sweden
Switzerland
Norway has comprehensive public
net wealth and yet again takes a
clear top position in the benchmark
for net debt.
New Zealand
Denmark
Australia
Czech Republic
Slovenia
Slovak Republic
Poland
Canada
Netherlands
Germany
Austria
Iceland
Hungary
Spain
France
United Kingdom
United States
Belgium
Ireland
Portugal
Italy
Greece
Note Public financial net debt.
Japan
Source OECD Economic Outlook No. 94
Behind the benchmark -200
-160
-120
-80
-40
0
40
80
120
160
200
Per cent of GDP
4.06 Growth expenditures as percentage of primary expenses, 2011
Education and state
education grants
Investment
Research and development
South Korea
Poland
Switzerland
Norway
It may support the growth of the
private sector if the government
prioritises its expenditure so that a
larger share of it goes to areas that
represent a genuine investment in
the future.
Iceland
Slovenia
Sweden
Netherlands
Expenditure for education, R&D and
public investment, in particular, can
be viewed as supporting growth.
Czech Republic
Spain
Portugal
South Korea, Poland and
Switzerland take the top three ranks
in terms of the share of primary
public expenditure that supports
growth.
Denmark
Japan
Finland
Israel
France
Hungary
Belgium
Ireland
Germany
Note This benchmark is combined of 2.02
(Public sector investment as a percentage
of GDP), 2.06 (Public expenditure on
research and development as a percentage of
GDP), 3.11 (Expenditure on education as a
percentage of GDP) including state education
grants and 4.02 (Public primary expenditure
as a percentage of GDP)
Austria
Italy
OECD
Eurozone
Source OECD.stat and DI calculations
Behind the benchmark
0
5
10
15
20
25
30
35
40
Per cent
GLOBAL BENCHMARK REPORT 2014 – PUBLIC ECONOMY
67
4.07 Government-funded research, development and demonstration in energy technologies, 2012
OECD
EUROZONE
Demand for modern energy technology is increasing across the
globe. Public investment in the
development of energy technology
is a precondition for realising the
market potential.
Finland (2011)
Hungary
Canada
Japan (2011)
Norway
Finland and Hungary are the countries to undertake most public
investment in this area. Both countries actively support research,
development and demonstration
in energy efficiency and renewable energy. Finland also spends
a smaller part of the funding on
nuclear power.
France (2011)
Denmark
South Korea (2011)
United States (2011)
Austria (2011)
Switzerland
Sweden
Australia
Slovak Republic
Germany
Netherlands (2011)
Italy (2011)
Portugal
Czech Republic (2010)
Spain (2010)
United Kingdom
Ireland (2011)
New Zealand
Greece (2011)
Turkey (2009)
Source IEA, OECD.Stat, energiforskning.dk
and DI calculations
Behind the benchmark 0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Share of GDP (per mille)
4.08 Government purchase of goods and services*, 2012
EUROZONE
OECD
To a certain extent, government
purchases of goods and services can
be seen as an indicator of public use
of private suppliers. In addition to
purchases of IT equipment, means
of transport, furniture etc. the
public sector also buys a long list of
services from private businesses.
United Kingdom
Finland
Iceland
Netherlands
Hungary
Czech Republic
The public sector’s use of private
suppliers helps to ensure that the
assignments are carried out in the
most efficient way. At the same
time, government use of private
suppliers supports the development
of the private service sector.
Estonia
Germany
Sweden
Slovak Republic
Switzerland
The three top ranks are taken by
the United Kingdom, Finland and
Iceland.
Poland
Denmark
Slovenia
Italy
Spain
Austria
Norway
Ireland
Portugal
France
* Public spending does not necessarily cover
the same activities in all countries. The indicator also includes public purchases of goods
and services from other public institutions.
Greece
Belgium
Source Eurostat and DI calculations
Behind the benchmark
0
10
20
30
40
50
60
Government purchases of goods
and services as percentage of total
government expenditure
GLOBAL BENCHMARK REPORT 2014 – PUBLIC ECONOMY
68
4.09 E-government usage by enterprises, 2013
EUROZONE OECD
Usage of the Internet for communication and reporting between the
public and private sectors leads to
considerable resource savings for
both parties. In a competitive society, it is important that government
e-services are available and user
friendly, and that they are used by
businesses.
Finland
Iceland
France
Denmark
Estonia
Ireland
Companies in Finland are the most
frequent users of e-government.
Sweden
Czech Republic
Norway
Slovenia
Austria
Portugal
Slovak Republic
United Kingdom
Netherlands
Poland
Belgium
Italy
Greece
Hungary
Germany
Spain
Turkey
Source Eurostat
Behind the benchmark
0
10
20
30
40
50
60
70
80
90
100
Percentage of enterprises that use
the Internet for interaction with public
authorities
4.10 Bribery and corruption, 2013
OECD
EUROZONE
Denmark
New Zealand
Finland
Sweden
Norway
Switzerland
Netherlands
Australia
Canada
Germany
Iceland
United Kingdom
Belgium
Japan
United States
Ireland
Chile
France
Austria
Estonia
Portugal
Israel
Poland
Spain
Slovenia
South Korea
Hungary
Turkey
Czech Republic
Slovak Republic
Italy
Greece
Mexico
Bribery and corruption prevent the
growth and development of companies and create insecurity regarding
their business opportunities.
Scoring the lowest level of bribery
and corruption, Denmark and New
Zealand share first place. Generally,
the bottom places have not changed
significantly for several years. This
confirms the notion that the fight
against corruption is a lengthy
process that requires changes of
both the institutional framework
and the mentality of the population.
Corruption and bribery are widespread in many growth markets
including the BRIC countries.
Brazil
China
India
Russia
Behind the benchmark
Note High values indicate that bribery and
corruption are widespread.
Source Transparency International,
Corruption Perceptions Index 2013
0
1
2
3
4
5
6
7
8
Index 0-10
GLOBAL BENCHMARK REPORT 2014 – PUBLIC ECONOMY
69
GLOBAL BENCHMARK REPORT 2014 – COSTS
70
5.00 Costs
Average ranks of countries
Switzerland
Chile
Poland
Ireland
Slovak Republic
Canada
Czech Republic
United States
Japan
Spain
South Korea
Turkey
Portugal
Estonia
Israel
Sweden
Greece
Slovenia
United Kingdom
Mexico
Germany
Hungary
Australia
France
Iceland
Netherlands
Austria
New Zealand
Belgium
Denmark
Norway
Finland
Italy
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
18
20
21
22
23
23
25
26
27
28
29
30
31
32
32
Switzerland tops the list of
average ranking in the
benchmarks for Costs.
(1)
(2)
(13)
(4)
(3)
(5)
(7)
(9)
(10)
(6)
(8)
(11)
(15)
(26)
(16)
(21)
(12)
(20)
(19)
(28)
(14)
(24)
(22)
(24)
(22)
(16)
(18)
(29)
(31)
(32)
(27)
(30)
(33)
0
5
10
15
20
25
The average ranks of
countries in the Costs pillar
GLOBAL BENCHMARK REPORT 2014 – COSTS
71
COSTS
The competitiveness of businesses in a global economy depends on whether
productivity and the quality of the product offset the costs of production.
Production costs and taxes are therefore important indicators of competitiveness. Maintaining a competitive cost level includes competitive income
and corporate tax levels, competitive labour costs and fair access to capital
markets.
In spite of high labour costs, Switzerland is the most competitive country in terms of
costs. This rank is earned as a result of low marginal tax rates, particularly for medium wage earners, and low inflation. Furthermore, Swiss businesses have easy access
to capital markets, which minimises financial costs and helps to stimulate economic
growth.
Chile holds second place in Costs primarily due to a low tax burden.
Poland is number three. The country is favoured by a highly competitive nominal corporate tax rate, easy access to capital markets and the lowest hourly compensation
costs in manufacturing.
GLOBAL BENCHMARK REPORT 2014 – COSTS
72
5.01 Total tax revenue as a percentage of GDP, 2012
OECD
EUROZONE
Mexico (2011)
Chile
United States
Australia (2011)
South Korea
Turkey
Switzerland
Ireland
Slovak Republic
Japan (2011)
Canada
Israel
Poland (2011)
Portugal
Estonia
Spain
New Zealand
Greece
United Kingdom
Czech Republic
Iceland
Slovenia
Germany
Netherlands (2011)
Hungary
Norway
Austria
Finland
Sweden
Italy
Belgium
France
Denmark
Behind the benchmark
Total tax revenue is a measure of
the size of the government and thus
the country’s structure with regard
to public versus private handling
of welfare tasks such as childcare,
hospitals, elderly care etc.
A high level of taxes makes it less
attractive for individual citizens
to show private initiative. The tax
burden is also a fine indicator of how
competitive each country is in terms
of attracting foreign entrepreneurs.
With a tax burden of almost 20
per cent of GDP, Mexico retains its
lead as the country with the lowest
overall tax revenue as a percentage
of GDP. Chile and the United States
occupy the following two positions.
Note The tax burden can be calculated in
many different ways.
Source OECD, Revenue Statistics 2013
0
5
10
15
20
25
30
35
40
45
50
Per cent of GDP
5.02 Marginal tax rate for medium wage earners*, including indirect taxes, 2012
Direct marginal tax
Indirect taxes
Chile
Mexico
Switzerland
South Korea
Japan
New Zealand
Australia
United States
Israel
Canada
Poland
Ireland
United Kingdom
Turkey
Iceland
Slovak Republic
Estonia
Denmark
Spain
Portugal
Czech Republic
Sweden
Greece
Slovenia
Netherlands
Italy
Norway
Hungary
Finland
France
Germany
Austria
Belgium
The marginal tax rate indicates
how much the individual taxpayer
receives after tax per additional
dollar earned. The marginal tax rate
is therefore vital for the incentive
to make an extra effort at the workplace. By including indirect taxes,
this benchmark displays the effect of
Value Added Tax and other indirect
taxes on the consumption value of
income after tax.
Chile is the OECD country with the
lowest marginal tax for medium
wage earners. Belgium takes the
bottom place with a marginal tax
rate of almost 75 per cent.
* Average wage for an industrial worker.
Note Data for indirect taxes is from 2011
OECD
Eurozone
Behind the benchmark
Source OECD, Taxing Wages 2012, Danish
Ministry of Taxation and DI calculations
0
10
20
30
40
50
60
70
80
Per cent
GLOBAL BENCHMARK REPORT 2014 – COSTS
73
5.03 Marginal tax rate for high wage earners*, including indirect taxes, 2012
Direct marginal tax
Indirect taxes
Chile
South Korea
Mexico
Japan
Switzerland
New Zealand
Canada
United States
Spain
Poland
Australia
Austria
Slovak Republic
Germany
Israel
Estonia
Turkey
United Kingdom
Czech Republic
Iceland
Netherlands
Hungary
Portugal
Norway
Ireland
Greece
Finland
Denmark
France
Slovenia
Italy
Sweden
Belgium
The marginal tax rate for higher
wage earners affects the labour
supply of the most productive
workers. High taxes reduce the
advantage of taking tertiary education, completing it quickly, working
longer hours and retiring later.
Chile has the lowest level of
marginal taxes for higher paid wage
earners. The highest marginal tax
rate is found in Belgium.
* 167 per cent of the average wage for
an industrial worker
Note Data for indirect taxes is from 2011
OECD
Eurozone
Behind the benchmark
Source OECD, Taxing Wages 2012, Danish
Ministry of Taxation and DI calculations
0
10
20
30
40
50
60
70
80
Per cent
5.04 Nominal corporate tax rate, 2013
EUROZONE
OECD
Ireland
Slovenia
Czech Republic
Poland
Chile
Iceland
Turkey
Hungary
Estonia
Switzerland
Sweden
Slovak Republic
United Kingdom
South Korea
Finland
Austria
Denmark
Israel
Netherlands
Greece
Canada
Italy
New Zealand
Norway
Germany
Australia
Mexico
Spain
Portugal
Belgium
France
Japan
United States
With increasing globalisation, both
capital and companies become
increasingly mobile. The corporate
tax rate therefore becomes increasingly significant because it reduces
investment yield. OECD analyses
show that lower corporate tax is
the most effective fiscal measure to
increase growth.
Ireland still has the lowest corporate tax rate among OECD countries
at only 12.5 per cent. The United
States, Japan and France still have
the highest corporate tax rates
and this reflects the fact that large
countries, thanks to their domestic
markets, can easily attract investment despite high corporate tax
rates.
Russia
China
India
Brazil
Behind the benchmark
Source OECD Tax database and KPMG’s
Corporate and Indirect Tax Rate Survey 2013
0
5
10
15
20
25
30
35
40
45
Per cent
GLOBAL BENCHMARK REPORT 2014 – COSTS
74
5.05 Actual corporate tax rate, 2012
OECD
EUROZONE
Belgium
Canada
Slovak Republic
Czech Republic
Estonia
France
Iceland
Switzerland
Greece
Hungary
Ireland
Slovenia
Finland
Poland
South Korea
Portugal
Austria
Sweden
Turkey
Denmark
Italy
Netherlands
Chile
Spain
United Kingdom
Germany
Israel
Mexico
Norway
Australia
Japan
United States
New Zealand
The tax payment of businesses
depends not only on the corporate
tax rate, but also on the breadth of
the tax base – which means how
big a proportion of the profit that is
taxed. The actual corporate tax rate
is significant in relation to company
localisation and investment decisions and, consequently, in relation
to retaining and attracting businesses and jobs.
Belgium has OECD’s lowest actual
corporate tax rate at 6.4 per cent.
Note The actual corporate tax rate is based
on a model calculation (for a conventional
production company (Ltd) with 60 employees
and without international operations).
China
Russia
India
Brazil
Behind the benchmark
Source PricewaterhouseCoopers Paying
Taxes “The Global Picture” 2014
0
5
10
15
20
25
30
35
Per cent
5.06 Annual inflation, 2009-2013 (average)
EUROZONE OECD
Japan
Switzerland
Ireland
Sweden
France
Portugal
Germany
Canada
United States
Norway
Spain
Slovenia
Czech Republic
Denmark
Belgium
Greece
Netherlands
Italy
Austria
New Zealand
Chile
Slovak Republic
Australia
Finland
Israel
South Korea
United Kingdom
Poland
Estonia
Mexico
Hungary
Iceland
Turkey
Price inflation is central to the stability of a country, and stable price
development is also an essential criterion for countries in the European
monetary cooperation. This benchmark shows the average annual
increase in consumer prices.
For several years, Japan has
recorded falling prices (deflation)
and once again ranks as number one
with an average growth in consumer
prices of -0.5 per cent over the past
five years. It should be noted that
deflation is not desirable.
Growth markets often face problems
curbing inflation. Especially Russia
and India have high inflation rates.
China
Brazil
Russia
India
Behind the benchmark
Source OECD Economic Outlook No. 94
and DI calculations
-2
0
2
4
6
8
10
12
Per cent
GLOBAL BENCHMARK REPORT 2014 – COSTS
75
5.07 Access to capital markets, 2013
EUROZONE
OECD
Poland
Switzerland
Sweden
Germany
Norway
Israel
Belgium
United States
Denmark
Netherlands
United Kingdom
Canada
Turkey
Australia
Chile
Finland
Czech Republic
Ireland
France
New Zealand
Japan
Austria
South Korea
Slovak Republic
Estonia
Mexico
Portugal
Hungary
Italy
Spain
Greece
Slovenia
Iceland
Easy access to capital markets minimises the financial costs for businesses, contributes to increased
investment, and stimulates
economic growth. In the wake of
the financial crisis, access to capital
markets is still difficult in many
countries.
In their own assessment, senior
managers in Poland, Switzerland
and Sweden have easy access
compared with the other OECD
countries.
Note This benchmark shows to which degree
senior managers assess that access to
national and foreign capital markets is easy.
The survey dates back to early 2013.
India
Brazil
China
Russia
Behind the benchmark
Source IMD World Competitiveness Yearbook
2013 (survey, scale 0-10)
0
1
2
3
4
5
6
7
8
9
10
Index 0-10
5.08 Hourly compensation costs in manufacturing, 2012
OECD
EUROZONE
In a globalised world, company
competitiveness is determined by
a reasonable relationship between
productivity and costs. The higher
the costs, the more productive businesses need to be in order to be
competitive – all other things being
equal.
Poland
Hungary
Slovak Republic
Czech Republic
Portugal
Poland, Hungary and the Slovak
Republic are among the countries
with the lowest hourly compensation
costs in manufacturing.
Slovenia
Greece (2009)
United Kingdom
Spain
Italy
Ireland
Japan
United States
Austria
Netherlands (2011)
Finland
Germany
France
Denmark
Belgium
Sweden
Norway
Behind the benchmark
Source DA’s database on international
wage statistics
0
50
100
150
200
250
300
350
400
DKK
GLOBAL BENCHMARK REPORT 2014 – COSTS
76
5.09 Annual growth in unit labour costs, 2009-2013 (average)
EUROZONE
OECD
The development of unit labour
costs illustrates the combined
effect on production costs of wage
increases and productivity development. An increase is an expression of the fact that the pay rises
were larger than productivity development.
Greece
Ireland
Spain
Japan
United States
Estonia
Switzerland
All OECD countries except for
Greece, Ireland, Spain and Japan
display average positive growth in
unit labour costs over the past few
years.
Slovak Republic
Czech Republic
Sweden
Slovenia
Denmark
Poland
France
Netherlands
Canada
Italy
Hungary
South Korea
Germany
Belgium
Australia
Austria
United Kingdom
Finland
Note Unit labour costs for the entire
economy. Data from the second half of 2013
is an OECD estimate.
Norway
Iceland
Behind the benchmark
Source OECD, Economic Outlook No. 94
and DI calculations
-3
-2
-1
0
1
2
3
4
5
6
Per cent
5.10 Yield of environmental taxes as a percentage of GDP, 2011
Energy
Transport excluding fuel
Pollution/resources
Spain
France
Slovak Republic
Environmental taxes are a cost for
enterprises and have major influence on their international competitiveness.
Iceland
Belgium
Germany
The rationale behind environmental
taxes is to make utilisation of scarce
or undesired resources more expensive and thus reduce consumption.
If individual countries choose to go
alone and impose increased costs
on production without balancing
them with other relief, then there is
a risk that production moves away
from these countries.
Czech Republic
Portugal
Austria
Sweden
Hungary
Poland
Ireland
Taxes on resources and transboundary pollution should be agreed
internationally if they are to have an
effect on global resource consumption and the climate.
United Kingdom
Norway (2010)
Greece
Italy
Spain has the smallest yield of environmental taxes as a percentage of
GDP, and Denmark the highest.
Estonia
Finland
Slovenia
Netherlands
Denmark
Eurozone
OECD
Behind the benchmark
Source European Commission, Taxation
trends in the EU, 2013
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Per cent of GDP
GLOBAL BENCHMARK REPORT 2014 – COSTS
77
78
GLOBAL BENCHMARK REPORT 2014 – X X X
GLOBAL BENCHMARK REPORT 2014 – X X X X
Global Benchmark Report
79
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
81
NEW TRENDS IN GLOBAL
INVESTMENT FLOWS
In 2012, for the first time ever, more than half of the world’s foreign direct investment (FDI) was channelled to countries outside OECD member states,
which, on the other hand, are still responsible for the majority of the investments. This development is apparent when looking at the balance between inward and outward FDI in the EU-15, where stocks of outward FDI increasingly exceed inward FDI. The situation is particularly problematic for countries experiencing a declining inflow since FDI can raise both employment and
productivity wherever it occurs. It is therefore important for all countries to be
able to attract FDI.
A large gap in FDI has evolved in the EU-15 countries
Many affluent countries have more outward foreign direct investment (FDI) than
inward. In other words, they have invested more abroad than other countries have
invested in them and this gap in FDI seems to be growing. In fact, the FDI gap of
the EU-15 has nearly tripled over the past decade and overall currently constitutes
about 15 per cent of GDP in these countries. Although many countries have experienced this development, the scope varies greatly as well as the underlying reasons
for the development of the investment gap.
Many countries have
growing FDI gaps
The FDI gap has grown significantly in EU-15
EU-15 outward FDI stock less inward FDI stock
Per cent of GDP
18
16
14
12
10
8
6
4
2
0
Source OECD and DI
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
82
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
Increasing amounts of FDI channelled to non-OECD countries
Total global flow of inward FDI from OECD member states and the world's other countries
OECD
The world excluding
the OECD
USD bn
2,500
Financial crisis
2,000
European
debt crisis
Dot-com bubble
1,500
1,000
Note Estonia and the Slovak Republic
are not included in flow to the OECE
before 1992.
The world's aggregate inward and
outward FDI flows should be the same but
are not due to measurement errors.
Source UNCTAD and DI
500
0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010 2012
FDI is moving outside of the
OECD…
Similar to the EU-15, many OECD member states are experiencing a gap between
inbound and outbound FDI. The reason is a general and growing tendency to invest outside these countries. In 2006, 70 per cent of the world’s FDI flows went to
OECD member states while, in 2012, less than half landed there.
… but it still comes from
OECD member states
The main part of the world’s FDI, however, still comes from OECD member states
even though there has been a small decline in their share of the world’s outward
FDI flows from 80 per cent in 2006 to 70 per cent in 2012. This means that in 2012,
70 per cent of the world’s FDI came from OECD member states while only half of
global FDI was channelled to those countries. The result is that overall the gap has
increased.
Furthermore, the financial crisis in 2008 and the debt crisis in 2011 had a restraining effect on global FDI flows. The flows, however, were only below the 2006 level
in 2009; otherwise, they have been higher. The general increase in FDI has to do
with the general growth of the world economy and is similarly an expression of an
increasingly globalised world.
In comparing OECD member states, it appears that outward FDI primarily exceeds
inward FDI in the most affluent countries. The question is then whether such a FDI
gap is good or bad?
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
83
FDI primarily comes from the OECD member-states
Total global flow of outward FDI to OECD member states and the world's other countries
USD bn
2,500
OECD
The world excluding
the OECD
Financial crisis
2,000
European
debt crisis
1,500
Dot-com bubble
1,000
Note Estonia and the Slovak Republic
are not included in flow to the OECE
before 1992.
500
The world's aggregate inward and
outward FDI flows should be the same but
are not due to measurement errors.
Source UNCTAD and DI
0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Although investment gaps seem to have occurred primarily in the most affluent
OECD member states, the pattern of inward FDI is not the same across the states.
OECD member states differ significantly in their ability to attract direct investments
from abroad. This shows that although a larger share of global FDI is channelled
outside OECD member states, there is still great potential to attract more FDI within these countries.
Great differences in a
country’s ability to attract
FDI
It is not obvious whether a gap between the outward and inward FDI is a positive or
negative development for a given country. As an example a FDI gap that occurs due
to less inward FDI and increasing outward FDI could indicate that domestic businesses increasingly remain with domestic owners while they are acquiring foreign
companies and expanding their operations in export markets. At face value that
sounds positive, but is foreign ownership necessarily a bad thing, or could it even
be preferable?
Not so clear whether the
development is positive or
negative
On the other hand, the gap could signify that both domestic and foreign companies
have lost interest in the given country. In that case, a large and growing FDI gap is
undesirable.
In order to understand whether a FDI gap is good or bad, it is necessary to take a
closer look at the development of the investment balance, and at what FDI actually entails. Based on the development in many European countries, it appears that
there are both positive and negative aspects to a growing FDI gap.
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
84
AN INVESTMENT GAP CAN BE LARGE OR
SMALL FOR MANY REASONS
Outward FDI exceeds inward FDI in affluent countries
OECD member states' outward FDI stock less inward FDI stock, 2012
Luxembourg
Switzerland
Netherlands
Ireland
Denmark
Germany
Finland
United Kingdom
France
Austria
Japan
Italy
USA
Sweden
Belgium
Norway
Canada
South Korea
Greece
Israel
Spain
Australia
Mexico
Iceland
Slovenia
Turkey
Portugal
Poland
New Zealand
Chile
Hungary
Slovak Republic
Estonia
Czech Republic
-80
-60
-40
-20
0
20
40
60
80
Source OECD and DI
100
Per cent of GDP
The attraction of FDI varies greatly among the individual countries
Average annual flow of inward FDI 2007-2012 as a proportion of GDP
Luxembourg
Belgium
Ireland
Iceland
Chile
Estonia
Hungary
Israel
Switzerland
Australia
Netherlands
United Kingdom
Canada
Sweden
Czech Republic
Norway
Poland
Slovak Republic
Austria
Spain
Portugal
Mexico
Turkey
France
New Zealand
USA
Slovak Republic
Finland
Denmark
Germany
South Korea
Italy
Greece
Japan
0
Source UNCTAD and DI
5
10
15
20
25
30
Per cent
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
85
Australia
Norway
Denmark
France
France’s stocks
of both inward and
outward FDI have
decreased in the
same period, and
since outward FDI
has decreased more,
the gap has become
smaller. An explanation could be that
France is generally
struggling with poor
competitiveness and
has had a tough time
in the financial crisis
and the successive
debt crisis.
The Danish FDI gap
is caused by a
decreasing flow of
inward FDI that
coincides with an
increasing flow of
outward FDI.
Similar to Denmark,
outward FDI in
Norway exceeds
inward FDI, but in
Norway, the gap is
smaller today than
in 2006 because the
inward FDI stock has
increased more than
the outward FDI. The
increase in inbound
FDI is mainly found
in oil production and
real estate.
In Australia, the
stock of outward FDI
has declined from
2006 through 2012
while the stock of
inward FDI has
increased.
It is primarily the
major inflow of
FDI to the mining
industry that has
caused Australia’s
stock of inward FDI
to exceed outward
FDI.
Source OECD and UNCTAD
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
86
FDI has many favourable effects
FDI can be many things
In principle, FDI is a transfer of capital securing the investor a significant share of
equity and accordingly influence in the company in which he has invested. Technically, FDI can be divided into four types:
1 Start-up of a new company/subsidiary
2 Transfer of capital to subsidiaries
3 Whole or partial acquisition of companies
4 Flow-through investment
The division into the four types makes it easier to understand how FDI can affect
the economy in the country it targets.
Some FDI benefits
employment ...
Start-up of new companies will involve the creation of new jobs since it can be characterised as green field investment. This is a particularly interesting aspect of inward FDI.
… while others have no real
economic effect
The transfer of capital to subsidiaries may also involve green field investment in
cases where the capital is used to expand the activities of the subsidiaries. There
may be other motives, though. If, for instance, the company’s investment goes to
improvements in production equipment, it does not immediately create a need for
more employment. On the other hand, it increases productivity. However, investment in a subsidiary may also be pure cash management with no real economic effect since it is simply a transfer of money that will be returned at a later stage.
Much FDI is acquisitions
Acquisitions have no obvious effect on employment. Since a major part of FDI covers whole or partial acquisitions of companies, no direct correlation between FDI
and employment can be expected.
1 Start-up of new business
2 Transfer of capital to subsidiary
Over the next five years Siemens will expand its
presence in Brazil by investing up to USD 1 billion inlcuding a brand new factory producing high
and low voltage motors and generators and a R&D
center in Rio de Janeiro.
Dell is expected to expand its operations in China
by 2020 with a USD 100 billion investment.
Sources Siemens, Microsoft, Dell and Nationalbanken
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
Flow-through investment has no real economic significance since the capital is
merely flowing through a holding company to the country where the actual investment takes place. In countries such as Belgium, Ireland, the Netherlands and Luxembourg, where much FDI flows through holding companies, both inbound and
outbound FDI will be at an artificially high level.
87
Flow-through investment
has no effect on the
economy
This means that not all FDI has an effect on the economy, but over the years, the
FDI will presumably include all types.
Increasing globalisation makes it important to understand
the factors that determine whether national and international
companies expand abroad or at home. The easy answer is
that businesses locate wherever it is most profitable.
3 Acquisition of company
4 Flow-through investments
In 2013, software giant Microsoft bought Nokia’s
main handset business for 5.44 billion euros.
American DuPont paid 5.8 billion dollars for the acquisition of Danish Danisco in 2011. The company was acquired
through a holding company in Luxembourg. Therefore, the
investment did not affect the economy of Luxembourg, even
though it was considered an American investment in Luxembourg and an investment from Luxembourg into Denmark.
billion euros
billion USD
billion USD
88
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
Greater revenue per employee with foreign owners
2006-2011, number of employees in man-years
USD 1,000 per employee
600
500
400
300
200
100
Source Statistics Denmark
Higher revenue per employee with foreign owners
0
Danish owners
Foreign owners
Foreign owners raise productivity
As mentioned above, foreign ownership per se does not affect employment, but
may have a positive effect on productivity. Considering Denmark as an example,
foreign-owned companies in Denmark have higher revenue per employee than
Danish-owned companies. This may be due to the fact that new owners bring new
knowledge, new ideas or new technology when they take over a company.
Part of the explanation as to why foreign-owned companies have higher revenue
per employee is presumably also that it is often the largest and most productive
companies that are acquired by foreign investors. On the other hand, the object
of acquiring a company must be to increase its value by increasing the expected
future earnings, either by raising productivity or by increasing sales. This leads to
the conclusion that foreign owners often work with productivity improvements – a
conclusion that is confirmed in a Danish context by a survey taken among DI member companies.
When FDI increases the productivity of companies invested in, it also works as an
incentive for other companies to increase their productivity in order to remain competitive. One way to do this could be to copy some of the foreign owners’ methods,
and this means that, over time, foreign ownership could create a broader productivity lift.
Interest from abroad also
facilitates access to capital
Last, but not least, a general interest from foreign investors is important in terms
of being able to obtain capital for the companies of a country. Major interest will
make it easier and less expensive for companies to find financing. This will make
more investment attractive, and this again will increase the physical capital stocks
and raise productivity.
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
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Companies with foreign ownership have more focus on productivity improvements
Responses to question whether the company is working to enhance productivity
Per cent
100
No
Yes, but without concrete
productivity targets
80
Yes, with concrete
productivity targets
60
40
20
0
Source DI's company panel, survey
among 552 member companies of which
157 have foreign owners among their
ownership
Foreign ownership
Danish owners
Foreign ownership not always to be preferred
Foreign capital may provide new jobs in the country it is invested in, but it may also
have a positive effect on productivity through the increase of capital goods or the introduction of new ideas and technologies by the foreign owners. It does not mean,
however, that any FDI or acquisition is an advantage for the receiving country. The
motive of the individual investor varies, and for some this could be the closure of
domestic branches. Precisely for this reason, it is vital to be as attractive as possible to a large number of investors so that it is possible to deselect those who do not
benefit the country.
In this context it is worth stressing that we are not anywhere near a situation where
all companies in either individual countries or in Europe as such are owned by foreigners. Denmark has relatively many foreign-owned companies compared with
other European countries, and still only 1.3 per cent of all companies in Denmark
have non-Danish owners. On the other hand, these are mainly larger companies,
so non-Danish ownership comprises a larger share of privately employed Danes.
Not all foreign acquisitions
are good…
... but most businesses still
have national owners
The majority of companies in Denmark have Danish owners
Proportion of foreign-owned companies of all firms and all private-sector employees in Denmark
1.3%
Danish owned
19.8%
98.7%
Foreign owned
80.2%
Number of companies
Number of employees
Note Number of employees in man-years
Source Statistics Denmark and DI
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Measured by the number of employees, one fifth of those employed in the private
sector in Denmark are working in a company with non-Danish owners. These do
not only count companies acquired by foreign investors, but also jobs that were created as a result of foreign companies’ green field investment.
Relocation may be necessary for companies…
You could fear that companies that are being acquired will relocate to another
country. It seems at least plausible that foreign owners do not have the same sense
of belonging to the countries where they buy companies that the national owners
have. On the other hand, it is not a given fact that national owners have a choice in
deciding whether to keep the company in the original country. Irrespective of the
nationality of the owner, it is difficult for a company to survive if the product or service it offers can be produced more efficiently and cheaply abroad.
…. if they are not competitive in their country of origin
What keeps the companies at home in the long term are not the boundaries to the
outside world, but rather the conditions businesses operate under. National borders simply have diminishing significance for many companies. The increasing investment flows across national borders are evidence of that.
Outward FDI is often a good
thing …
…. but not always
Outward FDI is not all positive
When a country’s businesses have many direct investments and employees abroad,
it is generally good for the country. It is evidence of efficient and expanding companies that increase their presence in the world through acquisitions and expansion.
This was also highlighted in a Danish context in a survey taken among DI’s members. The survey showed that access to new markets and proximity to customers
were the main motive when Danish companies established jobs abroad.
When proximity to customers and new markets are the main motive for establishing jobs abroad, there is obviously nothing to be done differently to convince the
companies to establish the jobs at home. On the other hand, we can do something
New markets abroad and high labour costs in Denmark are main motives for establishing jobs abroad
Indicate how you weighted the motives for the decision to establish jobs abroad and not in Denmark
Better access to new markets/close to the customer
Very important
Important
Reduction of labour costs
Less important
Enhancement of company structure and internal
division of labour
Not important
Don't know
Taxes
Not sufficient access to qualified labour in Denmark
Source DI's company panel. Survey
among 442 companies. Completed
mid-June 2011
To get better access to specialised knowledge
and technology
0
20
40
60
80
100
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
91
in relation to the second most quoted motive for establishing jobs abroad, which
was reduction of labour costs.
In Denmark, as in several other affluent countries, we are not interested in competing directly with low-wage countries on wages. In order to avoid that, work carried out in Denmark must have a high level of knowledge in order to give it a higher
value, and production must be smarter or more automated. Many other European
countries also meet these criteria; so irrespective of how innovative Danish companies are, costs are still very important.
Outward FDI also covers outsourcing
Some of the jobs that companies establish abroad are not just expansions, but a
relocation of jobs to other countries. In other words, some of the outward FDI does
not only mean that a country is missing out on new jobs, but is an expression of a
direct loss of jobs.
Quality should offset costs
Outward FDI can also be
outsourcing…
Outsourcing may be necessary in order to secure the survival of companies if they
have activities that could be performed more efficiently or cheaply in other countries. In this case, outsourcing contributes to ensuring the survival of domestic
businesses. It is however a problem from a country’s perspective if its businesses
will be outperformed if they retain the jobs in the country.
When looking at the degree of outsourcing that takes place from countries across
Europe, the pattern seems to be that the most affluent countries are outsourcing
the largest share of their industrial jobs.
… some countries outsource
more than others…
Costs are a common cause of outsourcing in many other European countries, particularly the most affluent among them.
…. mainly due to high costs
Denmark has outsourced the highest proportion of industrial jobs
Outsourced jobs in the period 2009-2011 as a proportion of employment in industrial companies with 100 or more employees
Denmark
Netherlands
Norway
Portugal
Sweden
Belgium
Estonia
Slovak Republic
France
Romania
Lithuania
0
1
2
3
4
5
6 Per cent
Source Eurostat
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GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
High costs motivate outsourcing in affluent countries
Proportion that states costs as motivation factor for outsourcing
Finland
Denmark
Sweden
Ireland
Norway
Belgium
Netherlands
Slovak Republic
France
Latvia
Portugal
Estonia
Source Eurostat, International sourcing
Romania
statistics survey 2012
Lower wage costs
Lower costs
(excluding wage costs)
0
High knowledge content
retains jobs in affluent
countries
10
20
30
40
50
60 Per cent
In contrast, in affluent countries, access to qualified labour, specialised knowledge
and higher quality apparently have no significance in relation to outsourcing decisions. However, these factors cause companies to outsource from the less affluent countries in the study. The reasons for outsourcing offer indications about the
strengths and weaknesses of the individual countries. Denmark, for example, produces high quality products with high knowledge content, and very few companies
outsource with the motive to improving those aspects. The motivation for Danish
companies to relocate their production to other countries is Denmark’s high level
of costs.
The major scope of outward FDI and in some cases also outsourcing that many
countries experience could partly be compensated for by a capacity for attracting
more investment from abroad. In this context, it may be natural that inward FDI
and outward FDI do not balance in many OECD member states since a long list of
countries outside the OECD record far higher growth rates, which simply make it
more attractive to invest there. There are, however, major differences across countries, and some countries are doing far better than others in terms of the scope of
outsourcing and the ability to attract FDI.
Reduced inward FDI is worrying
Many countries attract less
FDI than they used to
As mentioned earlier, there is major difference as to how much FDI the various
countries attract. It is, however, equally interesting whether the individual countries, irrespective of level, have been able to increase their attraction of FDI or
whether they have experienced a distinct fall in recent years.
This picture is also rather mixed, but in general, most countries have increased
their attraction of new FDI in the period 2007-2012 compared with the period
2001-2006. This has to do with the fact that the flow of FDI to OECD member
states has generally increased in the period despite constituting a smaller proportion of the world’s total FDI.
However, many countries have also experienced a major decline in inward FDI,
which is a development that those countries should aim to reverse since it means
that they miss out on investment that can increase productivity and create jobs.
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In low wage countries, quality, knowledge and qualifications motivate companies to outsource
Proportion that states quality, knowledge and qualification as motivation factor for outsourcing
Enhanced quality or introduction of new products
Access to specialised know
ledge and technology
Shortage of qualified labour
Romania
Estonia
Latvia
Portugal
Slovak Republic
Ireland
Finland
Norway
Belgium
Sweden
Netherlands
France
Denmark
0
5
10
15
20
30 Per cent
25
Source Eurostat, International sourcing
statistics survey 2012
Many countries have recorded increasing inward FDI
In the national currency, growth in inward FDI including flow-through from the period 2001-2006 through the period 2007-2012
Ireland
Norway
Chile
Australia
Japan
Turkey
Belgium
Canada
Israel
Austria
USA
Iceland
Switzerland
Poland
Hungary
Spain
United Kingdom
Sweden
Mexico
New Zealand
Greece
Germany
Portugal
Netherlands
Luxembourg
Italy
Estonia
Slovenia
Czech Republic
France
Finland
South Korea
Denmark
Slovak Republic
-100
Source OECD and DI
-50
0
50
100
150
200
250
300
350
400 Per cent
94
GLOBAL BENCHMARK REPORT 2014 – NEW TRENDS IN GLOBAL INVE STMENT FLOWS
If return is too low, no investment
Other countries become
more attractiv …
The increasing global flow of foreign direct investment makes it important to understand the factors that determine whether national and international companies
expand abroad or at home. The easy answer is that businesses locate wherever it is
most profitable, and this is determined by the return on investment (ROI) and the
security for achieving the desired ROI.
… because high costs re- For countries such as Denmark, which attract less FDI than their neighbours and
duce the yield other comparable countries, as a minimum, investments should return the same
yield as in the other countries. Declining or relatively low inward FDI is not simply a
natural development that must be accepted.
EU-15 can increase their
attractiveness
Several factors can increase a country’s attractiveness
Investments in any country have advantages and drawbacks, but it is vital to
strengthen the advantages and reduce the drawbacks if the flow of FDI is to increase. This will also ensure a situation in which national businesses increasingly
retain and establish jobs at home instead of abroad. As stated earlier, several EU15 countries struggle with high costs and are therefore attracting less FDI than earlier. However, apart from the high costs, these countries have strong foundations
for attracting FDI on other accounts.
Denmark has a strong foundation for attracting FDI ...
Taking Denmark as an example, the advantages of operating a business include our
business conditions that fundamentally support the Danish industrial strengths,
which are production of high quality products and niche products. Denmark has
a qualified labour force, a low degree of corruption and a high level of confidence
in the population. These are strengths we should hold on to and continuously improve. Generally speaking, we have a strong foundation for operating a business in
Denmark, and this also suggests that foreigners should invest more in Denmark.
... but it must be even
stronger ...
The fact that this is not the case is because other factors limit investment in Denmark. Locating in Denmark does not provide access to a large market. This factor
is difficult to change. On the other hand, we can do something about the high level
of costs, which many businesses point to as an important motive for choosing to
invest abroad rather than in Denmark.
... our neighbours have a
strong foundation, too
We are not talking about Denmark lowering the level of cost to that of Eastern Europe or Asia. The high level of knowledge in the products that are made in Denmark
vouch for that. It is rather about competing with the cost levels in the countries
around us.
Improvement can be made
in many areas
Many other factors could be adjusted in order to make Denmark or any other country an attractive investment destination. This would make long-term investment
far more attractive along with an increased focus on ensuring sufficient labour with
the right qualifications, a good infrastructure and improved conditions for research
and development.
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95
In addition, an investment always involves a certain degree of risk, and the greater
the risk, the larger the ROI required. For this reason, we must also consider how
the risk can be minimised. One way for governments to contribute is by being forthcoming and action-oriented towards foreign investors. If, from the outset, the companies experience fast and efficient service from the public authorities, it will be a
clear indication that they do not risk their investment and subsequent operation
being negatively affected by unpredictable costs due to slow case processing or
other administrative burdens. Fewer administrative burdens, per se, will reduce the
costs of the companies.
DI RECOMMENDS
In general, these recommendations deal with the following categories: administrative burdens, interaction with government investment, and direct financial incentives. The recommendations touch upon areas that any country should aim to improve if it wants to attract and retain more investment.
Fewer administrative burdens
>> Governments should establish ambitious quantitative targets for
reducing the administrative burdens of businesses.
>> Public case processing should have a focus on attracting more
businesses and investment
>> Consistent municipal planning and transparent planning criteria
will support a shorter path “from project to product” for businesses.
Enhanced interaction between public and private R&D
will raise the level of knowledge and innovation
>> Focus on business-oriented research
>> Enhanced cooperation between businesses and universities
>> Focus on strong and business-relevant public research environments
Financial incentives
>> Competitive corporate tax
>> Ensuring competitiveness of several other taxes that affect
businesses, which compete on the international markets
>> Improved wage competitiveness
The problem can be solved
Portugal
Denmark
Belgium
The Netherlands
Switzerland
France
Germany
Spain
Italy
USA
Eastern
Europe
India
China
Africa’s size is often underestimated. The map illustrates
that Africa is about the same
size as USA, China, India,
Japan, and Europe combined.
India
part 2
China
part 2
Great Britain
Japan
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97
AFRICA: OPEN FOR BUSINESS
In the past decade, Africa has developed from being an extremely impoverished
continent with gloomy prospects for the future to accommodating some of the
world’s fastest growing economies. The progress is thanks to high growth rates
caused by a strong increase in inward foreign direct investment, major
demand for African raw materials and a remarkable development of the
African consumer markets. Business conditions in Africa have also improved.
The EU is still Africa's largest donor and trading partner. However, the EU is
getting less relevant to the continent due to other countries' interest in trading
with and investing in the African countries. With changes in trade agreements
and aid policy underway, 2014 holds ample opportunity for revitalizing the
cooperation between the two regions.
Imagine Africa as the world’s factory floor. The first place that any CEO would consider to have any kind of product manufactured at a reasonable price and quality.
The question is only whether to locate the production in Uganda, Ethiopia or Mali.
The world’s factory floor …
Imagine Africa as the world’s food producer. A producer of tonnes of meat, vegetables, fruit, cereals and dairy products that are shipped – both as processed and
unprocessed goods – to consumers across the world.
… the world’s food
producer …
Or imagine Africa as one of the world’s most interesting consumer markets. New
trends are created and born here, and any international brand worth its salt has a
massive presence.
… the world’s most
interesting consumer
market …
These three scenarios may all sound utopian. The reality, however, is that now, in
2014, Africa is in the midst of a development process that may very well lead to all
three situations coming true by 2040.
… may be found in
Africa in 2040
The continent has already made so much progress that what is reality today – that
half of the African countries are middle income states and that there are more
than 650 million mobile telephone subscribers in Africa – would have sounded like
science fiction for a citizen of the world in the year 2000.
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At that time, Africa was named “The hopeless continent” by the Economist.
”Floods in Mozambique; threats of famine in Ethiopia
(again); mass murder in Uganda; the implosion of
Sierra Leone; and a string of wars across the continent. The new millennium has brought more disaster
than hope to Africa. Worse, the few candles of hope
are flickering weakly.
...
All the bottom places in the world league tables are
filled by African countries, and the gap between
them and the rest of the world is widening.”
The Economist, May 2000
In the early 1990s, a few African countries had experienced years of decent growth
rates, but around the turn of the millennium, growth rates had fallen to 1-3 per
cent, and with major population growth the countries were in reality in economic
recession. In the 1990s, several new leaders had given the impression that they
were more concerned with fighting poverty than lining their own pockets, but by
2000 several of them had thrown their countries into war. On top of this, a number of states suffered natural disasters such as floods, drought and, subsequently,
failed harvests and floods of refugees. In addition, diseases such as aids threatened
to make major inroads into the new generations.
The future of Africa was far
from bright in 2000
In conclusion, prospects for Africa were far from promising in 2000. In spite of this,
something surprising happened in the first decade of this century. Most African
countries have arrived at a positive course that has turned out to be self-reinforcing. Many years have displayed stable, high growth rates driven by external and internal demand and increasing direct investment from the rest of the world. There
have been fewer wars and more good leaders. Less disease and more education.
Most of all, however, optimism and growing self-confidence bring even more fuel to
Africa’s wish of creating a better life for coming generations.
In brief, Africa is open for business.
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99
Africa – a continent in progress
The African economy is forging ahead. With an annual average growth rate of 4.6
per cent in the period 2000-2012, Africa was one of the fastest growing regions in
the world.
High and stable growth in
the 2000s …
Africa had the world's third highest growth rates in the 2000s
Average annual GDP growth, 2000-2012
Asia
Middle East
Africa
Sub-Saharan Africa
* G7 are Canada, France, Germany,
Italy, Japan, UK and USA.
Central and
Eastern Europe
Note Africa includes Northern Africa
G7*
Source IMF, World Economic Outlook,
Database, October 2013
0
1
2
3
4
5
6
7 Per cent
Growth will speed up even more in the next five years when Africa – led by the
sub-Saharan states – is expected to be world champion in growth. According to
forecasts by the International Monetary Fund, Africa will have an average annual
growth rate of more than five per cent in the years up to 2018. And this even in a
period when the majority of advanced economies are licking their wounds after the
financial crisis.
… and in the 2010s
Africa will be world champion in economic growth in the next five years
Expected average annual GDP growth, 2013-2018
Sub-Saharan Africa
Africa
Asia
Middle East
* G7 are Canada, France, Germany,
Italy, Japan, UK and USA.
Central and
Eastern Europe
Note Africa includes Northern
Africa
G7*
Source IMF, World Economic
Outlook, Database, October 2013
0
1
2
3
4
5
6 Per cent
10 of the world’s 20 fastest growing economies in 2012 are
situated in Africa
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100
In 2012, a quarter of the African countries recorded growth rates of seven per cent
or higher. Several of them were even among the countries in the world with the
highest growth rates. These include Sierra Leone, Niger, Ivory Coast, Liberia, Ethiopia, Burkina Faso and Rwanda. It should be considered, however, that most of
them come from a very low level. If they can maintain high growth rates, many African states will quickly ascend the world’s GDP charts.
Africa’s economy is more voluminous
Africa’s economy has tripled since 1980 – GDP (fixed prices, million, USD 2000)
1980
346,000
million, USD 2000
1995
485,000
million, USD 2000
… AND THE
DEVELOPMENT
IS EXPECTED TO
CONTINUE …
2018
1,400,000
million, USD 2000
Source IMF, World Bank and DI-projection
2010
920,000
million, USD 2000
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Several driving forces behind the African growth engine
African growth is more stable and credible now than in previous growth waves because it is based on numerous underlying trends. Until the year 2000, various African countries would periodically experience high levels of growth, but the cause
was nearly always increasing commodity prices. When the world market price for
copper or cocoa fell again so would the country’s growth rate.
Growth fuelled by more
than raw materials
Even today, exports of raw materials and natural resources are important elements
in the African growth adventure, but they are now accompanied by increasing inward FDI and increasing demand by the African countries’ own markets. Altogether, it means that a series of self-reinforcing trends have started accumulating, and
this may forge high and stable growth rates in many African countries for several
years ahead.
African consumers are charging ahead
One of the most important forces behind growth in Africa is a pronounced change
in many of the continent’s consumer markets.
One third of Africa’s
population is middle class
While local consumers would previously only really be relevant for local shopkeepers, the markets now reflect a larger degree of variety. The middle and upper income segments are growing fast; and a third of the African populations are currently considered middle class. At the same time, the lower income segments are
dwindling.
The African consumer is moving up the income ladder
Consumer segments by income groups in USD PPP
Per cent
100
> $ 20,000
$ 10,000 – $ 20,000
$ 5,000 – $ 10,000
$ 2,000 – $ 5,000
< $ 2,000
80
60
40
20
0
Source McKinsey Global Institute, 2010
2000
2008
2020
By 2008, about 85 million households in Africa reached an annual income of more
than USD 5,000. This income marks a significant limit since, at this level, people
begin to use about half of their income on other things than food. By 2020, 128
million households, corresponding to 52 per cent of all households, are expected
to reach this level.
128 million households will
soon demand new products
and services
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The increasing incomes in Africa are generating demand for a long list of products
and services. Consumers increasingly demand quality and branded goods. At the
same time, prices are important since low prices may signal low quality and on the
other hand it is limited how much the lower income segments can pay.
Some countries have particularly interesting consumer markets. Nigeria and South
Africa are large countries and in the forefront in all segments with annual income of
more than USD 2,000. Countries such as Kenya, Sudan and Angola also have major groups in the upper income segments.
70 African cities with a
population of over one
million
In many places, however, the purchasing power of ordinary citizens is still so low
that the market for classic Danish quality products is limited. Developments are
fast, though, and a significant proportion of the middle class is concentrated around
Africa’s financial centres including Lagos, Nairobi and Johannesburg. Seventy African cities currently have a population of over a million, and in Lagos, for example,
the population is nearly three times that of the whole of Denmark.
At the same time, Africa is one of the continents in which most people are migrating
to the cities. About 40 per cent of the continent’s population live in urban areas;
and this percentage is expected to increase rapidly over the coming years.
In 2050, the population south of the Sahara is expected to reach
2 billion with 1.2 billion living in cities. Of these, 300 million will
earn more than USD 20 per day, resulting in a market of USD
2 trillion.
In 2008-2011, African cities grew on average by 3.5 per cent annually, and in some
countries, the tendency is even stronger. Led by Lagos, Nigeria, which is the world’s
seventh fastest growing city, urbanisation will be one of the strong trends that will
fuel the development of the African consumer markets over the coming years.
Urbanisation supports the
development of consumer
markets
Urbanisation strengthens the African consumer markets for several reasons. One
reason is that a major part of the middle class and the higher income segments will
be moving to the cities – an urban dweller’s consumption is often twice as high as
that of a farmer – and the average income in the cities is 80 per cent higher than
the national average.
Urbanisation is also important for the development of the African consumer markets because it is easier to reach the consumers in cities. The majority of Africans
used to be spread over a large continent with poor infrastructure that made the
development of a distribution network very difficult. But distribution channels in
the cities are developing fast, and several large supermarket chains are expanding
significantly. In Nigeria alone, the number of international shops opening on the
market is increasing by 36 per cent annually.
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84 per cent of the African consumers expect to be far better or somewhat better off in two years
In two years I expect my family to be …
Far better off than today
Somewhat better off than today
Same as today
Somewhat worse off than today
Much worse off than today
Source McKinsey ACIC 2011 survey
0
10
20
30
40
50
60 Per cent
Another interesting trend is the high degree of optimism among Africans. African
consumers are generally highly optimistic regarding the future. As many as 84 per
cent expect to be far, or somewhat, better off two years from now than today. Most
optimistic are the Ghanaians with 97 per cent expecting their family to be far, or
somewhat, better off in two years than now. The same tendency applies to many of
the other Sub-Saharan countries while North African countries are less optimistic.
This is not surprising in the light of the political unrest of recent years in the North
African region.
Optimistic consumers
The high degree of optimism is undoubtedly a consequence of many of the other predominating trends in Africa today: higher household incomes, high growth
rates, and a young population with a median age of just 18.
Optimism highest in Sub-Saharan Africa
Respondents answering they expect to be far, or somewhat, better off in two years from today
Ghana
Nigeria
Senegal
Angola
Ethiopia
South Africa
Kenya
Algeria
Egypt
Morocco
Source McKinsey ACIC 2011 survey
0
20
40
60
80
100 Per cent
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104
Mapping Africa's natural resource wealth
Selected countries and commodities
PERCENTAGE OF
WORLD’S PRODUCTION
ESTIMATED ANNUAL
EXPORT REVENUES
Nigeria
AVERAGE ANNUAL REVENUE
POTENTIAL FROM NEW PROJECTS*
Angola
Oil Exports
US$ 100 BN
annual
US$ 70 BN
annual
US$BN,
constant
2011 dollars
Per cent
2011 GDP
30.7%
9%
US$
1.6 BN
Gold
Ghana, Tanzania,
Mali, Guinea and
Burkina Faso
Iron ore
Guinea
147.8%
US$
1.7 BN
8%
Iron ore and
petroleum
Liberia
Bauxite
Guinea
15.0%
53%
US$
3.5 BN
21%
Cobalt
Industrial diamonds
Democratic Rebublic of Congo
Gas, gold and nickel
Tanzania**
16%
Uranium
Namibia and Niger
27.3%
22%
US$
3.5 BN
Diamonds
Botswana
Gas and coal
Mozambique
77%
46%
21%
Platinum
Chromite
South Africa
Manganese
* Estimates are intended to show order of magnitude. Revenue projections are highly sensitive
to assumptions about prices, phasing of production, and underlying production and capital costs
** Data represents annual revenue at peak production
Sources Africa Progress Panel Report 2013
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Major demand for African raw materials
While the steep increase in domestic demand is a relatively new factor, the external demand for African raw materials is a wellknown story. The new aspect is that
demand does not only come from Europe, but also from growth nations including
India and China, which are hungry for natural resources such as oil and minerals.
This means that world market prices are expected to continue to and ensure higher
income for the resourcerich African countries.
Africa's natural resource wealth is not just made up of oil, gas, and minerals. The
world’s large growth countries demand increasing amounts of food; and if Africa is able to develop its agriculture, the continent has a major potential for future growth. Agriculture in Africa is unproductive compared with other parts of the
world, and has not taken advantage of new knowledge and technology. At the same
time, more than half of the world’s uncultivated farmland is in Africa. The exploitation of these resources contains major opportunities. Finally, there is only little processing of African foods in Africa, and there is a great potential in the development
of a competitive food industry.
Major potential in African
agriculture
Slow productivity growth in the African agricultural sector
Development in productivity of cereal yields per hectare from 1961-2012
Cereal yield (ton per hectare)
6
5
EU
4
3
Southeast Asia
2
1
0
Africa
Sub-Saharan Africa
1962
1967
1972
1977
1982
1987
1992
1997
Source World Bank
2002
2007
2012
60 per cent of the world’s uncultivated farmland is African.
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Dramatic increase in inward FDI
A third trend fuelling growth is inward foreign direct investment. There has been a
pronounced increase in inward FDI in Africa since 2000. After stagnation in 2008,
investment picked up again when it turned out that Africa was not seriously affected by the financial crisis.
Raw materials,
telecommunication and the
financial sector
Apart from raw materials, the telecommunication and financial sectors are the
most attractive targets for non-African investors. There is also some interest in the
retail sector due to the advance of the African consumer markets.
Major Chinese investment
in the service sector
China has been a particularly remarkable investor in Africa in recent years. Contrary to general perception, the majority of Chinese investment is not directed at the
raw materials sector, but at the service sector. In addition, the Chinese have invested in agriculture and industry; and this trend will presumably be intensified with
the development of industrial estates aimed at attracting production companies, in
countries such as Nigeria, Ghana, Kenya and South Africa.
It is difficult to calculate the total Chinese investment in Africa since not all FDI is
officially registered. The figure on the next page, however, presents an estimate of
the official and unofficial parts of Chinese FDI in Africa.
In recent years, China has channelled a lot of FDI to particularly Zimbabwe, Ghana
and Ethiopia.
Trade between China and the African countries has also increased in recent years.
China bought more than 10 per cent of Africa’s total exports in 2011, and this is
15 times as much as in 2001. In 2012, the overall trade between China and the African countries amounted to USD 198 billion, an increase of 20 per cent from the
previous year.
Investment flows into Africa
Development in total inward FDI holding in Africa
USDbn
600
500
400
300
200
100
Source UNCTAD
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
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China has taken an interest in Africa
Number of Chinese projects and their value in Africa
USDbn
60
Number of projects
300
50
250
40
200
30
150
20
100
10
50
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
CASE: Can Europe learn from China’s involvement in Africa?
Chinese FDI in Africa often generates negative news in the western world. Stories speak of the overexploitation of African raw materials without sufficient
compensation to the local populations, the use of Chinese labour rather than
local labour, and a lack of respect for the environment and people in general.
If, however, you ask the individual Kenyan or Zambian of their perception of the
Chinese, you would rarely get such a one-dimensional picture. First, the Chinese have built a visible infrastructure that has significantly improved the lives
of many Africans and created a basis for further development. The western
donors have rather focused on other forms of aid such as budgetary support,
anti-corruption and the development of a state structure. While the donors believe these types of development aid are more effective, they are less visible for
the individual African citizen.
Secondly, the Chinese intention to trade with the African countries is highly
appreciated. Many Africans feel that this approach is more dignified than the
donor-recipient relations that exist with the western world. The aid from western countries may be presented as donations, but there are also conditions
and conditions attached.
An important point is that the African states increasingly demand trade and
investment and, to a lesser extent, donations. This means that the western
donors, including the EU, should not be afraid of integrating trade and aid – on
the contrary. Naturally, European involvement should be based on European
values with focus on cooperation and social and environmental sustainability.
0
Number of projects
Official total value
Unofficial total value
Source AidData
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Major differences in economy, growth and business climate
Comparison of economic growth, business climate and total size of economy
Economic growth (2008-2012), per cent
60
Ethiopia
Ghana
Nigeria
50
Angola
40
Egypt
30
Morocco
Congo, Dem
South Africa
Algeria
20
Côte d'Ivoire
10
Kenya
0
Sudan
EU-28 average
-10
0
20
40
60
80
100
Business Climate (index 1-100)
Note The size of the circle indicates the total size of the economy (GDP/PPP), 2012
Source World Bank, IMF and DI calculations
Conditions for African growth
The conditions, on which growth in Africa has been based in the past decade, have
also changed significantly. In many cases, it is a self-reinforcing process under which
improved conditions create the foundation for increased growth and vice versa.
Major differences across
the continent
Several African countries
range above BRIC in terms
of business climate
Diversity characterises Africa
In general, Africa is characterised by major economic and political differences
among the countries. In South Africa, for example, the average income is ten times
higher than in neighbouring Mozambique. Congo, Benin and Angola are among the
group of countries in the world in which the World Bank assesses it is the hardest to
do business. In contrast, the business climate in countries such as Ghana and Botswana is assessed to be better than in several European countries including Italy
and the Czech Republic.
Some countries have business climates that are so favourable that they outrank
many European and Asian countries. Many countries, however, are lagging behind
with less business-friendly conditions, and African countries still dominate the lowest ranks on the World Bank’s Doing Business Index.
There are, however, indications that changes are underway. In 2011/2012, 98 per
cent of the sub-Saharan countries implemented at least two reforms that benefitted the business climate.
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CASE: African countries compete for the favour of businesses
Rwanda is the leading country in Africa in terms of reforms of the business
climate. In the past few years, Rwanda has focused on improving its business
climate in order to invite FDI and speed up the country’s industrial development. Over the past five years, the country has implemented 22 reforms aimed
at making it easier to start a business, initiate exports, get access to financing, and several other business-friendly approaches. In this way, Rwanda has
moved from a rank as number 143 of 189 countries in 2009 to number 32 in
the 2014 World Bank Doing Business Index. With this position, Rwanda has
overtaken countries such as Belgium (36) and France (38).
Among other African countries struggling to improve their business climates,
Burundi has implemented 16 reforms over the past five years and the Ivory
Coast 9 reforms in the same period.
Diversity is characteristic of the African countries
Population
Size of population 2013, UN
Level of income
GDP per capita, 2013, IMF
Industrialisation
Value increment in production sector/GDP 2011,
World Bank
Internationalisation
Trade/GDP 2011, World Bank
Business Climate
World Bank’s Doing Business Index 2014
174
million
93,000
Nigeria
Seychelles
USD
22,344
USD
215
Equatorial Guinea
Malawi
43.8%
2.4%
Swaziland
Sierra Leone
154.6%
35.6%
Lesotho
Central African
Republic
No.
20
No.
189
Mauritius
Chad
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Minor improvements to corruption, infrastructure and political stability
The prevalence of corruption and fraud has generally declined in several African
countries in recent years. Overall, Africa is the region that has improved its position
the most, according to Transparency International’s Corruption Perceptions Index
(CPI). The improvement is, however, from a low level. This particularly applies to
Rwanda whose CPI score has increased by 28 points since 2006. This means that
Rwanda has a lower perceived level of corruption than European countries such as
Italy, the Czech Republic and Turkey. Looking at the whole group of sub-Saharan
countries, corruption is, however, still a major problem.
Africa has fought corruption, but is still the world’s most corrupt region
Change of average CPI score 2006-2013
CPI score 2013
Note The CPI score is an index
(0-100) with high values indicating a
low level of bribery and corruption.
Source Transparency International
and DI calculations
Africa
32.7
Latin America
37.2
Central and
Eastern Europe
49.7
Asia
38.6
Middle East
40.9
OECD
68.6
-3
-2
-1
0
1
2
3
4
Despite continued high levels of corruption across the continent, the development
reflects an actual intention of several African governments to fight corruption, with
selected countries as the frontrunners.
In addition to enhancements of the business climate and the level of corruption,
the African infrastructure has also improved although developments started at a
very low level. There have also been fewer conflicts. The 1960s saw 21 successful
coups d’état in Africa. In comparison, there have only been five successful coups
since 2000. Political stability has also improved with far more peaceful elections
across the continent.
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CASE: The new African giants
The many positive changes in Africa have also led to a distinct development
of the African business community. Previously, only few African companies
were visible outside their domestic market or in a position to measure up to the
global elite of large corporations. This has changed with a number of African
companies reaching a substantial size and experiencing constant high growth
rates. Most large African companies still have their roots in South Africa, but
companies of other nationalities are breathing down their necks. Many of the
com-panies are primarily working in the natural resource sector, but in keeping
with developments, more sectors are being represented.
Annual revenue, USDbn
Sonatrach
Oil and gas
72.0
A.P. Moller-Maersk
Transport and energy
60.2
Sonangol
Oil
33.3
Sasol
Energy and chemicals
17.5
MTN Group
Telecommunication
15.0
The Bidvest Group
Service, trade and distribution
14.6
Eskom
Electricity
14.1
Shoprite Holdings
Trade
8.9
Vodacom Group
Telecommunication
8.2
Imperial Holdings
Industry
8.0
De Beers Consolidated Mines
Mining
7.4
0
10
Note Revenue figures are from 2011 or 2011/2012.
A.P. Moller-Maersk inserted as benchmark
Source The African Report and A.P. Moller – Maersk
20
30
40
50
60
70
80
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The world’s youngest continent
More than half of Africa’s population is below the age of 24, and the population is
growing rapidly. By 2050, Africa will have a population of 2 billion and have overtaken both China and India. At the same time, Africa’s demographic development
is such that the vast majority of people are of working age. Compared with other
regions, the African countries also have few children and old people to support in
this period.
Africa’s labour force will be the largest in the world in 2040
Expected development of labour force 1950-2045
Million
1,500
Africa
1,200
India
China
900
600
Europe
300
Source UN - World Population Prospects
A unique opportunity for
economic and social
development
0
1955
1965
1975
1985
1995
2005
2015
2025
2035
2045
This development offers a unique opportunity for economic and social development if the African countries succeed in creating a sufficient number of new jobs.
You could say that Africa has the last, major labour resource in the world, which
means that Africa has a unique potential as a major unexploited labour production
location. If this opportunity is to be brought to fruition, and Africa is to become a
real alternative to other production destinations, a further improvement is required
in business climates, infrastructure, the level of education, and access to crossborder trading.
Threats to the African growth adventure
Unemployed youth may
create unrest
Many of the trends that create opportunities for the African countries also have
a downside. The large young population could turn out to be a ticking time bomb
under the stability in countries unable to generate a sufficient number of new jobs.
With many young people migrating to the cities hoping to find a job, the infrastructure is under heavy pressure while this migration may also cause increasing problems of slums with poor living conditions and social tensions.
At the same time, the authoritarian, repressive, undemocratic and generally ineffective governments of many countries may halt the positive development. Unrest
in one land can rapidly infect the neighbouring countries making it vital that all
countries join the progress.
Many countries do not have
inflation and exchange rate
developments under control
Inflation and exchange rate fluctuations are also risks affecting the African countries. Although inflation following the increasing oil and food prices in 2008 has decreased, it is still at a high level around 7 per cent. Earlier this year, Morgan Stanley
included South Africa in the “Fragile Five” group along with Turkey, Brazil, India
and Indonesia due to the risk connected to the exchange rate.
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The future of EU-Africa relations
In spite of Africa’s new partners such as China, India, Brazil, and South Korea, the
EU is still a key actor. The EU continues to be Africa’s largest aid donor as well as
the continent’s single largest trading partner.
In April 2014, the two partners will meet at the 4th Africa-EU Summit to carry out a
high level political dialogue. The Summit will follow up on the Joint Africa-EU Strategy from 2007, which focuses on a number of issues. Prominent topics in the discussions at the April summit are certain to be development aid and trade.
EU-Africa trade increasing – but at a slow pace
The EU is still the single largest trading partner for Africa. There are, however, vast
differences in how much the various EU member states trade with Africa. In general, the EU-15 countries export more to Africa than the EU-28 countries with Belgium and the Netherlands in the lead. In fact, the average exports per average citizen in Belgium have been more than 20 times higher than the average exports per
average citizen in Poland over the past five years.
The EU is Africa's single
largest trading partner
Great European differences in exports to Africa
Average exports to Africa 2008-2012 per average citizen 2008-2012, Euro
Belgium
Netherlands
Sweden
France
Portugal
Malta
Luxembourg
Italy
Finland
Spain
Germany
Ireland
Estonia
Slovenia
United Kingdom
Austria
Denmark
Greece
Latvia
Czech Republic
Hungary
Bulgaria
Croatia
Lithuania
Cyprus
Romania
Slovak Republic
Poland
EU15
EU28
Source Eurostat and DI calculations
0
200
400
600
800
1,000
EU exports to Africa from the 28 member states have more than doubled in the period 2000 – 2012. Again, some member states are clearly in the lead – some building on top of already large exports to Africa such as Portugal and the Netherlands,
others starting from a lower level such as Poland.
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EU exports to Africa doubled since 2000
Index 100 = 2000
Austria
600
Belgium
Denmark
Spain
France
Netherlands
Poland
Portugal
EU15
Source Eurostat and DI calculations
500
400
300
200
100
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Looking at imports of African goods to Europe, the picture is much the same. Total
imports have more than doubled in the period, but import growth for the individual
member states is highly diversified. The Netherlands and Portugal have increased
their imports from Africa by a factor three to four during the period, as have Denmark and Sweden, whereas Hungary’s imports from Africa have actually decreased
in the same period.
EU imports from Africa doubled since 2000
Index 100 = 2000
Austria
Sweden
Belgium
Belgium
Denmark
Denmark
Spain
France
France
United Kingdom
Netherlands
Hungary
Poland
Poland
Portugal
Portugal
EU15
EU27
Source Eurostat and DI calculations
600
500
400
300
200
100
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
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Deadline for EU-Africa trade negotiations approaching
The year 2014 marks a shift in trade policy between the EU and Africa. First, revisions of the EU’s Generalised Scheme of Preferences (GSP), under which developing country exporters face lower duties on exports to the EU, came into force as
of January 1. The new GSP significantly reduces the number of beneficiaries with
the aim of focusing on those countries that are most in need, i.e. the poorest countries. Since a number of African countries are now counted as upper middle income
countries, they will no longer qualify for GSP.
The EU and the different African regions are currently going through the final
rounds of the negotiations of Economic Partnership Agreements (EPAs). The EPAs
are aimed at promoting trade between the EU and the African regions and include
initiatives related to trade development, sustainable growth and poverty reduction.
Countries that no longer fall under GSP should therefore be covered by the EPAs
in stead. However, reaching an agreement in the different regions and between the
regions and the EU has proven to be complicated.
CASE: European donors are rethinking aid and trade
Sida, the Swedish aid agency, is currently working with a vision of making the private sector as close a partner to Swedish development aid as governments and
civil society. Based on this objective, Sida has already developed a number of innovations in development aid. One example of how the vision has been transformed into reality is a project with the Swedish bus and truck manufacturer Volvo. The two partners have established a programme to train car mechanics in
Ethiopia, a country with large gaps in the supply of skilled labour. Sida also supports the development and test of new products and services for the poor, private
sector contributions to peace building, and a number of other interventions. With
plans to integrate private sector aid into all its strategies, Sida will continue to develop new ideas for cooperation with business over the coming years.
Several other European countries have taken concrete steps and launched new
strategies in 2013 for working closer with the business world:
> UK Secretary of State for International Development Justine Greening announced three priorities for development: 1) Lowering barriers to trade and
investment, 2) promoting entrepreneurs and businesspeople in developing
countries, and 3) greater investment by UK businesses.
> In a new policy by the Netherlands, “A World to Gain”, three types of relationships will be pursued: “aid relationships” guided by altruism for fragile and
post-conflict states, “trade relationships” with other wealthy countries, and
“transition relationships”, which link aid with commercial policies and are
guided by enlightened self-interest.
> The German government has an announced commitment to “strengthening
the linkage between foreign trade and development cooperation”, and it is a
priority for German businesses to play a stronger role in official development
cooperation.
Economic Partnership
Agreements to promote
trade and support
development
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The European Commission has set a deadline of October 1, 2014 for regions to
conclude, sign, and start implementing the agreements. If the deadline is not met,
African countries that are no longer eligible for GSP will lose some or all of their
preferential access to the European market. Furthermore, the prospects of losing
this access with serious consequences for exports and growth may prompt some
countries to split from their regional grouping and instead negotiate individual
trade deals with the EU.
Therefore, there is a strong interest from all sides in ensuring that the EPAs are finalised before the deadline. However, it is still uncertain whether it will be possible
to identify acceptable compromises with all regions before October 2014.
EU aid to Africa
Between 2007 and 2012, the EU donated more than EUR 24 billion to Africa in official development assistance. In light of the great advances made by many African
countries in recent years, and the African countries’ increased interest in trade and
investments, the role of development aid is diminishing although, an amount of this
scale is still significant, especially to some countries. Furthermore, while African
leaders have put industrialisation high on their agendas over the past few years, the
EU has largely maintained a focus on aid for social sectors.
EU aid to focus more on
supporting inclusive and
sustainable growth than
before
In an effort to adjust to the changing circumstances, the EU developed the aid reform strategy Agenda for Change in 2011. Alongside a focus on human rights, democracy and governance, the Agenda for Change prioritises inclusive and sustainable growth for human development, including job creation driven by the private
sector.
Following this, the EU is trying to work closer with business and other private sector partners. For many years, business was not considered a relevant partner in development. Rather, this was a field for public donors and civil society organisations
only. Similarly, the issue of job creation was not considered as important as support
to social sectors such as health and education.
However, the rise of several countries from developing country status to developed
or emerging economies has proven that job creation driven by the private sector
is inseparable from longterm development objectives. Without it, improving the
health and education level of a country is unsustainable in the long run. Therefore,
the role of job creation and the private sector as a partner in development have
been added to the agenda of almost all important international development meetings and fora over the past few years.
GLOBAL BENCHMARK REPORT 2014 – AFRICA: OPEN FOR BUSINE SS
CASE: A new development agenda post-2015 – beyond the Millennium
Development Goals
In September 2000 world leaders came together at United Nations Headquarters in New York to adopt the United Nations Millennium Declaration. They
each committed their nations to a new global partnership to reduce extreme
poverty by setting out a series of time-bound targets with a deadline of 2015
that have become known as the Millennium Development Goals.
1
2
3
4
5
6
7
8
Eradicate extreme poverty and hunger
Achieve universal primary education
Promote gender equality and empower women
Reduce child mortality
Improve maternal health
Combat hiv/aids, malaria and other diseases
Ensure environmental sustainability
Global partnership for development
However, the reality is that not all MDGs will be reached before 2015. Also, the
achievement of the MDGs has been uneven among and within countries. Africa
is one of the continents that lags behind. In fact, Africa as a whole is off-track
on five out of the eight MDGs.
While the deadline of 2015 draws closer, the world is debating what should
come after the MDGs. The MDGs have been widely praised for their ability to
make the world come together and collaborate on achieving these eight goals.
However, the drawback of this is that focus has been pulled away from other
important issues, which are not prominent among the eight goals.
One example is the issue of job creation. Even though it is an important part of
fighting extreme poverty (MDG1), it has not received sufficient attention from
donors. While some countries whose leaders have had a strong focus on job
creation are well on track to reaching the goal (e.g. several countries in Asia),
the unemployment rate remains much the same – or has increased – in many
African countries.
This is one of the reasons why the High-level Panel on the Post-2015 Development Agenda has included the following as one of five transformative shifts
that the post-2015 development agenda should build on:
Transform economies for jobs and inclusive growth “Diversified economies,
with equal opportunities for all, can unleash the dynamism that creates jobs
and livelihoods … We should make it easier for people to invest, start-up a
business, and trade”.
The EU is currently working on a new Communication, which will set the framework
for strengthening the role of the private sector in achieving inclusive and sustainable growth in developing countries in relation to EU development aid over the coming years. It is important that this Communication is adjusted to the current state
of the world and flexible enough to be workable for several years to come. Furthermore, the EU should look to some of the member countries for inspiration on how
to work with the business sector.
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DI RECOMMENDS
African countries need growth, income, infrastructure, goods, and services. European companies can offer all this. If development aid is structured in a way so that it
leverages business activities in the best possible way, positive development effects
would be enormous.
With that in mind, DI recommends the following:
The post-2015 framework:
>>As recommended by the High Level Panel on the post-2015 development
agenda, the post-2015 framework should have a strong focus on transforming economies for jobs and inclusive growth. The entire post-2015 framework
should be based on the notion that poverty is best fought by allowing people
to lift themselves out of poverty through employment driven by the private
sector.
A better enabling environment for business
and job creation:
>>The EU should consult with the European private sector to identify concrete
barriers for trade with, and investment in developing countries. The EU should
fight these barriers through financial support to business environment reforms and by applying policy pressure on partner governments.
>>The EU should strengthen the support to business membership organizations
in developing countries to build their capacity and ensure that they can be a
strong voice for businesses.
>>The EU should strengthen the support to public private dialogue. This should
be done through financial support and policy pressure on partner governments.
Using trade as a catalyst for job creation and development:
>>The EU should support regional integration in Africa and support efforts to remove trade barriers between African countries.
>>The EU should speed up efforts to finalise Economic Partnership Agreements
with all African regions.
Using the private sector as “delivery channel”
for development:
>>The EU should increasingly promote and support private sector engagement
in the delivery of all types of services. In many sectors, there is an untapped
potential for marketbased solutions that are more sustainable in the long run
than conventional public service delivery mechanisms. The EU should further
promote and support new innovative business models through new financial
instruments and policy support.
GLOBAL BENCHMARK REPORT 2014 – AFRICA: OPEN FOR BUSINE SS
New financial instruments for business development and job
creation:
>>The EU should develop relevant financial instruments (grants, loans, guarantees) enabling European companies to partner with companies in developing
countries in order to develop capacity and transfer knowledge and technology.
>>The EU should develop programmes that would create incentives for European companies to engage local SMEs in their value chain in connection with an
investment in a developing country. This is particularly relevant for infrastructure projects and mining projects, but also in other industries.
A better trained African workforce:
>>There is a need for more and better vocational training and education in Africa. The EU should ensure the involvement of employers in the supply of all
types of education in order to ensure relevance for businesses.
>>The EU should establish incentives and financial instruments to support apprenticeships in connection with investments by European companies in developing countries.
DI and Africa
DI has been actively involved in Africa on behalf of, and in cooperation with Danish businesses since the early 1990s. At that time, DI entered into dialogue with
the Danish development aid agency, Danida, to discuss how the Danish business
community could be involved in developing the business sectors of Danida’s partner countries. This marked the beginning of a long and constructive dialogue on
the development of private sector programmes and various financing instruments,
which are now an integrated part of Danish aid policy.
DI has also been active in the global dialogue on business and development on
its own and as a member of organizations such as the European Business Council
on Africa and the Mediterranean (EBCAM), BUSINESSEUROPE and Business and
Industry Advisory Committee to the OECD (BIAC). Currently, DI's focus is on contributing to the dialogue on the post-2015 development agenda and the issue of
development effectiveness.
Furthermore, since 1996, DI has provided consulting to more than 250 Danish
companies on how to develop their businesses in numerous African countries. The
generated expertise includes everything from discussion on initial considerations,
across strategy development, to the implementation of new and innovative business concepts. This knowledge makes DI one of the organisations in Denmark
with the most extensive experience in business development directed at the base
of the income pyramid. For many years, DI has also been initiator and coorganiser
of delegations to selected African countries.
Finally, since 1996, DI has been a close partner to more than 20 African business
organisations. Through capacity building, DI has contributed to making the African business organisations professional voices for the business sector in their
countries. DI has helped gather sister organisations in regional networks to promote cooperation aimed at improving business conditions across national borders.
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Global Benchmark Report
123 METHODOLOGY, DEFINITIONS
AND SOURCES
127 DESCRIPTION OF SOURCES
131 SUMMARY OF BENCHMARKS
137 INDEX TO BENCHMARKS
121
GLOBAL BENCHMARK REPORT 2014 – X X X
GLOBAL BENCHMARK REPORT 2014 – METHODOLOGY, DEFINITIONS AND SOURCE S
123
METHODOLOGY, DEFINITIONS
AND SOURCES
In this report we have benchmarked the global performance and general business
conditions of 33 OECD member states in terms of their utilisation of the opportunities offered by globalisation. All the members of the OECD except for Luxembourg
are benchmarked.
Benchmarking
33 OECD countries
The comparison is based on 87 measurable benchmarks divided into five pillars:
Level of Globalisation, Productivity and Innovation, Qualified Labour, Public Economy and Costs.
87 benchmarks across
five pillars
For each of the 87 benchmarks, the countries have been ranked according to how
well they perform in international competition and whether they have the proper
conditions and prerequisites to exploit the opportunities offered by globalisation.
Data for the BRIC countries (Brazil, Russia, India, and China) is included whenever
available. With their high growth and increasing purchasing power, these countries
have growing significance in global competition, and it is interesting to compare
them with the OECD countries. They are not, however, included in rankings and
overall results.
Data from BRIC countries
Calculations of average
Most charts show an OECD average and an average for eurozone countries. The average is only calculated on the basis of countries for which data is available. Data is
weighted for GDP at PPP using the following formula:
G = Average
i = 1,…,I. Number of OECD member states for which data exists
gdpi = GDP for country i
Vi = Data value for country i
For a few benchmarks, for which data exists for less than two thirds of the OECD
member states, an overall OECD average is not calculated. Similarly, there is no
average for the eurozone in the few cases where data is unavailable for the largest
euro-countries.
Average for the OECD
and eurozone
GLOBAL BENCHMARK REPORT 2014 – METHODOLOGY, DEFINITIONS AND SOURCE S
124
Average rank of countries
Within each of the five pillars of benchmarks, we have calculated the average rank
of each country. Since data does not exist for all countries, this calculation requires
several steps. First we calculate an average rank for each country based on the
benchmarks that include data for the country in question. This average is used to
create a relative ranking for the country in benchmarks for which there is no data
for the country. Then we rank again and calculate an average ranking in the whole
section.
In the few cases where a benchmark includes data for less than two thirds of the
OECD countries, this benchmark will not be used in the calculation of the average
for the pillar.
When two (or more) countries obtain the same ranking, they are shown with the
same ranking corresponding to the highest possible ranking.
Overall average
The summary on page 12 includes an overall average of the countries’ ranks in the
five pillars called The Global Benchmark Report’s Competitiveness Index 2014. It
is calculated as a simple average of the countries’ ranks in each of the five pillars.
The purpose is to present an overall ranking of the OECD countries and not just
their ranks in the individual pillars and benc
Fundamental pillars of competitiveness
Revised structure
Last year, the structure of the report was revised such that it is aligned with five fundamental pillars of competitiveness. Together these five pillars constitute the foundation for creating open and prosperous nations capable of creating and sustaining
growth and balance. Thus, the comparison is based on 87 benchmarks divided into
Level of Globalisation, Productivity and Innovation, Qualified Labour, Public Economy and Costs. Furthermore, it should be noted that the two benchmarks GDP
growth and GDP per capita in the summary only contribute to the greater picture of
globalisation and are not part of the global competitiveness index ranks.
Choice of data and sources
Recognised sources
The benchmarks have been selected with a view to providing as good a picture as
possible of the countries’ competitiveness and general business conditions. Data
has been drawn from internationally recognised sources and is internationally comparable. The sources of each benchmark can be found in the figures and in the list
of tables at the end of the report. See a list and a description of sources on the following pages.
In cases where historical data is not available for each country, the last known value
is used. Not all 33 OECD countries have been members of the OECD for the whole
period. Israel, Chile, Estonia and Slovenia joined in 2010. There countries are nevertheless included in the period.
Benchmark 2.26 (Quality of electrical supply) is new in the Global Benchmark Report 2014.
GLOBAL BENCHMARK REPORT 2014 – METHODOLOGY, DEFINITIONS AND SOURCE S
125
Because new data was not available during the preparation of the Global Benchmark Report 2014, 2.12 (Growth expectations among entrepreneurs) and 2.13
(Entrepreneurial activity) are identical with the benchmarks of last year.
Metadata for each individual benchmark has been prepared. It explains what the
benchmark shows, why it is of relevance to a country's international competitiveness and provides a thorough description of the source. Metadata is available in
the PDF version of the Global Benchmark Report 2014, which can be downloaded
from di.dk/gbr.
Further information
126
GLOBAL BENCHMARK REPORT 2014 – DE SCRIPTION OF SOURCE S
GLOBAL BENCHMARK REPORT 2014 – DE SCRIPTION OF SOURCE S
127
DESCRIPTION OF SOURCES
The African Report is a magazine with focus on African economy and politics.
www.theafricanreport.com
Africa Progress Panel is a panel consisting of ten high level members with great
insight in the African region. They are working towards a more sustainable and
equitable development in Africa and publish an annual report with different topics.
www.africaprogresspanel.org
AidData is a research and innovation collaboration providing easy accessible information on development financing.
www.aiddata.org
BLS (Bureau of Labour Statistics) is the US government’s premier research institute focusing on labour market and economics.
www.bls.gov
Carlsberg Group is a Danish multinational brewery and the fourth largest brewery in the world.
www.bls.gov
Cato Institute is an independent think tank focusing on individual liberty, free
markets, and peace. Cato issues an annual publication, Economic Freedom of the
World, in cooperation with the Fraser Institute in Canada and more than 70 other
think tanks from across the globe.
www.cato.org
The Confederation of Danish Employers (DA) is the main organisation for 14
employer associations in the Danish private labour market in manufacturing,
trade, transport, service and construction. DA regularly publishes statistics about
international wage developments.
intstat.da.dk
The Conference Board is a global, independent business organisation. It publishes financial reports and analyses business trends.
www.conference-board.org
Danida is Denmark’s official development agency and part of the Danish Ministry
of Foreign Affairs.
www.um.dk/da/danida
The Danish Ministry of Business and Growth seeks to improve the conditions
for growth in Denmark. The Ministry conducts economic analyses and suggests
policy initiatives in areas imperative to economic growth. The Ministry publishes
an annual account of Danish competitiveness called “Denmark in the global economy”.
www.evm.dk
The Danish Ministry of Taxation consists of the Department and the Danish Tax
Authority (SKAT). The Department works as staff function for the entire organisation and holds the main leadership. SKAT collects income, business and corporate
taxes.
www.skm.dk
128
GLOBAL BENCHMARK REPORT 2014 – DE SCRIPTION OF SOURCE S
The Danish Patent and Trademark Office issues patent and design rights, and
registers trademarks and utility models.
www.ip-center.dkpto.dk
Dell is a multinational computer technology company based in the United States.
www.dell.com
DI's company panel consists of 2,100 member companies. Four times per year,
panel members respond to questionnaires on the company’s financial state, employee situation and growth opportunities supplemented by various theme questions.
www.di.dk
The Economist is a weekly magazine with focus on economics, politics and financial matters.
www.economist.com
Energiforskning.dk is a portal with information on research and development
programmes in energy technology.
www.energiforskning.dk
The European Commission is the executive body of the European Union. Among
other publications, the Commission publishes Taxation Trends in the EU.
www.ec.europa.eu
The European Patent Office is the executive arm of the European Patent Organisation.
www.epo.org
Eurostat is the statistical body of the European Commission, producing data for
the European Union.
www.epp.eurostat.ec.europa.eu
EVCA (European Private Equity and Venture Capital Association) is an association of European equity funds.
www.evca.eu
GEM (Global Entrepreneurship Monitor) is a non-profit academic research consortium focusing on international research on entrepreneurship.
www.gemconsortium.org
IEA, the International Energy Agency, is an intergovernmental organisation, which
acts as energy policy advisor to 28 member countries. The agency issues the annual Key World Energy Statistics publication with detailed data on the world’s energy consumption.
www.iea.org
IFU (Investment Fund for Developing Countries) is providing consulting and venture capital for Danish companies wishing to start up business and partnerships
in developing countries.
www.ifu.dk
IMD, the International Institute for Management Development, located in Lausanne, Switzerland, is one of the world’s leading management schools. It is the
publisher of the World Competitiveness Yearbook.
www.imd.ch
IMF, the International Monetary Fund is an organisation of 188 countries, working
to promote global monetary cooperation.
www.imf.org
Innovation Union Scoreboard tracks innovation performance in a broad range
of countries. The publication is issued by PRO INNO Europe, which is an initiative
under the European Commission’s Directorate-General for Enterprise and Industry. The objective of PRO INNO Europe is to be a venue for analyses related to
innovation policies in Europe.
www.proinno-europe.eu
GLOBAL BENCHMARK REPORT 2014 – DE SCRIPTION OF SOURCE S
129
KPMG is a leading audit and consultancy firm represented in 146 countries.
www.kpmg.com/Global
McKinsey Global Institute is the economic and business research unit of the
American management and consulting company McKinsey & Company.
www.mckinsey.com
A.P. Moller – Maersk Group is a Danish business conglomerate with activities
primarily in transport and energy.
www.maersk.com
Morgan Stanley is an American multinational company providing financial services.
www.morganstanley.com
Nationalbanken (the National Bank of Denmark) is Denmark’s central bank.
www.nationalbanken.dk
OECD (Organisation for Economic Co-operation and Development), based in
Paris, is an economically oriented organisation for cooperation between democratic countries with a market economy. The OECD issues various publications
and operates an online database.
www.oecd.org
OECD.stat is the statistics bank of the OECD. It has data from member states as
well as non-member states.
www.stats.oecd.org
PricewaterhouseCoopers (PwC) is a global audit and consultancy firm.
www.pwc.com
Produktion360 is an internet portal about management, organisation and technological challenges in production, food and life science companies. The IT company Columbus is behind the initiative.
www.p360.dk
Siemens is a German multinational engineering and electronics company.
www.siemens.com
Statistics Denmark is the official statistical bureau of Denmark.
www.dst.dk
Transparency International is an organisation working to eradicate corruption.
www.transparency.org
UN (United Nations) is a world organisation consisting of 193 member countries.
The organisation plays an important role in global development politics, environmental collaboration, the fight for human rights and negation of peace.
UNCTAD (United Nations Conference on Trade and Development) is a part of UN
that is responsible of the development and focuses on trade.
www.unctad.org
WDI (World Development Indicators) is the World Bank’s bank of statistics and
consists of data for development countries.
www.data.worldbank.org
WEF (World Economic Forum) is an independent international organisation committed to improving the situation in the world by engaging leaders in partnerships
to shape global, regional, and industrial agendas. WEF publishes the annual Global Competitiveness Report.
www.weforum.org
The World Bank’s “Doing Business” report provides a status of the conditions for
operating a business in 189 countries.
www.doingbusiness.org
World Bank is an international bank working for reconstruction and development. The objective is to fight poverty by financing states.
www.worldbank.org
GLOBAL BENCHMARK REPORT 2014 – X X X
GLOBAL BENCHMARK REPORT 2014 – SUMMARY OF BENCHMARKS
131
SUMMARY OF BENCHMARKS
Benchmark
No. 1
No. 2
No. 3
Page
1.00
Level of globalisation
Ireland
Chile
Switzerland
1.01
Growth in exports, 2009-2013 (average)
Estonia
South Korea
Slovak Republic
22
1.02
Exports as a percentage of GDP, 2013
Ireland
Slovak Republic
Hungary
22
1.03
Export performance, 2009-2013 (average)
Poland
Israel
Slovak Republic
23
1.04
Upmarket exports to EU15, 2008-2012 (average)
Switzerland
Japan
Ireland
23
1.05
Exports to emerging markets
(non-OECD countries), 2012
South Korea
Japan
Australia
24
1.06
Foreign direct investment holdings as a
percentage of GDP, 2012
Belgium
Ireland
Switzerland
24
1.07
Direct investment holdings abroad as a
percentage of GDP, 2012
Belgium
Switzerland
Ireland
25
1.08 Foreign direct investments, inflow 2008-2012
(average)
Belgium
Ireland
Chile
25
1.09 Foreign direct investments, outflow 2008-2012
(average)
Belgium
Switzerland
Ireland
26
1.10 Direct investment holdings in emerging markets,
2011
Mexico
Slovenia
Chile
26
1.11
Freedom to trade internationally, 2011
Ireland
United Kingdom
New Zealand
27
1.12
Efficient customs authorities, 2013
Sweden
Ireland
Finland
27
1.13
Attitudes toward globalisation, 2013
Ireland
Sweden
Israel
28
1.14
Cultural openness, 2013
Ireland
Sweden
Israel
28
1.15 International experience for senior managers,
2013
1.16
Image abroad, 2013
Switzerland
Chile
Sweden
Poland
29
Germany
Sweden
29
GLOBAL BENCHMARK REPORT 2014 – SUMMARY OF BENCHMARKS
132
Benchmark
No. 1
No. 2
No. 3
Switzerland
Sweden
Netherlands
Investment as a percentage of GDP, 2013
Australia
Estonia
South Korea
32
2.02
Public sector investments as a percentage
of GDP, 2011
Poland
South Korea
Estonia
32
2.03
Labour productivity, 2013
Norway
United States
Belgium
33
2.04
Growth in labour productivity, 2009-2013 (average)
Poland
Ireland
South Korea
33
2.05
Total research and development expenditure as a
percentage of GDP, 2011
Israel
South Korea
Finland
34
2.06
Public expenditure on research and development
as a percentage of GDP, 2011
Iceland
Austria
South Korea
34
2.07
Quality of scientific research institutions, 2012-2013
(average)
Israel
Switzerland
United Kingdom
35
2.08
University/industry research collaboration,
2012-2013 (average)
Switzerland
Finland
United States
35
2.09
European patent applications, 2012
Switzerland
Sweden
Finland
36
2.10
Triadic patent families, 2011
Japan
Switzerland
Sweden
36
2.11
Innovation performance, 2012
Switzerland
Sweden
Germany
37
2.12
Growth expectations among entrepreneurs, 2012
Turkey
Australia
Chile
37
2.13
Entrepreneurial activity, 2012
Chile
Estonia
United States
38
2.14
Framework conditions for entrepreneurship, 2013
New Zealand
Canada
Australia
38
2.15
Average time to complete the procedure of closing
a business, 2013
Ireland
Japan
Canada
39
2.16
Venture capital investments as a percentage of
GDP, 2009-2012 (average)
Denmark
Switzerland
Sweden
39
2.17
Gazelle enterprises, 2010
Czech Republic
Estonia
France
40
2.18
Mentality of society supporting competitiveness,
2013
United States
Switzerland
Israel
40
2.19
Flexibility and adaptability, 2013
Ireland
Israel
Poland
41
2.20
Fixed broadband subscribers, 2012
Switzerland
Nederlands
Denmark
41
2.21
E-commerce, 2012
Iceland
Norway
Sweden
42
2.22
Economic freedom, 2011
New Zealand
Switzerland
Finland
42
2.23
Burden of government regulation, 2012-2013
(average)
Finland
Estonia
New Zealand
43
2.24
Quality of infrastructure, 2012-2013 (average)
Nederlands
Finland
France
43
2.25
Energy intensity, 2011
Ireland
Switzerland
United Kingdom
44
2.26
Quality of electricity supply, 2012-2013 (average)
Switzerland
Netherlands
Austria
44
2.00
Productivity and innovation
2.01
Page
GLOBAL BENCHMARK REPORT 2014 – SUMMARY OF BENCHMARKS
Benchmark
133
No. 1
No. 2
No. 3
Page
3.00
Qualified labour
Canada
Switzerland
South Korea
3.01
Labour market participation rate, 2012
Iceland
Switzerland
Sweden
48
3.02
Labour market participation rate for the
55 to 64-year-olds, 2012
Iceland
Sweden
New Zealand
48
3.03
Unemployment, 2013
South Korea
Norway
Japan
49
3.04
Average annual working hours per employed person,
2012
Mexico
South Korea
Greece
49
3.05
Share of employees with tertiary education in the
private sector, 2012
Ireland
Belgium
Finland
50
3.06
Labour regulations, 2013
Iceland
Denmark
Switzerland
50
3.07
Job mobility, 2012
Chile
South Korea
Turkey
51
3.08
Employee motivation, 2013
Denmark
Switzerland
Ireland
51
3.09
Financial incentives to work, 2011
Australia
Greece
Turkey
52
3.10
Equal opportunities, 2013
Norway
Sweden
Canada
52
3.11
Expenditure on educational institutions as a
percentage of GDP, 2010
South Korea
United States
Norway
53
3.12
Expenditure on tertiary education as a
percentage of GDP, 2010
United States
Canada
South Korea
53
3.13
Intended instruction time in public institutions
per year for 7 to 14-year-olds (average), 2011
Chile
Australia
France
54
3.14
OECD Pisa study, Reading skills, 2012
Japan
South Korea
Finland
54
3.15
OECD Pisa study, Mathematical qualifications,
2012
South Korea
Japan
Switzerland
55
3.16
OECD Pisa study, Scientific qualifications, 2012
Japan
Finland
Estonia
55
3.17
Share of 25 to 34-year-olds with upper secondary
education, 2011
South Korea
Czech Republic
Slovak Republic
56
3.18
Share of 25 to 34-year-olds with tertiary education,
2011
South Korea
Japan
Canada
56
3.19
Age by completion of tertiary education, 2011
Belgium
Nederlands
Turkey
57
3.20
Share of graduates by subject, 2011
South Korea
Germany
Greece
57
3.21
Personal gain on further education, 2009
United States
Ireland
Czech Republic
58
3.22
Share of foreign students at tertiary education
institutions, 2011
New Zealand
Switzerland
Australia
58
3.23
Attractive business environment for foreign
highly skilled people, 2013
Switzerland
United States
Australia
59
3.24
Completed PhDs in science and engineering, 2011
Switzerland
Germany
United Kingdom
59
3.25
Adult participation in education and learning, 2012
Denmark
Switzerland
IcelandB 6060
GLOBAL BENCHMARK REPORT 2014 – SUMMARY OF BENCHMARKS
134
Page
No. 1
No. 2
No. 3
4.00
Benchmark
Public economy
Switzerland
South Korea
Estonia
4.01
Public spending as a percentage of GDP, 2012
Switzerland
Mexico
Chile
64
4.02
Public primary expenditure as a percentage
of GDP, 2011
South Korea
Switzerland
Turkey
64
4.03
Structural budget balance, 2013
South Korea
Greece
Italy
65
4.04
Public gross debt as a percentage of GDP, 2013
Estonia
Norway
Australia
65
4.05
Public net debt as a percentage of GDP, 2013
Norway
Finland
South Korea
66
4.06
Growth expenditures as percentage of primary
expenses, 2011
South Korea
Poland
Switzerland
66
4.07
Government-funded research, development
and demonstration in energy technologies, 2012
Finland
Hungary
Canada
67
4.08
Government purchase of goods and services,
2012
United Kingdom
Finland
Iceland
67
4.09
E-government usage by enterprises, 2013
Finland
Iceland
France
68
4.10
Bribery and corruption, 2013
Denmark
New Zealand
Finland
68
No. 1
No. 2
No. 3
Switzerland
Chile
Poland
Mexico
Chile
United States
72
Benchmark
5.00 Costs
Page
Page
5.01
Total tax revenue as a percentage of GDP, 2012
5.02
Marginal tax rate for medium wage earners,
including indirect taxes, 2012
Chile
Mexico
Switzerland
72
5.03
Marginal tax rate for high wage earners,
including indirect taxes, 2012
Chile
South Korea
Mexico
73
5.04
Nominal corporate tax rate, 2013
Ireland
Slovenia
Poland
73
5.05
Actual corporate tax rate, 2012
Belgium
Canada
Slovak Republic
74
5.06
Annual inflation, 2009-2013 (average)
Japan
Switzerland
Ireland
74
5.07
Access to capital markets, 2013
Poland
Switzerland
Sweden
75
5.08
Hourly compensation costs in manufacturing,
2012
Poland
Hungary
Slovak Republic
75
5.09 Annual growth in unit labour costs, 2009-2013
(average)
Greece
Ireland
5.10
Spain
France
Yield of environmental taxes as a percentage
of GDP, 2011
Spain
Slovak Republic
76
76
GLOBAL BENCHMARK REPORT 2014
135
136
GLOBAL BENCHMARK REPORT 2014 – INDEX TO BENCHMARKS
GLOBAL BENCHMARK REPORT 2014 – INDEX TO BENCHMARKS
137
INDEX TO BENCHMARKS
A
Adult participation in education and learning
> 3.25
60
Attractive business environment for foreign highly skilled people
> 3.23
59
B
> 4.10
Bribery and corruption
68
> 2.20
Broadband subscribers, fixed
41
> 4.03
Budget balance, structural
Burden of government regulation
65
> 2.23
43
C
> 5.07
Capital markets, access to
75
> 2.15
Closing a business, average time to complete the procedure of
Compensation costs in manufacturing, hourly
> 5.08
75
> 5.05
Corporate tax rate, actual
Corporate tax rate, nominal
74
> 5.04
73
> 1.14
Cultural openness
Customs authorities, efficient
39
28
> 1.12
27
D
Direct investment holding abroad as a percentage of GDP
Direct investment holding in emerging markets
> 1.07
> 1.10
25
26
E
E-commerce
> 2.21
Economic freedom
42
> 2.22
E-government usage by enterprises
42
> 4.09
68
> 2.26
Electricity supply, quality
44
> 3.08
Employee motivation
51
Employees in the private sector, share with tertiary education
Energy intensity
> 3.05
> 2.25
Entrepreneurial activity
Equal opportunities
44
> 2.13
Environmental taxes as a percentage of GDP, yield of
50
38
> 5.10
76
> 3.10
52
Expenditure on educational institutions as a percentage of GDP
Expenditure on tertiary education as a percentage of GDP
> 3.11
> 3.12
53
53
GLOBAL BENCHMARK REPORT 2014 – INDEX TO BENCHMARKS
138
E
> 1.03
Export performance
Exports as a percentage of GDP
23
> 1.02
22
Exports to emerging markets (non-OECD countries)
> 1.05
24
> 1.01
Exports, growth in
22
F
> 3.09
Financial incentives to work
52
> 2.19
Flexibility and adaptability
41
> 1.06
Foreign direct investment holdings as a percentage of GDP
Foreign direct investments, inflow (average)
> 1.08
25
> 1.09
Foreign direct investments, outflow (average)
26
> 3.22
Foreign students at tertiary education institutions, share of
Framework conditions, for entrepreneurship
Freedom to trade internationally
24
58
> 2.14
38
> 1.11
27
G
> 2.17
Gazelle enterprises
Globalisation, attitudes toward
40
> 1.13
Government purchase of goods and services
Growth expectations among entrepreneurs
28
> 4.08
67
> 2.12
37
Growth expenditures as a percentage of primary expenditure
> 4.06
66
H
Hours worked per person in employment, annual average
> 3.04
49
I
> 1.16
Image abroad
Inflation, annual
29
> 5.06
74
> 2.24
Infrastructure, quality
Innovation performance
43
> 2.11
37
Intended instruction time in public institutions per year for 7 to 14-year-olds
International experience for senior managers
Investments as a percentage of GDP
> 1.15
> 3.13
54
29
> 2.01
32
J
Job mobility
> 3.07
51
L
Labour market participation rate
> 3.01
48
Labour market participation rate for 55 to 64-year-olds
Labour productivity
48
> 2.03
Labour productivity, growth in
Labour regulations
> 3.02
33
> 2.04
33
> 3.06
50
M
Marginal tax rate for high wage earners, including indirect taxes
> 5.03
Marginal tax rate for medium wage earners, including indirect taxes
Mathematical qualifications, OECD's PISA Study
Mentality of society supporting competitiveness
> 3.15
> 2.18
> 5.02
73
72
55
40
GLOBAL BENCHMARK REPORT 2014 – INDEX TO BENCHMARKS
139
P
Patent applications, European
Patent families, triadic
> 2.09
36
> 2.10
Personal gain on further education
36
> 3.21
> 3.24
PhDs in science and engineering, completed
59
> 4.04
Public gross debt as a percentage of GDP
Public net debt as a percentage of GDP
58
65
> 4.05
Public primary expenditure as a percent of GDP
66
> 4.02
> 2.02
Public sector investments as a percentage of GDP
Public spending as a percentage of GDP
64
32
> 4.01
64
R
Reading skills, OECD's PISA Study
> 3.14
54
Research and development expenditures as a percentage of GDP, total
> 2.05
34
Research and development, public expenditure as a percentage of GDP
> 2.06
34
Research, development and demonstration in energy technologies, publicly funded
> 4.07
67
S
> 3.16
Scientific qualifications, OECD's PISA Study
Scientific research institutions, quality of
55
> 2.07
35
T
Tax revenue as a percentage of GDP, total
Tertiary education, age by completion of
> 5.01
72
> 3.19
Tertiary education, share of 25 to 34-year-olds with
Tertiary education, share of graduates by subject
57
> 3.18
56
> 3.20
57
U
Unemployment
> 3.03
49
Unit labour costs, annual growth in
> 5.09
University/industry research collaboration
Upmarket exports to EU15
76
> 2.08
35
> 1.04
23
Upper secondary education, share of 25 to 34-year-olds with
> 3.17
56
V
Venture capital investments as a percentage of GDP
> 2.16
39
For the tenth consecutive year, the Global Benchmark Report 2014
examines how the global challenge is met in the OECD countries.
The assessment is based on 87 benchmarks across five pillars comprising Level of globalisation, Productivity and innovation, Qualified
labour, Public economy and Costs. Together these pillars constitute
the foundation for creating open and prosperous nations capable of
creating and sustaining growth and balance. The report highlights
strengths and weaknesses of each OECD country in facing international competition, providing a picture of each country’s ability to develop attractive business environments and utilise opportunities presented by globalisation.
DI – Confederation of Danish Industry
H.C. Andersens Boulevard 18 1787 Copenhagen V Phone 3377 3377 [email protected] di.dk
Ready for globalisation?
For further information on the Global Benchmark Report see di.dk/
gbr. The website provides a unique opportunity to download a
PDF-version of the report where you can read more about how the individual benchmarks are prepared and why they are relevant in international competition. All graphs and figures are available for download intended for your own presentations and analyses.
GLOBAL BENCHMARK REPORT
The conditions for doing business in the global economy are constantly changing – presenting new challenges and opportunities.
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GLOBAL
BENCHMARK
REPORT
Including themes on global investment flows and Africa
