Evaluating countries’ performances by means of rank trajectories: functional measures of magnitude and evolution

Abstract

Countries’ performance can be compared by means of indicators, which in turn give rise to rankings at a given time. However, the ranking does not show whether a country is improving, worsening or is stable in its performance. Meanwhile, the evolutionary behaviour of a country’s performance is of fundamental importance to assess the effect of the adopted policies in both absolute and comparative terms. Nevertheless, establishing a general ranking among countries over time is an open problem in the literature. Consequently, this paper aims to analyze ranks’ dynamic by means of the functional data analysis approach. Specifically, countries’ performances are evaluated by taking into account both their ranking position and their evolutionary behaviour, and by considering two functional measures: the modified hypograph index and the weighted integrated first derivative. The latter are scalar measures that are able to reflect trajectories behaviours over time. Furthermore, a novel visualisation technique based on the suggested measures is proposed to identify groups of countries according to their performance. The effectiveness of the proposed method is shown through a simulation study. The procedure is also applied on a real dataset that is drawn from the Government Effectiveness index of 27 European countries.