Global Inclusive and Sustainable Competitive Industrial Performance (ISCIP): An efficiency based spatio-temporal analysis for 139 countries

Abstract

The most recent debate championed by World Economic Forum suggests that competitiveness, social cohesion and environmental sustainability may be compatible. This gives hope to policymakers that a productive, low-carbon, and inclusive economy is possible and perhaps the only viable option going forward. In the context of industrial development, a diagnostics and monitoring tool that can benchmark a country’s industrial competitiveness within the broader framework of the post-2030 agenda is therefore highly sought by policymakers. The original contribution of the present study is to expand the scope of United Nations Industrial Development Organization’s Competitiveness Industrial Performance Index by proposing the Inclusive and Sustainable Competitive Industrial Performance Index which (i) considers a new set of social and environmental dimensions in addition to the industrial competitiveness; (ii) provides the flexibility of a dual-formulation of manufacturing-specific and whole-economy scenarios to reflect different policy needs of countries; (iii) applies a cross-efficiency Data Envelopment Analysis model and a spatio-temporal analysis to optimize the composition of Inclusive and Sustainable Competitive Industrial Performance Index indicators for 139 countries (2010–2019). With a different method of aggregation and new dimensions being taken into account, results concerning the Competitive Industrial Performance Index and the Inclusive and Sustainable Competitive Industrial Performance Index country rankings are aligned in flagging that industrial competitive and high-income countries are more effective than their peers in promoting industrial development by minimizing tradeoffs with social and environmental indicators. A limitation of the present study is that results do not reflect the global shocks affecting world megatrends after 2019. Second, as the Inclusive and Sustainable Competitive Industrial Index remains a composite indicator, a high rank can still hide significant negative externalities in absolute terms. Finally, the set of the composing ISCIP sub – indicators cannot be exhaustive to capture all the aspects of sustainability.