Nations that adapt or die
Developing nations such as Tunisia, Kazakhstan and Jordan are more likely to achieve sustained long-term growth than others, including the Brics nations of Brazil, Russia, India, China and South Africa.
This is according to a new index that measures a country’s ability to adapt to change and capitalise on new opportunities.
The Change Readiness Index, created by advisory firm KPMG in collaboration with researchers from the Overseas Development Institute in the United Kingdom, assessed the capability to manage change in 60 developing nations and claims to capture a new dimension of performance with admittedly “surprising” results. South Africa ranked 26th, China came in 13th, India 23rd, Brazil 31st and Russia appeared much further down the list at number 51.
Top of the list was Chile, followed by Tunisia, Taiwan, Jordan, Kazakhstan and Morocco.
The index report said the new measure was based on the premise that, “rather than looking at a country’s performance to date (as most indices do), the Change Readiness Index takes a forward-looking perspective by capturing the underlying factors that are likely to determine a country’s capability to manage change that we hypothesise will support sustained growth in the long term”.
“Input indicators are often directly controlled by governments and other stakeholders, whereas outcome indicators are heavily influenced by externally determined factors.”
The index therefore looks not only at a government’s ability to respond effectively to change, but also examines other sectors such as civil society and the private sector.
The research used three subindices to decide on an overall ranking. Economic capabilities dealt with economic policies and frameworks, governance capabilities examined issues relating to the capacity of government and the institutional arrangements that have been established, and social capabilities took into consideration the characteristics of a society, such as literacy, support networks and civil society.
Although Chile and Brazil are possibly the most competitive economies in South America, Chile leads the index whereas Brazil is halfway down at 31. The index noted Chile’s efforts to diversify its export structure, high levels of domestic and financial competition and an efficient financial market. “One significant area of difference is macroeconomic management, with Brazil demonstrating poorer performance with regard to variables such as the inflation rate and government debt.”
Chile attracts more foreign investment in the transport sector and has a better capacity to fight corruption.
The report said Syria’s ranking of 14 was “unexpected”, given its current state. “A possible explanation is that the underlying quality of policies and institutions in Syria could mean it is well equipped to move to a position of sustained development once peace is restored - depending on the amount of damage to the country during the transition.”
Another unexpected result was Mozambique at 59th, just behind Zimbabwe. It is “apparently inconsistent with generally positive perceptions about the relative performance of Mozambique versus Zimbabwe”, the report said. “Mozambique’s rapid growth is reflected in higher rankings on other indices.”
Over time, the index will be tested and necessary adjustments made.
The index report noted the importance for such indicators at this point in time: one only need to look at the impact of food, fuel and financial crises as well as the impact of climate and political change to see the need. “As developing nations grow and mature, forces such as urbanisation, population growth and rising demand for natural resources will generate both risk and opportunity around the world.”
Martyn Davies, chief executive of local consultancy Frontier Advisory, said South Africa, India and Russia were more or less deserving of their middle-to low-ranking positions in the index, but China and Brazil deserved more credit.
“China is not just responsive to change; it is planning for change,” Davies said. At the start of the economic crisis in 2008, China saw the implosion of its Western export markets and rolled out its biggest-ever economic stimulus plan, which also helped to fight the effects of the global economic slowdown.
Davies said countries such as Singapore, Rwanda, South Korea and Mauritius were exceptionally responsive to change and should have been included on the list.