A decision support system to evaluate the competitiveness of nations

Abstract

The measurement of competitiveness and strategy development is an important issue for policy makers. The aim of this paper is to explore methodological transparency as a viable solution to problems created by existing aggregated indices as well as to conduct a detailed analysis on the ongoing performance of nations' competitiveness. For this purpose, a methodology composed of three steps is used. To start, a combined clustering analysis methodology is used to assign countries to appropriate clusters. In current methods, country clustering is generally based on GDP. However, we suggest that GDP alone is insufficent to define the stage of competitiveness a country belongs. In the proposed methodology, 135 criteria are used for a proper classification of the countries. Relationships between the criteria and classification of the countries are determined using Artificial Neural Networks (ANNs). ANN provides an objective method for determining the attribute/criteria weights, which are, for the most part, subjectively specified in existing methods. Finally, in the third step, the countries of interest are ranked based on weights generated in the previous step. Beyond the ranking of countries, the proposed methodology can also be used to identify those attributes that a given country should focus on in order to improve its position relative to other countries, i.e., to transition from its current cluster to the next higher one. As a final analysis, the dynamic change of the rank of the countries over years has also been investigated.