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Rating Australia-a selection of global indexes



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RESEARCH PAPER SERIES, 2020-21 16 NOVEMBER 2020

Rating Australia—a selection of global indexes Rory Haupt and Liz Wakerly Statistics and Mapping and Economic Policy Sections

The media regularly reports the findings of various indexes that seek to quantify the comparative performance of countries in relation to specific areas as varied as happiness or economic competitiveness.

This Quick Guide brings together the findings of a selection of these indexes to give a snapshot of how Australia compares internationally. The indexes are arranged alphabetically according to subject and each entry summarises what is being measured, where Australia ranks in the comparison and provides a short analysis of the result and the underlying methodology. Entries conclude with a list of similar or related measures.

These indexes are inevitably imperfect measures, as their authors frequently acknowledge. Nevertheless, provided their limitations are understood, they do provide an interesting summary of how Australia compares relative to other nations. In that context, the indexes that follow show Australia to be among the best performing countries in areas ranging from health to security.

Contents

Introduction .................................................................................... 3

1. Agriculture and food .................................................................... 4

Global Food Security Index ................................................................. 5

2. Aid and charity ............................................................................ 7

Commitment to Development Index .................................................. 7

3. Competitiveness and globalisation .............................................. 8

Global Competitiveness Report .......................................................... 8

4. Corruption ................................................................................. 10

Corruption Perceptions Index ........................................................... 10

5. Education .................................................................................. 12

Programme for International Student Assessment .......................... 12

6. Environment .............................................................................. 13

Environmental Performance Index ................................................... 13

7. Health........................................................................................ 15

Global Health Security Index ............................................................. 15

8. Human Rights ............................................................................ 17

Rating Australia—a selection of global indexes 2

Freedom in the World Index ............................................................. 17

9. Inequality .................................................................................. 19

OECD Income Inequality ................................................................... 19

10. Innovation, science & technology ............................................ 20

Global Innovation Index .................................................................... 20

11. Politics and democracy ............................................................ 21

Democracy Index ............................................................................... 21

12. Press freedom and the rule of law ........................................... 23

World Press Freedom Index .............................................................. 23

13. Renewable energy ................................................................... 25

Renewable Energy Country Attractiveness Index ............................. 25

14. Security and safety .................................................................. 27

Safe Cities Index ................................................................................ 27

15. Tourism ................................................................................... 28

The Travel & Tourism Competitiveness Index .................................. 28

16. Well-being and happiness ........................................................ 30

World Happiness Report ................................................................... 30

Rating Australia—a selection of global indexes 3

Introduction An increasing number of quantitative assessments of national characteristics have emerged over time. Many of these assessments come in the form of indexes: a combination of measures weighted to provide an overall indicator in an area of interest. Indexes are generally comprised of a number of statistical measures, as opposed to, for example, Gross Domestic Product which is a single statistic. As such, as outlined in this paper, indexes can be advantageous when assessing broader areas which often contain a number of complex inputs. For example, how can we measure freedom as a whole, when freedom can be represented in many different ways?

There are, however, limitations to the usefulness of indexes insofar as they often require complex calculations and the weighting of different components is usually chosen subjectively.

Selecting indexes based on their simplicity, suitability and accessibility, analysis of each is broken down into four parts:

• an outline of the index, and where Australia ranks

• an in depth look into what the index measures including the statistical inputs and methodology

• general commentary including further discussion of how Australia performs, as well as an assessment of any advantages or critiques and

• a list of complementary indexes or statistics.

To facilitate the search for relevant indexes, they are presented in alphabetical subject order.

Rating Australia—a selection of global indexes 4

Figure 1: Australia's rankings in indexes

Note: Compiled by the Parliamentary Library. Sources shown throughout paper.

Rating Australia—a selection of global indexes 5

1. Agriculture and food Global Food Security Index The most recent release of The Economist Intelligence Unit’s Global Food Security Index occurred in 2019. The index measures food security in a country, where food security is defined as:

the state in which people at all times have physical, social and economic access to sufficient and nutritious food that meets their dietary needs for a health and active live.

The index is measured with reference to the three factors of food security: affordability; availability; and quality and safety of food, assessing food security amongst 113 countries. In the most recent rankings, Australia is one of the leading nations in food security, ranking 12th in the world with a score of 81.4 points. This represents a drop in the rankings by 6 spots from the previous year.

Figure 2: Global Food Security Index—Rankings

Source: The Economist Intelligence Unit, Global Food Security Index: Rankings and trends, 2019, accessed 16 November 2020.

What does it measure? The Global Food Security Index takes into account three different areas relating to food security: affordability; availability; and quality and safety. Each area has a set of indicators which generate a score for each country. These include factors spanning agriculture, consumption and diversification. The overall ranking is a simple weighted average of the three categorical rankings. Also available as part of the rankings is an adjustment factor, which assesses the impact of climate change on the food security of each country, informed by natural resources and resilience rankings. The adjustment factor identifies which countries are expected to experience an improvement in rank, or no change, or deterioration due to the effects of climate change. For Australia, climate change is expected to lead to a deterioration in rank, likely due to the nation’s susceptibility to drought, bushfires and others natural disasters.

Commentary A 2017 report from the European Commission’s Joint Research Centre assesses the use of the Global Food Security Index for assessing food security in countries of interest. The report highlights a number of shortfalls of the index. As the report notes, the indicators included in the index only assess a subsection of food security determinants, with data that varies in age across both countries and indicators. The example is used of 2015-16 El Niño-damaged countries receiving

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better ranks than expected as such impacts were not accounted for (p. 3). The index is comprised of indicators assessing contributing factors of food security, as opposed to the outcomes themselves, and as such, does not assess all factors of food security (p. 45). A comparison with similar indexes shows both strong correlations and variations (p. 42). The report concludes that the index is used best in conjunction with other indicators which measure outcomes of food security. For a more traditional measure, see food security indicators by the Food and Agriculture Organization of the United Nations. For a broader snapshot of a nation’s agriculture industry, data are available from The World Bank.

Related measures Agriculture and Rural Development Data, The World Bank

Food Security Indicators, Food and Agriculture Organization of the United Nations

Rating Australia—a selection of global indexes 7

2. Aid and charity Commitment to Development Index The Center for Global Development’s Commitment to Development Index, or CDI, provides a measure of the level of a state’s contribution to global development through a variety of factors. The CDI assesses 40 countries in seven areas—finance, environment, security, aid, technology, trade and migration—and ranks the nations based on an overall score. In the 2020 rankings, Australia achieved a score of 70 overall, ranking it 8 out of 40 countries. This is an improvement from the 2018 index, when Australia was ranked 14th out of the 27 countries assessed. Australia has strengths in investment, trade and technology, but achieved a relatively low score in the environment category, where it ranks it 37 out of 40 countries.

What does it measure? Each of the seven broad areas identified above is assessed based on a number of sub-components, each, in turn, comprising various indicators. For example, the finance score is provided by two subcomponents, investment and financial secrecy, each of which is summarised by various indicators, such as international investment agreements and bilateral treaties. In order to achieve a similar measure across indicators and the seven components, scores are standardised to percentiles, with the best performing country in an indicator receiving 100 and the worst performing country receiving zero. Each of the seven components is weighted equally in the final rankings.

Commentary The CDI provides a broad overview of a country’s contribution to global development in several important areas. While the index only includes 27 countries, all are OECD countries and, as such, the rankings represent most of the developed countries in the world. An expansion of the rankings would prove useful, potentially providing an indicator of the willingness of emerging economies, such as India and Brazil, to commit to global development. Such an expansion may, however, face difficulties relating to collection of data and quality control. In terms of charity specific indexes, the Aid Transparency Index provides a useful measure of the use of aid across 45 aid organisations, ranging from development agencies, such as the United Nations Development Programme, to state-based aid providers, such as Australia’s Department of Foreign Affairs and Trade.

Related measures

World Giving Index, Charities Aid Foundation

Aid Transparency Index, Publish What You Fund

International Development Statistics online databases, OECD; Official Development Assistance, OECD

Aid Effectiveness Data, The World Bank

Rating Australia—a selection of global indexes 8

3. Competitiveness and globalisation Global Competitiveness Report The World Economic Forum’s Global Competitiveness Report was most recently released in 2019. The report analyses and measures the competitiveness performance of 141 countries, measured through 12 ‘pillars’. The report defines competitiveness as:

… the set of institutions, policies, and factors that determine the level of productivity of a country. (p. xiii)

Australia ranked 16th in the Global Competitiveness Index with a score of 78.7. This is a drop in two spots since the previous year, despite a reduction in score of only 0.2 points. Figure 3 highlights Australia’s performance across the pillars, identifying the best performing country (above score) and how Australia ranks (below score).

Figure 3: Global Competitiveness Report: Australia

Source: World Economic Forum, Global Competitiveness Report 2019: Australia, accessed 16 November 2020.

What does it measure? The Global Competitiveness Report uses 12 pillars to assess competitiveness: institutions; infrastructure; ICT (information and communication technologies) adoption; macroeconomic stability; health; skills; product market; labour market; financial system; market size; business dynamism; and innovation capability. Each pillar is weighted equally. Each of the pillars is comprised of a number of sub-pillars, also equally weighted, with scores for sub-pillars determined through numerous indicators. There are 98 indicators across the 12 pillars, with 54 based on statistics, such as mean years of schooling; and 44 qualitatively based, such as an assessment of property rights.

Commentary The Global Competitiveness Report examines a wide range of contributing factors. Any measure of competitiveness will involve complexity, and as such a single index will be required to make concessions in order to provide simplicity. The value of such an index is that it provides comparability across nations.

Rating Australia—a selection of global indexes 9

Related measures

Index of Economic Freedom, The Heritage Foundation/Wall Street Journal

KOF Index of Globalization, ETH Zürich

R&D expenditure (% of GDP), OECD

Global Talent Competiveness Index, INSEAD

Rating Australia—a selection of global indexes 10

4. Corruption Corruption Perceptions Index The most recent release of Transparency International’s Corruption Perceptions Index (CPI) occurred in 2019. The index uses the perceptions of experts and businesspeople to provide a measure of the level of public sector corruption in a nation. The measure is provided in the form of a score, with 100 representing the absence of corruption, and 0 representing a high level of corruption. In the 2019 release, Australia ranked 12th in the world out of 180 nations, with a score of 77. This is a one rank increase from the previous year, maintaining the same score of 77.

Figure 4: Corruption Perceptions Index 2019

Source: Transparency International, Corruption Perceptions Index 2019 (download ‘Maps’), accessed 16 November 2020.

What does it measure? The Corruption Perceptions Index measures the perceived level of public sector corruption. Transparency International obtains data from 13 data sources which measure public sector corruption—the Economist Intelligence Unit’s Country Risk Service, for example—with each source fulfilling a set of requirements to be considered. The requirements include reliable and valid methodology, the rating of a substantial number of countries, and the credibility of the source. Sources are then standardised on a scale of 0-100, with the average being used as a nation’s score. Standardisation is achieved through the subtraction of the mean of each source in a set baseline year from each country score, which is then divided by the standard deviation from the baseline year. Following this, standardised scores are transformed to a 0-100 scale through the multiplication of the score by the CPI standard deviation in 2012, and the addition of the mean from the 2012 CPI. Transparency International also provides a measure of uncertainty in their reporting, in the form of standard errors and confidence intervals associated with each score.

Commentary Similar to other indexes, the main criticism of the Corruption Perceptions Index is that it is based on subjective rankings. It is important to note, however, that these rankings are based on expert, rather than analyst, views. The measure has also come under criticism for not being a good measure of actual corruption, as Xypolia notes in The Conversation: ‘What these indexes have in common is that they are all largely based on surveys about perceptions on corruption - personal judgements, not hard data’:

Rating Australia—a selection of global indexes 11

... One of the reasons why we rely on these indexes is because we have struggled to come up with anything better. Corruption by its very nature usually takes place away from the public eye and records, which makes it difficult to measure.

Related measures The International Country Risk Guide, The PRS Group

Rating Australia—a selection of global indexes 12

5. Education Programme for International Student Assessment The OECD Programme for International Student Assessment (PISA) undertakes testing of 15 year old students in three areas: reading, mathematics, and science. The test is undertaken every three years, with the most recent results released in 2018. Students were assessed in 79 countries and economies, with a particular focus on OECD countries. In the 2018 results, Australian students received a mean reading score of 503, statistically significantly above the OECD average of 487, but far below the 555 score achieved by mainland China. In mathematics, Australia scored only slightly above the OECD average, scoring 491 points against the average of 489. This ranks below most comparator countries such as New Zealand, Canada, and the United Kingdom, but above the United States. The highest score for mathematics was China, who scored 591 points. In science, Australia received 503 points, relative to the OECD average of 489 points. China received the highest score of 590 points. While consistently above the OECD average, the rankings do show that Australia has room for improvement, regularly featuring below many countries of cultural comparison. Relative to 2015, Australia’s scores in the science and mathematics categories have decreased, as have OECD averaged; while Australia has maintained the same reading score with a slight decrease in OECD average.

What does it measure? PISA seeks to test students on their proficiency across the areas of reading, mathematics and science. To do so, a test framework is developed. In developing the framework, international experts from each area are enlisted to develop their respective area, with the framework agreed upon by countries. Students are sampled from a population of 15 year olds within a country. Questions within a test range from low to high difficulty, with proficiency within a subject determined by an ability to answer questions successfully. PISA scores are set relative to the variation in results on a normal distribution, with mean scores around 500 points, and standard deviations around 100 points. As such, a score of 490 in one year does not necessarily reflect the same as a score of 490 in another year.

Commentary The core advantage of PISA is that is tests students on their ability to complete practical tasks. Unlike other indexes of education which rely on years in schooling or population completion rates of schooling, PISA provides a snapshot of one of the key goals of an education system: the development of students’ abilities to develop comprehension and problem solving skills across a number of subjects. With that said, however, there are aspects of education which PISA does not capture. Another of the core goals of an education system is to provide students with the ability to succeed as part of the labour force. Without incorporation of measures such as completion rates, and rates assessing transitions to work, PISA fails to capture some core components of education. Furthermore, the variability of scores across time limits the comparability of countries performance across years, instead meaning comparisons must be drawn on performance relative to other countries year on year. For other measures which incorporate a broader range of indicators, see the OECD’s Better Life Index Education section, or the UNDP Education Index (p. 54).

Related measures Education, Better Life Index, OECD

Education Data, The World Bank

Education Index, UNDP Human Development Reports. Other UNDP education indexes available here

World University Rankings, Times Higher Education World University Rankings

Global University Rankings, Center for World University Rankings

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6. Environment Environmental Performance Index The Environmental Performance Index (EPI) is a joint project of the Yale Center for Environmental Law & Policy, and the Center for International Earth Science Information Network at Columbia University. The EPI was most recently released in 2020. It assessed 180 countries, with rankings constructed on two core categories—environmental health and ecosystem vitality—comprised of 32 indicators. Australia ranks 13 with a score of 74.9, receiving the 11th highest score for environmental health of 91.6, but a middling score for ecosystem vitality of 63.8. This is a 5.5 point improvement across 10 years.

Table 1: 2019 Environmental Performance Index Rankings

Rank Country EPI

Score

10-Year Change

1 Denmark 82.5 7.3

2 Luxembourg 82.3 11.6

3 Switzerland 81.5 8.6

4 United

Kingdom

81.3 9.0

5 France 80.0 5.8

6 Austria 79.6 5.4

7 Finland 78.9 6.0

8 Sweden 78.7 5.3

9 Norway 77.7 7.6

10 Germany 77.2 1.2

11 Netherlands 75.3 1.5

12 Japan 75.1 -0.5

13 Australia 74.9 5.5

Source: Environmental Performance Index, 2020 Environmental Performance Index, accessed 16 November 2020.

What does it measure? The EPI is influenced by two policy objectives: environmental health, which seeks to measure environmental threats to human health, such as poor air quality; and ecosystem vitality, a measure of a country’s natural resources and ecosystem, such as biodiversity and forests. Each of the policy objectives is informed by a number of categories, with each category informed by indicators. The EPI is a hierarchical model, with weighting occurring at each stage to inform the next step. Indicators are normalised on a 0-100 scale for consistency. The weights are informed through objective and subjective means: for environmental health, weights are assigned based on the distribution of disability-adjusted life-years, or DALYs, lost to environmental health influences; whereas for ecosystem vitality, weights are subjective, informed by previous literature in the area. The overall indicator is weighted 40 per cent in environmental health, and 60 per cent in ecosystem vitality.

Commentary The EPI represents a comprehensive measurement of environmental health and performance within countries, accounting for a broad set of environmental indicators. There is, however, a notable omission of policy considerations from the metrics: the framework does not engage with areas such as broader environmental policies related to climate change or clean energy. The EPI is complemented by other indexes which focus on specific areas, such as the Climate Change Performance Index and the Global Adaptation Index.

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Related measures

Better Life Index, Environment, OECD

Climate Change Data, The World Bank

Notre Dame Global Adaption Index, University of Notre Dame

Climate Change Performance Index, Germanwatch

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7. Health Global Health Security Index The Global Health Security Index, or GHS Index, is a joint project of the Nuclear Threat Initiative and the John Hopkins Center for Health Security, developed by the Economist Intelligence Unit. The GHS Index measures health security and associated health response capabilities, with the first index released in 2019. The measure is applied to 195 countries. The index is developed with a focus on six health security and response categories: prevention, detection and reporting, rapid response, health system, compliance with international norms, and risk environment. In the 2019 index, Australia ranked 4th, with an index score of 75.5.

Table 2: 2019 Global Health Security Index Results

Rank Country

Index Score Region Population Income

1 United States 83.5

Northern America

100m+ High income

2

United Kingdom

77.9 Europe 50-100m High income

3 Netherlands 75.6 Europe 10-50m High income

4 Australia 75.5 Oceania 10-50m High income

5 Canada 75.3

Northern America

10-50m High income

6 Thailand 73.2

Southeastern Asia 50-100m Upper middle

income

7 Sweden 72.1 Europe 1-10m High income

8 Denmark 70.4 Europe 1-10m High income

9 South Korea 70.2 Eastern Asia 50-100m High income

10 Finland 68.7 Europe 1-10m High income

Source: Global Health Security Index, Country Ranking View of Index Results, 2019, accessed 16 November 2020.

What does it measure? The GHS seeks to measure a country’s preparedness for a mass health event, such as a pandemic. It is comprised of indicators across six categories, with a focus on prevention of pathogens, a detection of and quick response to such pathogens, and the ability of a health system in dealing with such events. All data is obtained from open-source information, such has country-reported data, or that reported by international bodies, like the World Health Organization. The index is comprised of 34 indicators, which in turn are made up of 85 subindicators. For example, the ‘prevent’ category is comprised of six indicators, one of which is biosafety. Biosafety is scored according to two subindicators: whole-of-government biosafety systems; and biosafety training and practices. The overall index score is obtained by averaging the six category scores, with each category weighted equally.

Commentary Given the events of the COVID-19 pandemic, the GHS proved correct in noting that discussion and preparedness for such events was necessary. The index has, however, proven to be inaccurate in its assessments of country capabilities when contrasted with evidence that has arisen from the pandemic. Abbey et al., for example, compare GHS rankings of OECD countries with an assessment of their performance throughout the pandemic. Of the five highest ranked OECD countries in the GHS, only Australia has performed well, ranking second in the authors’ multi-criteria rank. Alternatively, out of the 36 OECD countries assessed, the top three countries in the GHS—the United States, United Kingdom, and Netherlands—rank 32nd, 35th and 36th, respectively. Abbey

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et al. posit that a possible explanation for over- and under-performing countries in the pandemic has been the role of political leadership, a variable unassessed in the GHS. While the GHS has correctly identified a requirement for increased health security awareness, the recent pandemic has highlighted a need for the index to assess their inputs. There are few health indexes available, but the World Health Organization publish a wide range of health statistics useful for identifying a country’s performance in a number of areas.

Related measures

World Health Statistics, World Health Organization

Health index, UNDP Human Development Reports. Other UNDP health indexes available here.

Health Data, The World Bank

Health, Better Life Index, Organisation for Economic Co-operation and Development

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8. Human Rights Freedom in the World Index The Freedom House Freedom in the World report provides a numerical rating of freedom, based on political rights and civil liberties. Countries are assigned a ranking out of 100, with 0 being not at all free, and 100 being fully free. Freedoms are assessed on the basis of two subcategories relating to political rights and civil liberties. In the most recent report, released in 2020, Australia achieved a score of 97, ranking jointly at 8th in the world, tied with Denmark, Ireland and New Zealand. Over the past 10 years, Australia has increased in score from 96 to 97. The three areas in which Australia’s ranking did not score highly were all related to civil liberties: scoring 3 out of 4 points for freedom and independence of the media; 3 out of 4 points for the equal treatment of the population under the law, policies and practice; and 3 out of 4 points for freedom and opportunity from economic exploitation. On the final two points, Indigenous peoples are noted as falling behind the rest of the population.

Figure 5: Freedom in the World 2020

Source: Freedom House, Freedom in the World 2020, p. 7, accessed 16 November 2020.

What does it measure? The overall measure is a score based on two categories: political rights; and civil liberties. Each category is further addressed at several sublevels. Using 25 measures (each scoring out of 4), political rights are assessed based on electoral process, political pluralism and participation, and the functioning of government; civil liberties are assessed based on freedom of expression and belief, associational and organisational rights, rule of law, and personal autonomy and individual rights. Each sublevel is also provided with guiding questions to assist analysts with ratings. Due to its broad scope, the Freedom in the World Index incorporates a number of relevant freedoms in its measure. Most notable of these is freedom of the media, included as a measure of civil liberty.

Commentary Critiques of Freedom House’s Index and other human rights indexes relate to the fact that, although there may be methodological guidelines, ratings are still largely subjective. Furthermore, since the ratings consider a broad overview of freedom, human rights records might not be fully considered. For example, in 2017 the United Nations released a statement criticising Australia’s human rights performances in various areas, namely treatment of refugees and indigenous rights. These criticisms are not necessarily reflected in the Index.

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Related measures

Universal Human Rights Index Database, United Nations Human Rights Office of the High Commissioner

State-Sponsored Homophobia Report, International Lesbian, Gay, Bisexual, Trans and Intersex Association

State of the World’s Minorities, Minority Rights

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9. Inequality OECD Income Inequality A traditional economic measure for income inequality is the Gini coefficient. The OECD publishes calculations of the income Gini coefficient for all OECD countries. The OECD’s Income inequality measure reports Australia had a Gini coefficient of 0.33 in 2019, where 1 denotes complete inequality and 0 denotes complete equality. This is higher than the median coefficient in the OECD, with Australia having the 14th highest coefficient of the 35 measured OECD countries. Income distribution in Australia is more equal than 13 other OECD countries.

Figure 6: OECD Income Inequality

Source: OECD Data, Income inequality, 2019, accessed 16 November 2020.

What does it measure? In order to calculate income inequality, we must first provide a definition of income. The OECD defines a household’s disposable income as earnings, self-employment and capital income plus public cash transfers, with income taxes and social security contributions deducted. The income of a household is attributed to each of its members, with an adjustment to reflect differences in needs for households of different sizes. The Gini coefficient is based on the comparison of cumulative proportions of the population against cumulative proportions of income they receive, and it ranges between 0 in the case of perfect equality and 1 in the case of perfect inequality.

Commentary In comparison to the OECD average, Australia has a relatively high level of income inequality—22 of 35 countries have lower measures of income inequality. However, in comparison with countries that share similarities with Australia’s cultural and political framework (including Canada, the United Kingdom and the United States), Australia maintains more income equality. Of those countries, only Canada has a lower score for income inequality, with a Gini coefficient of 0.307. The World Economic Forum provides an extensive analysis of gender inequality in its The Global Gender Gap Report 2020, in which Australia ranks 44th out of 153 countries.

Related measures Human Development Data, UNDP Human Development Reports Global Wealth Report, Global household wealth, Credit Suisse Gender Inequality Index, UNDP Human Development Reports The Global Gender Gap Report 2020, World Economic Forum

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10. Innovation, science & technology Global Innovation Index The Global Innovation Index, a joint project by Cornell University, INSEAD and the World Intellectual Property Organization, provides a measure of innovation within nations using a combination of data across seven areas: institutions; human capital and research; infrastructure; market sophistication; business sophistication; knowledge and technology outputs; and creative outputs. Also included in the rankings are innovation input and output sub-indexes, which are used to calculate the Global Innovation Index, and the efficiency ratio of the country. In the 2020 report, which covered 131 economies, Australia ranked 23rd in the Global Innovation Index, a decrease of one spot from the previous year. Australia performed best in the category of market sophistication, ranking 7th in the world, but was dragged down by a ranking of 40th in the category of knowledge and technology outputs.

What does it measure? The Global Innovation Index is measured across seven areas. Each section has three different subsections, each comprising a set of indicators. For example, the institutions pillar is comprised of the three subsections of political environment, regulatory environment, and business environment. The political environment subsection is comprised of two indicators: political and operational stability, obtained through the IHS Markit Country Risk scores; and government effectiveness, obtained through the World Bank’s Worldwide Governance Indicators. Subsection scores are calculated as a weighted average of the relevant indicators, with section scores being calculated as a weighted average of the relevant subsections. As such, the Global Innovation Index includes a wide array of data and indicators, leading to a broad interpretation of innovation. For example, while factors such as education and infrastructure may directly influence innovation, underlying factors such as political stability are also influential in the institutional structure of innovation. The index is largely comprised of data-based indicators. Of the 80 indicators, 58 are drawn from hard data, 18 from indexes, and just 4 are formed in qualitative ways, through surveys of experts.

Commentary The Global Innovation Index provides an extensive measure of innovation. The indicators used for the index are largely quantitative, with only five of the 80 indicators based on qualitative data. This leads to a robust index, as the limited qualitative inputs allows for a more impartial index. While the index provides a wide-ranging measure of innovation, incorporating factors such as education, science and technology, other indexes may be more useful when looking for a specific measure of each of those factors.

Related measures

Global Information Technology Report 2016/Networked Readiness Index, The World Economic Forum

OECD Science, Technology and Industry Scoreboard: The digital transformation, OECD

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11. Politics and democracy Democracy Index The Economist Intelligence Unit’s Democracy Index uses various indicators to assess the quality of democracy in 167 countries. The index is based on 60 indicators across five categories: electoral process and pluralism; the functioning of government; political participation; political culture; and civil liberties. The most recent ratings for 2019 were released in 2020. Australia received a score of 9.09 out of 10, ranking it 9th. Australia’s score of 9.09 has remained stable over time, with a score of 9.09 in 2006, dropping as low as 9.01 from 2014-2016, before rising back to 9.09 from 2017.

Figure 7: Democracy Index 2019

Source: Global Democracy Ranking, Democracy Index 2019, accessed 16 November 2020.

What does it measure? Each of the five categories has a rating on a 0 to 10 scale; the overall index is the simple average of the five category indexes. The category indexes are based on the sum of the indicator scores in the category. Examples of indicators include: freedom to form political parties; the pervasiveness of corruption; the percentage of women in parliament; perceptions of military rule; and freedom to form professional organisations and trade unions. Adjustments to category scores are made if countries do not score a 1 in the following critical areas of democracy: whether national elections are free and fair; the security of voters; the influence of foreign powers on government and the capability of the civil service to implement policies. In addition to experts’ assessments, the EIU uses, where available, public opinion surveys—particularly in the political participation and political culture categories. Index values are used to place countries within one of four types of regime: full democracies; flawed democracies; hybrid regimes; and authoritarian regimes.

Commentary In order to limit subjective responses, the Democracy Index combines expert assessments with public opinion data. Alternative measures, for example that published by Freedom House (see index 8. Human Rights), use only qualitative assessments to assign scores to countries. However, the inclusion of dichotomous values (which take the value of 0, 0.5 or 1) in the Democracy Index, removes some of the nuance achieved in other measures. For example, the indicator ‘public confidence in parties’ takes on a value of 1, if more than 40 per cent have confidence; 0.5 if it lies between 25 and 40 per cent; and 0 if less than 25 per cent.

Rating Australia—a selection of global indexes 22

Related measures Freedom in the World 2020, Freedom House

The Polity Project, Center for Systemic Peace

Environmental Democracy Index, World Resources Institute

Rating Australia—a selection of global indexes 23

12. Press freedom and the rule of law World Press Freedom Index The World Press Freedom Index is published by Reporters Without Borders (RSF). The degree of freedom available to journalists in 180 countries is determined by pooling the responses of experts to a questionnaire (with 87 questions) devised by RSF. This qualitative analysis is combined with quantitative data on abuses and acts of violence against journalists during the period evaluated. The criteria evaluated in the questionnaire are pluralism, media independence, media environment and self-censorship, legislative framework, transparency, and the quality of the infrastructure that supports the production of news and information. These are combined with data on abuses and violence against journalists and media outlets. Countries are given scores ranging from 0 to 100, with 0 being the best possible score and 100 the worst. In the 2020 rankings, Australia ranked 26th with a score of 20.21, a fall of five places since 2019.

Figure 8: World Press Freedom Index

Source: Reporters Without Borders, 2020 World Press Freedom Index, accessed 16 November 2020.

What does it measure? The RSF calculates two scores. The first, ScoA is based on the first six of the seven indicators listed above; the second, ScoB, combines the first six measures with the seventh (abuses). (The abuses indicator for each country is calculated on the basis of the data about the intensity of abuses and violence against media actors during the period evaluated.) A country’s final score is the greater of these two scores. The method prevents an inappropriately low score (high ranking) being given to a country where few or no acts of violence against journalists take place because the provision of news and information is tightly controlled.

Commentary The use of two measures provides a useful way to compare press freedom across countries with very different journalism industries. In some nations, particularly those with a tightly controlled, government-directed industry, explicit abuses may be minimal. For example, the second lowest ranked country in the index, Turkmenistan, has 0 abuses listed. However, its poor results in ScoA results in a worse ranking. On the other hand, a country such as Afghanistan has, relative to other countries in the region, a low score when it comes to ScoA, but due to a high measure of abuses

Rating Australia—a selection of global indexes 24

scores much higher in the second measure, leaving it with a ranking of 122. With zero abuses, for example, Afghanistan would have ranked 94th.

Related measures

Freedom and the Media 2019, Freedom House

Rule of Law Index, World Justice Project

Rating Australia—a selection of global indexes 25

13. Renewable energy Renewable Energy Country Attractiveness Index The Renewable Energy Country Attractiveness Index (RECAI) is developed by EY, with the most recent rankings published in May 2020. RECAI ranks the top 40 countries in the world on the attractiveness of their renewable energy investment and deployment opportunities. It assesses five domains: macro vitals; energy imperative; policy enablement; project delivery; and technology potential. Australia ranks well relative to other countries, placing 4th behind the United States, China and France, but ahead of Germany and the United Kingdom.

Table 3: 2020 Renewable Energy Country Attractiveness Index

Rank Country

Change from 2016

1 United States 0

2 China 0

3 France 5

4 Australia 6

5 Germany 0

6

United Kingdom

7

7 India -4

8 Denmark 7

9 Netherlands 8

10 Japan 2

Source: EY, Renewable Energy Country Attractiveness Index May 2020 and Renewable Energy Country Attractiveness Index May 2016, accessed 16 November 2020.

What does it measure? The RECAI rankings factor various parameters from five groups relevant to the renewable energy industry. All parameters are shown in Figure 10 below.

Figure 9: Renewable Energy Country Attractiveness Index—Methodology

Source: EY, RECAI Methodology, EY Renewable Energy Country Attractiveness index, 2019, accessed 16 November 2020.

Rating Australia—a selection of global indexes 26

Each of the five pillars is assessed based on a set of parameters. Each parameter is assessed through a series of datasets, with each dataset converted to a range from 1-5. Parameter scores are then weighted based on these scores. The various factors were chosen according to their role in increasing the market attractiveness of renewable energies. This includes economic, political and technological factors, as technological inputs are of limited effectiveness if there is not a stable and supportive government, or a stable economy, enabling the exploitation of their full potential.

Commentary The RECAI provides a measure of the availability and progression of renewable energies across 40 countries. Other indexes—such as the World Bank’s measures of Energy and Mining—are more useful when assessing energy output and composition as a whole. One such measure is fossil fuel and renewable energy as a percentage of total final consumption.

Related measures The Global Energy Architecture Performance Index 2017, World Economic Forum

Energy and Mining, The World Bank

Rating Australia—a selection of global indexes 27

14. Security and safety Safe Cities Index The Economist Intelligence Unit’s (EIU’s) Safe Cities Index (SCI) assesses urban security using 57 indicators across 60 cities. The index—measured on a scale of 0 to 100, with 100 representing ‘best health’—uses four broad pillars: digital security; health security; infrastructure security; and personal security. The most recent iteration of the SCI was released in 2019, with two Australian cities being assessed: Sydney was ranked 5th with a score of 87.9; Melbourne was ranked 10th with a score of 87.3.

Table 4: 2019 Safe Cities Index Rankings

Rank City Score 2017 score

1 Tokyo 92.0 89.8

2 Singapore 91.5 89.6

3 Osaka 90.9 88.9

4 Amsterdam 88.0 87.3

5 Sydney 87.9 86.7

6 Toronto 87.8 87.4

7 Washington, DC 87.6 80.4

=8 Copenhagen 87.4 N/A

=8 Seoul 87.4 83.6

10 Melbourne 87.3 87.3

Source: Economist Intelligence Unit, Safe Cities Index 2019, p. 15, accessed 16 November 2020 and Economist Intelligence Unit, Safe Cities Index 2017, p. 5, accessed 16 November 2020.

What does it measure? As noted above, the SCI is comprised of four, equally weighted pillars. There are 57 indicators: 17 quantitative; and 40 qualitative. Every city is scored across input and output performance within and across the four domains. Each domain comprises between eight and 21 indicators, divided between inputs (capacity/preparedness-driven), such as policy measures and access to services, and outputs (performance-driven), such as air quality and the prevalence of crime. Digital security assesses the ability of urban citizens to freely use the internet and other digital channels without fear of privacy violations or identity theft. Health security measures how cities fare in terms of environmental policy as well as the level and quality of healthcare available to residents. Infrastructure security considers the built physical environment, such as city infrastructure and its vulnerability to disasters and terrorist attacks. Personal security considers how at-risk citizens are from crime, violence, man-made threats and natural disasters.

Commentary The SCI presents a measure of safety within a city, assessing various elements that contribute to security. By comparison, in the OECD’s Better Life Index, Australia ranks 27th out of 40 in safety. Although having a rate of homicide well below the OECD average, only 63 per cent feel safe walking home at night (below the OECD average). The contrast between the two indexes presents an interesting divergence in the assessment of safety in Australia.

Related measures

Global Peace Index, Institute for Economics and Peace

Safety, Better Life Index, OECD

Fragile States Index, The Fund for Peace

Rating Australia—a selection of global indexes 28

15. Tourism The Travel & Tourism Competitiveness Index The World Economic Forum’s (WEF’s) Travel & Tourism Competitiveness Report presents the Travel & Tourism Competitiveness Index (TTCI) which, published biennially, benchmarks the travel and tourism competitiveness of 140 economies and measures the ‘set of factors and policies that enable the sustainable development of the Travel & Tourism (T&T) sector, which in turn, contributes to the development and competitiveness of a country’.

The index is comprised of four subindexes: the enabling environment; travel and tourism policy and enabling conditions; infrastructure; and natural and cultural resources. Each subindex includes a number of pillars. In total, there are 14 pillars and 90 individual indicators, distributed among the different pillars. Countries are assigned a score between 1 and 7 based on how they perform, with better performing countries achieving higher scores. In the 2019 release of the TTCI, Australia was ranked 7th with a score of 5.1. Spain, France, Germany, Japan, the United States and the United Kingdom received higher scores.

Figure 10: 2019 Travel & Tourism Competitiveness Index—Rankings

Source: World Economic Forum, ‘Travel & Tourism Competitiveness Report’, 2019, p. xiii, accessed 16 November 2020.

What does it measure? Each of the four subindexes is made up of a number of pillars. Subindexes and pillars are shown in Figure 12.

Figure 11: Travel & Tourism Competitiveness Index - Methodology

Source: World Economic Forum, ‘Travel & Tourism Competitiveness Report’, 2019, p. ix, accessed 16 November 2020.

Rating Australia—a selection of global indexes 29

Each pillar is compiled of various indicators, with scores for the pillars calculated as an unweighted average of these indicators. For example, the enabling environment subindex is comprised of 12 business environment indicators, five safety and security indicators, six health and hygiene indicators, nine human resources and labour market indicators and eight ICT readiness indicators. Each subindex score is calculated as the average of the contributing pillars. Likewise, the total score for the TTCI is calculated as the average of the subindexes.

Two thirds of the dataset for the TCCI is statistical data from international organisations. The remaining third is based on survey data from the WEF’s annual Executive Opinion Survey, which is used to measure qualitative concepts.

Commentary The 2019 Travel & Tourism Competitiveness Report finds that travel and tourism competitiveness continues to improve worldwide, but also flags that future demand for transportation services, especially aviation, might outpace improvements in infrastructure capacity.

Analysis of TTCI subindexes can help to identify areas for improvement. For example, while Australia appears to rank well across the board, improvements could be made if we look at the travel and tourism policy and enabling conditions, where Australia ranks a joint 28th. Australia’s environmental sustainability—measured using policy indicators such as the stringency and enforcement of government’s environmental regulations, and variables assessing the status of water, forest resources and marine life—ranks 49th, alongside Romania and Tanzania.

Rating Australia—a selection of global indexes 30

16. Well-being and happiness World Happiness Report The most recent World Happiness Report was released in 2020. The report indicates that Australia ranks relatively well in terms of happiness—measured across six variables—ranking 12th out of 153 countries. Compared to the 2016 report, this is a drop of 3 ranks from 9, with a reduction in score from 7.313 to 7.223.

Figure 12: 2020 World Happiness Rankings

Notes: Dystopia is a hypothetical country with ‘values equal to the world’s lowest national averages’ (p. 16). Residual ‘simply represents that part of the national average ladder score that is not explained by our model’ (p. 18).

Source: J Helliwell et al. (eds), World Happiness Report 2020, p. 19, accessed 16 November 2020.

What does it measure? The 2020 update presents average life evaluation scores for 153 countries. These scores are based on subjective responses to the Cantril ladder question: participants are asked to imagine their position in a ladder from 0 to 10, with 10 representing the best possible life, and 0 the worst possible.

The authors consider six key variables:

• GDP per capita

• healthy years of life expectancy

• social support (as measured by having someone to count on in times of trouble)

• trust (as measured by a perceived absence of corruption in government and business)

• perceived freedom to make life decisions

• generosity (as measured by recent donations).

Furthermore, the 2020 report focuses on the influences of environments on happiness, in particular the effects of social, urban and natural environments.

Rating Australia—a selection of global indexes 31

Commentary The notion of gauging the development of a nation based on individual, self-reported life evaluation measures has been criticised, with some debating ‘whether subjective views are truly measurable’ (p. 266). However, the OECD report How’s Life: Measuring Well-Being states ‘a large body of recent research has shown … that it is indeed possible to make valid comparisons between different groups of people’ (p. 266). It further states:

Measures of life satisfaction are a useful complement to more traditional indicators based on objective conditions because they present an overall picture of well-being that is grounded in people’s preferences rather than in a-priori judgements about what are the important drivers of individuals’ well-being. (p. 266)

The authors acknowledge a range of statistical and analytical limitations, such as the risk that the explanatory ‘variables [they] use may be taking credit properly due to other variables, or to unmeasurable factors’ (p. 18). Nevertheless, in the 2016 report, the authors argue:

that happiness, as measured by life evaluations, provides a broader indicator of human welfare than do measures of income, poverty, health, education, and good government viewed separately. We now make a parallel suggestion for measuring and addressing inequality. Thus we argue that inequality of well-being provides a better measure of the distribution of welfare than is provided by income and wealth … (p. 4)

Related measures

Human Development Index, United Nations Development Programme, Human Development Reports

Better Life Index, OECD

The Global Youth Wellbeing Index, International Youth Foundation and Hilton

Rating Australia—a selection of global indexes 32

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