.
How would your country respond to an earthquake? A stock market shock? A regime change?
The Change Readiness Index (CRI), released by KPMG and Oxford Economics, looks to answer these kinds of questions by assessing countries’ abilities to respond to shocks. By understanding their own capacity to handle change, nations can identify their weak areas and work to improve them, so when one of these shocks hits they can be better prepared to react.
The idea of the CRI was developed at the 2010 World Economic Forum, after the devastating earthquake struck Haiti and people were left wondering how would their country react to an event like that. Thus the CRI started in 2012 and is now in its third iteration. This year’s index features 127 countries, 37 of which are new additions to the CRI. Ninety seven percent of the global population is included in the latest index.
Twenty-two primary survey questions from 1270 country experts were gathered and a secondary dataset including 120 secondary variables, drawing from sources like the World Bank and IMF, made up the methodology of the report. Experts analyzed the data to form the report.
Three pillars: enterprise capability, government capability, and people and civil society capability, form the core of the report. Enterprise capability looks at variables that affect a businesses ability to function in a country: like labor markets, economic policy, infrastructure, and innovation. Government capability is focused on an administration’s ability to enforce laws and budget, amongst other capacities. Finally, people & civil society capability includes information on the population’s demographics and education, as well as growth inclusivity. Countries received rankings for each of these pillars, as well as an overall ranking based on all the variables.
Primarily, the CRI’s top ten reflected countries’ with a high income and small population. Singapore topped the index and the rest of the leading ten included a couple resource rich nations, the UAE and Qatar, as well as several Nordic countries: Norway, Denmark, Sweden and Finland.
The top 22 nations on the CRI display the importance of wealth when it comes to dealing with change. All 22 nations leading the index are high-income; Taiwan, an upper-middle income nation, ranked 23rd overall. While income is important, it does not solely ensure better change readiness.
The latest CRI documents the rising of several nations in the rankings. Algeria, India, and Russia have all improved. Algeria made the largest jump, having improved in both enterprise and government capability. While Russia did improve in the CRI, the depreciating ruble makes the stability of these improvements questionable.
On the other end of the improvement spectrum, Syria, Myanmar, and Somalia had falls in the rankings. Syria’s decline is largely linked to the ongoing crisis, which has killed approximately 200,000 Syrians. Somalia’s dropping enterprise capability and the state’s growing terrorism has led to its CRI ranking decline.
Resource dependence is revealed in the CRI to be potentially detrimental to change readiness. Although resources are expected to foster growth, they can also be a curse to states due to associated currency inflation, clashes over ownership, and poor government management. If the resources are not well managed and allocated, they become more of a curse than a gift. The UAE and Norway are both highly dependent on natural resources, but manage to rank in the CRI’s top ten thanks to their strong government capability.
Another correlation revealed by the CRI is the link between inclusive growth and high change readiness. Along with inclusivity, equality is also important for high change readiness. The report stated that when there is greater equality a society has a lower risk of unrest and people become more unified.
The report also noted that the top ten states on the index primarily had small populations with none of them having a population over 10 million persons. Small states benefit from greater wealth, higher levels of GNI per capita, as well as high literacy and life expectancies, all of which aid their change readiness. This is not to say that a small population ensures change readiness, as smallness can also lead to low government capability and inefficient governance.
Going forward, countries and investors can learn a lot from this information. Governments can identify best practices and see how they are stacking up to their peers. By understanding the states strengths and weaknesses the government can better engage investors.
Investors can also use the CRI as a starting point when creating more comprehensive risk assessments for states for potential investment or states where investment is already occurring.
NGOs can also use the CRI to analyze potential candidates for aid by looking at the lower ranking nations. These development agencies can also look at CRI data to see what weakness they can help addresses.
The top 22 nations on the CRI display the importance of wealth when it comes to dealing with change. All 22 nations leading the index are high-income; Taiwan, an upper-middle income nation, ranked 23rd overall. While income is important, it does not solely ensure better change readiness.
The latest CRI documents the rising of several nations in the rankings. Algeria, India, and Russia have all improved. Algeria made the largest jump, having improved in both enterprise and government capability. While Russia did improve in the CRI, the depreciating ruble makes the stability of these improvements questionable.
On the other end of the improvement spectrum, Syria, Myanmar, and Somalia had falls in the rankings. Syria’s decline is largely linked to the ongoing crisis, which has killed approximately 200,000 Syrians. Somalia’s dropping enterprise capability and the state’s growing terrorism has led to its CRI ranking decline.
Resource dependence is revealed in the CRI to be potentially detrimental to change readiness. Although resources are expected to foster growth, they can also be a curse to states due to associated currency inflation, clashes over ownership, and poor government management. If the resources are not well managed and allocated, they become more of a curse than a gift. The UAE and Norway are both highly dependent on natural resources, but manage to rank in the CRI’s top ten thanks to their strong government capability.
Another correlation revealed by the CRI is the link between inclusive growth and high change readiness. Along with inclusivity, equality is also important for high change readiness. The report stated that when there is greater equality a society has a lower risk of unrest and people become more unified.
The report also noted that the top ten states on the index primarily had small populations with none of them having a population over 10 million persons. Small states benefit from greater wealth, higher levels of GNI per capita, as well as high literacy and life expectancies, all of which aid their change readiness. This is not to say that a small population ensures change readiness, as smallness can also lead to low government capability and inefficient governance.
Going forward, countries and investors can learn a lot from this information. Governments can identify best practices and see how they are stacking up to their peers. By understanding the states strengths and weaknesses the government can better engage investors.
Investors can also use the CRI as a starting point when creating more comprehensive risk assessments for states for potential investment or states where investment is already occurring.
NGOs can also use the CRI to analyze potential candidates for aid by looking at the lower ranking nations. These development agencies can also look at CRI data to see what weakness they can help addresses.The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.
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Understanding Change: The 2015 Change Readiness Index
DARJEELING, INDIA - CIRCA MARCH 2011: Electricity Wires on the Streets of Darjeeling, Sikkim, India||
July 23, 2015
How would your country respond to an earthquake? A stock market shock? A regime change?
The Change Readiness Index (CRI), released by KPMG and Oxford Economics, looks to answer these kinds of questions by assessing countries’ abilities to respond to shocks. By understanding their own capacity to handle change, nations can identify their weak areas and work to improve them, so when one of these shocks hits they can be better prepared to react.
The idea of the CRI was developed at the 2010 World Economic Forum, after the devastating earthquake struck Haiti and people were left wondering how would their country react to an event like that. Thus the CRI started in 2012 and is now in its third iteration. This year’s index features 127 countries, 37 of which are new additions to the CRI. Ninety seven percent of the global population is included in the latest index.
Twenty-two primary survey questions from 1270 country experts were gathered and a secondary dataset including 120 secondary variables, drawing from sources like the World Bank and IMF, made up the methodology of the report. Experts analyzed the data to form the report.
Three pillars: enterprise capability, government capability, and people and civil society capability, form the core of the report. Enterprise capability looks at variables that affect a businesses ability to function in a country: like labor markets, economic policy, infrastructure, and innovation. Government capability is focused on an administration’s ability to enforce laws and budget, amongst other capacities. Finally, people & civil society capability includes information on the population’s demographics and education, as well as growth inclusivity. Countries received rankings for each of these pillars, as well as an overall ranking based on all the variables.
Primarily, the CRI’s top ten reflected countries’ with a high income and small population. Singapore topped the index and the rest of the leading ten included a couple resource rich nations, the UAE and Qatar, as well as several Nordic countries: Norway, Denmark, Sweden and Finland.
The top 22 nations on the CRI display the importance of wealth when it comes to dealing with change. All 22 nations leading the index are high-income; Taiwan, an upper-middle income nation, ranked 23rd overall. While income is important, it does not solely ensure better change readiness.
The latest CRI documents the rising of several nations in the rankings. Algeria, India, and Russia have all improved. Algeria made the largest jump, having improved in both enterprise and government capability. While Russia did improve in the CRI, the depreciating ruble makes the stability of these improvements questionable.
On the other end of the improvement spectrum, Syria, Myanmar, and Somalia had falls in the rankings. Syria’s decline is largely linked to the ongoing crisis, which has killed approximately 200,000 Syrians. Somalia’s dropping enterprise capability and the state’s growing terrorism has led to its CRI ranking decline.
Resource dependence is revealed in the CRI to be potentially detrimental to change readiness. Although resources are expected to foster growth, they can also be a curse to states due to associated currency inflation, clashes over ownership, and poor government management. If the resources are not well managed and allocated, they become more of a curse than a gift. The UAE and Norway are both highly dependent on natural resources, but manage to rank in the CRI’s top ten thanks to their strong government capability.
Another correlation revealed by the CRI is the link between inclusive growth and high change readiness. Along with inclusivity, equality is also important for high change readiness. The report stated that when there is greater equality a society has a lower risk of unrest and people become more unified.
The report also noted that the top ten states on the index primarily had small populations with none of them having a population over 10 million persons. Small states benefit from greater wealth, higher levels of GNI per capita, as well as high literacy and life expectancies, all of which aid their change readiness. This is not to say that a small population ensures change readiness, as smallness can also lead to low government capability and inefficient governance.
Going forward, countries and investors can learn a lot from this information. Governments can identify best practices and see how they are stacking up to their peers. By understanding the states strengths and weaknesses the government can better engage investors.
Investors can also use the CRI as a starting point when creating more comprehensive risk assessments for states for potential investment or states where investment is already occurring.
NGOs can also use the CRI to analyze potential candidates for aid by looking at the lower ranking nations. These development agencies can also look at CRI data to see what weakness they can help addresses.
The top 22 nations on the CRI display the importance of wealth when it comes to dealing with change. All 22 nations leading the index are high-income; Taiwan, an upper-middle income nation, ranked 23rd overall. While income is important, it does not solely ensure better change readiness.
The latest CRI documents the rising of several nations in the rankings. Algeria, India, and Russia have all improved. Algeria made the largest jump, having improved in both enterprise and government capability. While Russia did improve in the CRI, the depreciating ruble makes the stability of these improvements questionable.
On the other end of the improvement spectrum, Syria, Myanmar, and Somalia had falls in the rankings. Syria’s decline is largely linked to the ongoing crisis, which has killed approximately 200,000 Syrians. Somalia’s dropping enterprise capability and the state’s growing terrorism has led to its CRI ranking decline.
Resource dependence is revealed in the CRI to be potentially detrimental to change readiness. Although resources are expected to foster growth, they can also be a curse to states due to associated currency inflation, clashes over ownership, and poor government management. If the resources are not well managed and allocated, they become more of a curse than a gift. The UAE and Norway are both highly dependent on natural resources, but manage to rank in the CRI’s top ten thanks to their strong government capability.
Another correlation revealed by the CRI is the link between inclusive growth and high change readiness. Along with inclusivity, equality is also important for high change readiness. The report stated that when there is greater equality a society has a lower risk of unrest and people become more unified.
The report also noted that the top ten states on the index primarily had small populations with none of them having a population over 10 million persons. Small states benefit from greater wealth, higher levels of GNI per capita, as well as high literacy and life expectancies, all of which aid their change readiness. This is not to say that a small population ensures change readiness, as smallness can also lead to low government capability and inefficient governance.
Going forward, countries and investors can learn a lot from this information. Governments can identify best practices and see how they are stacking up to their peers. By understanding the states strengths and weaknesses the government can better engage investors.
Investors can also use the CRI as a starting point when creating more comprehensive risk assessments for states for potential investment or states where investment is already occurring.
NGOs can also use the CRI to analyze potential candidates for aid by looking at the lower ranking nations. These development agencies can also look at CRI data to see what weakness they can help addresses.The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.
