© IMD 2007-2015
Global Competitiveness and the Financial
Sector in the Nordic Countries
Arturo Bris— Professor of Finance, IMD
Director, IMD World Competitiveness Center Yale International Center for Finance
European Corporate Governance Institute
© 2015 IMD International. Not to be used or reproduced without permission.
© IMD 2007-2015
Quizz
Which country has achieved positive GDP growth in all but one
years since 1960?
China
Colombia
Denmark
Nigeria
USA
2
© IMD 2007-2015
Quizz
Which country has achieved positive GDP growth in all but one
years since 1960?
China
Colombia
Denmark
Nigeria
USA
3
© IMD 2007-2015
June 21st, 2015
4
© IMD 2007-2015
Quizz
One of these countries was not among the top 10 richest countries
(by GDP per capita) in 1970
Japan
Libya
Saudi Arabia
UK
USA
5
© IMD 2007-2015
Quizz
Sorry, wrong question
Only one of these countries was among the top 10 richest countries
(by GDP per capita) in 1970
Japan
Libya
Saudi Arabia
UK
USA
6
© IMD 2007-2015
Quizz
Sorry, wrong question
Only one of these countries was among the top 10 richest countries
(by GDP per capita) in 1970
Japan
Libya
Saudi Arabia
UK
USA
7
© IMD 2007-2015
Herbert Stein's Law
"If something cannot go on forever,
it will stop"
© IMD 2007-2015
Applying Stein’s Law:
"Trends that can't continue, won't."
9
World Stock Markets:
MSCI World Index. 1970=100
Source: Datastream
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
aug-
70
aug-
71
aug-
72
aug-
73
aug-
74
aug-
75
aug-
76
aug-
77
aug-
78
aug-
79
aug-
80
aug-
81
aug-
82
aug-
83
aug-
84
aug-
85
aug-
86
aug-
87
aug-
88
aug-
89
aug-
90
aug-
91
aug-
92
aug-
93
aug-
94
aug-
95
aug-
96
aug-
97
aug-
98
aug-
99
aug-
00
aug-
01
aug-
02
aug-
03
aug-
04
aug-
05
aug-
06
aug-
07
aug-
08
aug-
09
aug-
10
aug-
11
aug-
12
aug-
13
aug-
14
aug-
15
© IMD 2007-2015
Applying Stein’s Law:
"Trends that can't continue, won't."
10
World Stock Markets:
MSCI World Index. 1970=100
Source: Datastream
0
100
200
300
400
500
600
700
jan
-93
aug-
93
mar
-94
okt
-94
maj
-95
dec
-95
jul-
96
feb
-97
sep
-97
apr-
98
no
v-9
8
jun
-99
jan
-00
aug-
00
mar
-01
okt
-01
maj
-02
dec
-02
jul-
03
feb
-04
sep
-04
apr-
05
no
v-0
5
jun
-06
jan
-07
aug-
07
mar
-08
okt
-08
maj
-09
dec
-09
jul-
10
feb
-11
sep
-11
apr-
12
no
v-1
2
jun
-13
jan
-14
aug-
14
mar
-15
China
© IMD 2007-2015
August 25th, 2015
11
© IMD 2007-2015
June 21st, 2015
12
© IMD 2007-2015
GDP Growth – Actual and Expected
-4
-2
0
2
4
6
8
10
12
14
16
2007
2015
© IMD 2007-2015
Growth: Back to Normal
14
Financial Times, June 11th 2015
© IMD 2007-2015
Continued success in the US Remains 1st
Some declining results in Asia Malaysia (14th), Japan (27th), Thailand (30th), Indonesia (42nd)
Mixed results among big emerging countries China (22nd), India (44th), Russia (45th), Brazil (56th)
Partial recovery in Europe Portugal (36th), Spain (37th) and Italy (38th) rise
Snapshot of competitiveness
as of May 28, 2015
THE WORLD COMPETITIVENESS SCOREBOARD 2015 – Who are the winners and losers?
Denmark
© IMD 2007-2015 16
WCY
2015Country
WCY
2014
WCY
2015Country
WCY
2014
1 USA 1 - – 31 Estonia 30 -1
2 China Hong Kong 4 +2 32 France 27 -5
3 Singapore 3 - – 33 Poland 36 +3
4 Switzerland 2 -2 34 Kazakhstan 32 -2
5 Canada 7 +2 35 Chile 31 -4
6 Luxembourg 11 +5 36 Portugal 43 +7
7 Norway 10 +3 37 Spain 39 +2
8 Denmark 9 +1 38 Italy 46 +8
9 Sweden 5 -4 39 Mexico 41 +2
10 Germany 6 -4 40 Turkey 40 - –
11 Taiwan 13 +2 41 Philippines 42 +1
12 UAE 8 -4 42 Indonesia 37 -5
13 Qatar 19 +6 43 Latvia 35 -8
14 Malaysia 12 -2 44 India 44 - –
15 Netherlands 14 -1 45 Russia 38 -7
16 Ireland 15 -1 46 Slovak Republic 45 -1
17 New Zealand 20 +3 47 Romania 47 - –
18 Australia 17 -1 48 Hungary 48 - –
19 United Kingdom 16 -3 49 Slovenia 55 +6
20 Finland 18 -2 50 Greece 57 +7
21 Israel 24 +3 51 Colombia 51 - –
22 China Mainland 23 +1 52 Jordan 53 +1
23 Belgium 28 +5 53 South Africa 52 -1
24 Iceland 25 +1 54 Peru 50 -4
25 Korea Rep. 26 +1 55 Bulgaria 56 +1
26 Austria 22 -4 56 Brazil 54 -2
27 Japan 21 -6 57 Mongolia N/A –
28 Lithuania 34 +6 58 Croatia 59 +1
29 Czech Republic 33 +4 59 Argentina 58 -1
30 Thailand 29 -1 60 Ukraine 49 -11
61 Venezuela 60 -1
Change Change
© IMD 2007-2015
The Role of Financial Markets:
Bank Debt vs. Corporate Bonds
17
© IMD 2007-2015 18
The Role of Financial Development on Competitiveness
© IMD 2007-2015
The Role of Financial Development on Competitiveness
19
Survey Question:
Finance and banking regulation is sufficiently adequate, [No=0, Yes=10]
© IMD 2007-2015
20
Foreign investors are free to acquire control in domestic companies [No=0, Yes=10]
Capital markets (foreign and domestic) are easily accessible [No=0, Yes=10]
Corporate boards do supervise the management of companies effectively [No=0, Yes=10]
Regulatory compliance is sufficiently developed [No=0, Yes=10]
IMD World Competitiveness Executive Opinion Survey based on an index from 0 to 10
© IMD 2007-2015
Nordic Countries
21
7
8
9
10
2010 2011 2012 2013 2014 2015
Private Property Rights Personal security and private property rights are adequately protected [No=0, Yes=10]
Denmark
Finland
Iceland
Norway
Sweden
© IMD 2007-2015
Nordic Countries
22
1
2
3
4
5
6
7
8
9
10
2010 2011 2012 2013 2014 2015
Cost of Capital Cost of Capital Encourages Business Development [No=0, Yes=10]
Denmark
Finland
Iceland
Norway
Sweden
© IMD 2007-2015
Case Studies
23
0
10
20
30
40
50
60
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Australia
Taiwan
Thailand
China
Poland
Fin
an
ce
Su
bfa
cto
r – C
om
pe
titive
ne
ss R
an
kin
g
© IMD 2007-2015
Poland
24
© IMD 2007-2015
What matters most
25
Chin
a H
ong K
ong
Chin
a M
ain
land
India
Indonesia
Japan
Kore
a R
ep.
Mala
ysia
Phili
ppin
es
Sin
gapore
Taiw
an
Thaila
nd
UA
E
Overall 2 22 44 42 27 25 14 41 3 11 30 12
Economic Performance 9 4 16 36 29 15 6 34 3 11 13 7
Government Efficiency 1 35 47 30 42 28 16 36 2 9 27 3
Business Efficiency 1 27 33 34 25 37 10 26 7 14 24 18
Infrastructure 15 25 58 56 13 21 27 57 7 18 46 38
© IMD 2007-2015
RD
60
Rank 54 47 49 49 56 56 21 33 49 46 35 27 34 57 56 21 25 31 52
Tar
iff b
arri
ers
.
Cust
om
s' a
uth
ori
ties
[S]
Pro
tect
ionis
m [
S]
Public
sec
tor
contr
acts
[S]
Fore
ign inve
stors
[S]
Cap
ital
mar
kets
[S]
Inve
stm
ent
ince
ntive
s [S
]
Subsi
die
s [S
]
Stat
e ow
ner
ship
of en
terp
rise
s [S
]
Com
pet
itio
n leg
isla
tion [
S]
Par
alle
l ec
onom
y [S
]
Eas
e of doin
g busi
nes
s [S
]
Cre
atio
n o
f fir
ms
[S]
Star
t-up d
ays
.
Star
t-up p
roce
dure
s
.
Labor
regu
lations
[S]
Unem
plo
ymen
t le
gisl
atio
n [
S]
Imm
igra
tion law
s [S
]
Red
undan
cy c
ost
s
.
Openess Competition & Regulations Labor regulations
20
40
53
China: 2.4. Business Legislation
© IMD 2007-2015
China: Competitive Landscape
China Mainland 2015 2 27 16 1 57 10 53 10 56 38 34 2 27 46 25 8 20 7 54 39
China Mainland 2014 2 9 11 1 58 24 54 14 53 36 37 1 28 40 30 4 14 7 53 45
© IMD 2007-2015
If Financial Markets are right, perhaps we should look for long-
term growth
Where is it?
In Competitive Economies
© IMD 2007-2015
The Requirements of a Competitive System:
Self-Assessment
1. A Good Government
Does your country have a government which:
Enacts/Enforces regulation which promotes business creation,
Focuses on job creation as priority #1,
Is transparent, corruption-free,
Enjoys a healthy financial position?
29
© IMD 2007-2015
The Requirements of a Competitive System:
Self-Assessment
2. Investing in people
Does government policy provides resources so that:
Education and Health Systems are of high quality,
Infrastructure is reliable and supports business,
Fosters innovation,
Improves quality of life for people?
30
© IMD 2007-2015
The Requirements of a Competitive System:
Self-Assessment
3. A value-enhancing business culture
Do enterprises in your country:
Have access to financing, even if small,
Do have good governance systems,
Are productive and efficient,
Are managed by executives with the right values and attitudes?
31
© IMD 2007-2015
Thank you!!!
Twitter: @arturobris
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