UK ranked 19th as Sweden tops new PwC ESCAPE index and Eastern Europe rises

Published at 09:14 AM on 05 February 2014

  

  • The PwC ESCAPE Index provides a holistic measure of a country’s performance and progress over time.
  • The index combines 20 economic, social, communications, political and environmental metrics relevant to future progress. 

Despite the global financial crisis, most emerging markets have continued to make progress since 2007 in their bid to escape the ‘middle income trap’ (see note 1), according to PwC’s new ESCAPE index (see note 2).

 

The advanced economies as a whole have fallen back since the global financial crisis hit, including the UK and the US. Central and Eastern European countries such as Poland, Romania and Russia have shown particularly strong rises since 2000. Saudi Arabia has graduated to advanced economy status over this period, while China and Chile are approaching escape velocity from the middle income trap. 

Table 1: Major risers between 2000 and 2012 on PwC ESCAPE Index rankings, including comparison with UK and US  

Country

Rank in   2000

Rank in   2012

Change in   ranking

Australia

13

7

+6

Saudi Arabia

26

12

+14

China

21

16

+5

Chile

23

17

+6

US

14

18

-4

UK

12

19

-7

Poland

27

21

+6

Romania

37

24

+13

Russia

39

25

+14

Source: PwC analysis drawing on data from IMF, World Bank and other sources (as detailed in the full report). 

John Hawksworth, chief economist at PwC and co-author of the report, said: 

“The UK continues to score well as an easy place to do business and recent sharp falls in unemployment show the flexibility of its labour market. But the UK was hit hard by the global financial crisis: since then it has had relatively low GDP per capita growth and high inflation, although both measures improved significantly during 2013. 

“UK businesses and consumers are likely to feel the benefit of the current recovery because the brakes went on so hard between 2007 and 2012.  Now we're seeing renewed job creation and growth, the UK is likely to be moving back up the index. 

“Despite the recent cyclical upturn, our analysis shows that the UK has had some persistent structural weaknesses throughout the period since 2000. We find that the UK lags behind the average of its advanced economy peers in terms of investment, education, trade, income inequality and also general levels of trust in the population.” 

Many northern European economies have performed consistently well according to the index, with latest rankings including: Sweden (1st), Switzerland (2nd), the Netherlands (4th), Finland (5th) and Denmark (6th). Germany also scores very respectably in 9th place, although France has slipped down from 16th in 2007 to 20th in 2012. 

But the situation in Southern Europe has been very different, with Italy, Spain, Portugal and Greece having fallen sharply since the global financial crisis hit in 2007. Greece has now dropped to outside the top 30 countries that are listed in Table 2 below. 

While most emerging economies have made strong economic and technological progress on the index since 2000, some still have a long way to go on broader social, political and environmental indicators. For example, Brazil, India and the four ‘MINT’ countries (Mexico, Indonesia, Nigeria and Turkey) have not yet cracked the top 30 on the index. 

PwC chief economist John Hawksworth added: 

“To graduate to the advanced economy club, it is not enough just to do well on traditional economic indicators such as GDP growth and inflation.  Both governments and business investors should pay attention to the broader range of measures that our ESCAPE index captures.” 

Notes 

1. The Middle Income Trap occurs when a country's growth plateaus and eventually stagnates after reaching middle income levels. The problem can arise when emerging economies face rising wages and declining cost competitiveness, and find themselves unable to compete either with advanced economies in high-skill innovations, or with low income developing economies in the cheap production of manufactured goods.

 

2. The new PwC ESCAPE index provides a holistic measure of a country’s performance and progress over time. The index covers five dimensions relevant to escaping from the middle income trap for emerging economies or, for advanced economies, escaping from stagnation after the financial crisis:

 

Economic growth and stability

Social progress and cohesion

Communications technology

Political, legal and regulatory institutions

Environmental sustainability

 

The ESCAPE index looks at a broad range of countries, indicators and time periods, using national level data from official sources such as the World Bank and the IMF. There are 20 individual variables included in the index, each weighted equally at 5% to avoid any single variable having undue influence on the overall results. The index covers 42 of the largest economies in the world, accounting for around 85% of global GDP in 2012. Results are available for three years: a base year of 2000; 2007 as the last year before the global financial crisis hit; and 2012 as the latest available data point for the range of indicators considered here.

 

For more information on the PwC ESCAPE index, please visit our website at:http://www.pwc.co.uk/economic-services/issues/escape-index-mapping-how-markets-emerge.jhtml . The top 30 countries in the index in 2012 are listed in Table 2 below (see the full report on our website for results for all countries in the index).

Table 2: PwC ESCAPE index rankings – Top 30 in 2012

Rankings

Country

Index scores

2000-2012 change

2000

2007

2012

 

2000

2007

2012

 

3

1

1

Sweden

64.9

71.5

70.5

5.7

1

3

2

Switzerland

65.4

68.7

70.3

4.9

4

7

3

Singapore

63.5

66.4

66.3

2.8

2

5

4

Netherlands

65.1

68.1

66.1

1.0

7

4

5

Finland

60.7

68.2

66.0

5.3

5

2

6

Denmark

63.2

70.1

65.9

2.7

13

9

7

Australia

55.7

63.6

64.1

8.5

8

8

8

New   Zealand

56.7

64.5

63.7

7.0

11

10

9

Germany

56.2

62.3

63.4

7.2

9

12

10

South   Korea

56.5

61.2

63.0

6.5

10

11

11

Canada

56.3

61.3

59.6

3.3

26

22

12

Saudi Arabia

38.9

50.2

58.1

19.2

6

6

13

Ireland

62.0

66.6

57.8

-4.2

15

17

14

Malaysia

54.1

55.2

57.3

3.1

16

15

15

Japan

53.6

56.8

56.9

3.3

21

21

16

China

46.0

50.6

56.3

10.3

23

19

17

Chile

44.0

52.4

56.0

12.0

14

14

18

US

55.3

57.6

55.5

0.2

12

13

19

UK

55.8

59.4

55.1

-0.7

17

16

20

France

50.9

55.5

53.6

2.7

27

25

21

Poland

36.0

48.2

52.9

16.9

22

24

22

Thailand

45.1

49.0

52.4

7.3

24

28

23

Vietnam

43.0

46.4

51.7

8.6

37

27

24

Romania

25.8

47.3

49.5

23.7

39

29

25

Russia

22.5

43.0

47.7

25.2

20

20

26

Italy

46.8

50.9

46.7

-0.1

18

18

27

Spain

50.0

54.9

46.1

-3.8

19

23

28

Portugal

50.0

49.1

44.5

-5.4

32

32

29

Peru

29.3

37.4

43.7

14.4

40

30

30

Ukraine

19.4

42.0

43.5

24.2

                     

Sources: PwC analysis drawing on data from the World Bank, IMF and other sources (as detailed in the full report). The index scores show absolute performance on a scale from 0-100 with the average score for all 42 countries constrained to be 50 in 2007.

 

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Andrew Smith

PwC | Communications
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