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Is the Global Competitiveness Index a Reliable Tool for the Design of Labor Market Policies? Evidence from Peru

Author

Listed:
  • Vera, Celia Patricia

    (Universidad de Piura)

  • Rendon, Silvio

    (Inter-American Development Bank)

Abstract

Peru's national policy on productivity and competitiveness relies on the Global Competitiveness Index (GCI) by the World Economic Forum. We analyze the subjective component of GCI and show that, in the labor market area, this index has been largely constructed with opinion data coming from a particular group of the business sector. The opinion data is based on a survey of 98 business executives, which mainly represent firms with 100 or more employees and account for only 1% of total firms in Peru. Further, the questionnaire exhibits obvious flaws, and the underlying viewpoint that less employment protection promotes productive and formal work is not aligned with the evidence. Thus, we do not find that GCI provides a solid base for policy advice.

Suggested Citation

  • Vera, Celia Patricia & Rendon, Silvio, 2021. "Is the Global Competitiveness Index a Reliable Tool for the Design of Labor Market Policies? Evidence from Peru," IZA Policy Papers 180, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izapps:pp180
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    References listed on IDEAS

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    1. Nikita Céspedes & María E. Aquije & Alan Sánchez & Rafael Vera Tudela, 2016. "Productividad sectorial en el Perú: un análisis a nivel de firmas," Chapters of Books, in: Nikita Céspedes & Pablo Lavado & Nelson Ramírez Rondán (ed.), Productividad en el Perú: medición, determinantes e implicancias, edition 1, volume 1, chapter 3, pages 70-92, Fondo Editorial, Universidad del Pacífico.
    2. Lall, Sanjaya, 2001. "Competitiveness Indices and Developing Countries: An Economic Evaluation of the Global Competitiveness Report," World Development, Elsevier, vol. 29(9), pages 1501-1525, September.
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    4. Jaramillo, Miguel & Alcázar, Lorena, 2012. "El impacto de la licencia municipal en el desempeño de las microempresas en el Cercado de Lima," Documentos de Investigación dt64, Grupo de Análisis para el Desarrollo (GRADE).
    5. Daniel Kaufmann & Aart Kraay & Massimo Mastruzzi, 2004. "Governance Matters III: Governance Indicators for 1996, 1998, 2000, and 2002," The World Bank Economic Review, World Bank, vol. 18(2), pages 253-287.
    6. Wolfgang Ochel & Oliver Roehn, 2006. "Ranking of Countries - The WEF, IMD, Fraser and Heritage Indices," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 4(02), pages 48-60, July.
    7. Miguel Jaramillo, 2013. "Is there demand for formality among informal firms? Evidence from microfirms in downtown Lima," Avances de Investigación 0013, Grupo de Análisis para el Desarrollo (GRADE).
    8. Mariya Aleksynska & Sandrine Cazes, 2016. "Composite indicators of labour market regulations in a comparative perspective," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-33, December.
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    11. Wolfgang Ochel & Oliver Röhn, 2006. "Ranking of Countries - The WEF, IMD, Fraser and Heritage Indices," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 4(2), pages 48-60, 07.
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    Cited by:

    1. Jiménez, Bruno & Rendon, Silvio, 2023. "Does employment protection unprotect workers? The labor market effects of job reinstatements in Peru," Labour Economics, Elsevier, vol. 80(C).

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    More about this item

    Keywords

    labor markets; competitiveness; subjective data;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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