A Cluster Analysis on Sustained Global Competitiveness for European Countries

The Global Competitiveness Index (GCI) developed by Xavier Salai-Martín, in collaboration with the World Economic Forum, has been measuring the factors that drive the growth and prosperity since 2005. This paper focuses on grouping the European nations according to global competitiveness. It uses the hierarchical and K-means cluster with a particular focus to examine the grouping of countries from 2008 to 2017 and to reduce the complexity in examining the relationship between European countries. The drivers of competitiveness are grouped into 12 critical pillars, namely, institutions, macroeconomic environment, infrastructure, higher education and training, health and primary education, goods market efficiency, financial market development, labor market efficiency, technological readiness, market size, business sophistication, and innovation respectively. The mean score of Europe during the study period was 4.7 and 40% of the European countries were found to be above the average and have been consistently performing well ahead of the average on competitiveness. This study can be generalized to other nations as well as compared with other indexes for exhaustive research that can be useful for policymakers.