The Gordon Institute of Business Science Centre for Dynamic Markets (CDM) on 5 February 2014, announced the launch of its inaugural GIBS Dynamic Market Index (DMI).
The GIBS DMI attempts to empirically identify the conditions and institutions that enable the catalysts for economic growth, wealth creation, innovation and overall socio-economic development during a time of significant change in the global economy.
The in-depth global study is a comparative global measure of institutional evolution and progressive structural change, which reflects and informs the competitive performance of nations across six enabling pillars of market dynamism. These are:
1. Open and Connected;
2. Red Tape;
3. Socio-political Stability;
4. Justice System;
5. Macroeconomic Management; and
6. Human Capital;
The GIBS DMI, which will be updated annually, measured these pillars across 133 countries over a seven-year period between 2006 and 2012, and provides insight into the key attributes of an evolving political economy and the true economic potential of these countries.
Based on a rich body of reliable data sources to measure change in the operating environments of countries, the GIBS DMI covers a wide sample of countries for which reliable data are available and offers a rigorous tool for comparative analysis and reference at a global level.
Two features distinguish the GIBS DMI from other similar indices with comparative measures: Firstly, the GIBS DMI focuses on change, not a single static measure and secondly, the index relies almost entirely on hard data results as opposed to opinions, sentiments and surveys.
The GIBS DMI identified those countries that improved their institutional pillars of dynamism, some ‘catching up’ to the others off a low base, others maintaining and improving their institutional environment off progressive reforms implemented in earlier years. It also identified those countries which have regressed or made few improvements over the period of analysis and, as such, are relatively stagnant, or even in decline, as a result.
The study found Dynamic Markets, by virtue of a reasonably solid foundation of institutions and policies, comprised just 18 out of the 133 countries measured. Meanwhile, Static and Adynamic Markets accounted for 66 countries of the total. This means that 49.6% of the countries measured globally either made lacklustre improvements to the dynamism of their institutions and policy environment or actually eroded their dynamism and declined during 2006 to 2012.
Apart from the relatively small group of Dynamic Markets, Catch-up Markets provide the most exciting story of dynamism and economic potential of all. Despite the global economic environment, Catch-up Markets made up the largest single grouping, accounting for 49 out of the 133 countries measured or 36.8% of the countries on the GIBS DMI.
These markets are some of the most economically underdeveloped and traditionally complex – operationally and politically – in the world. In general, they have enjoyed high levels of economic growth. However, this was typically externally driven, characterised by uncertainty or global demand for their resources, with comparatively low levels of capital flowing in to sustain levels of economic growth and development of their industries.
According to Dr Lyal White, director of the CDM which published the GIBS DMI, “The GIBS DMI suggests that while the commodity boom has played a significant role in the growth of Catch-up Markets, many of these markets have addressed core structural areas of their political economies through stronger institutions, effective policies and greater stability. They have made a conscious effort to improve their competitive performance and attract foreign capital for sustainable growth and development.
“Africa comprises a large part of the Catch-up Markets and reflects the GIBS DMI findings of progressive structural change through improved institutions as a means of realising true economic potential. The GIBS DMI recognises the complexities prevalent in sub-Saharan Africa and other Catch-Up Market nations, but supports the notion of sub-Saharan Africa’s rise and the enormous opportunities that lie ahead on the continent.”
Commenting on the launch of the GIBS DMI, Dean of GIBS, Professor Nick Binedell said,“Given GIBS role within South Africa and Africa, it is our vision to contribute to best practice in teaching, research and thought leadership with respect to the companies, political economy, institutions and other factors that make up dynamic markets. One of the driving factors behind the creation of the GIBS Centre for Dynamic Markets (CDM) is to help inform and prepare companies and leaders to improve their general management practices in dynamic markets globally.
“The GIBS DMI will provide business leaders and managers with invaluable lessons learnt from comparing and contrasting the different socio-political and economic circumstances and policies that have contributed to the dynamism of economies globally.”