1. Utilization of up-to-date data in 209 criteria
Hard data were collected through various statistical sources published by international and government organizations. Soft data were collected by our partner institution, the Korea Trade-Investment Promotion Agency (KOTRA), which holds more than 100 offices abroad. In addition, from 2008 we have added data collected by our partner scholars who conducted the Executive Surveys in their host countries, so that we have enlarged the pool of respondents.
2. Competitiveness evaluation model grounded on proven theory
The Double Diamond (DD) based 9-Factor model (IPS model) evaluates national competitiveness using physical and human factors. Physical factors are composed of factor conditions, demand conditions, related industries, and business contexts. Human factors are comprised of workers, politicians and bureaucrats, entrepreneurs, and professionals.
3. 3-Year Moving Average Methodology to minimize the measurement error
From the National Competitiveness Research 2008-2009, the 3-Year Moving Average Methodology is applied in the 23 sub-factor level by using the 2009, 2010, and 2011 data. This methodology is also used in some other studies such as the Index of Economic Freedom by the Heritage Foundation and Wall Street Journal and the Corruption Perception Index by Transparency International, in order to reduce the abrupt variations, which might arise due to external shock for a certain year.
4. Classification of country segments based on more realistic criteria
The research classifies 65 countries based on their size and competitiveness in order to yield realistic analysis results. Countries are first classified into large, medium and small according to their size by combining the population and land size, and into strong, medium and weak based on their country competitiveness using the indicators calculated with the IPS model, and ultimately are classified into 9 segments (3*3). The classification enables the relative comparison of competitiveness of countries within the same group.
5. Strategy simulation
In strategy simulation, both Cost Strategy and Differentiation Strategy are applied to each nation to determine which strategy is more effective in enhancing national competitiveness. In the process, different weight can be applied to different variables in the IPS model. Since in Cost Strategy, competition is based on natural resources and low labor cost, "factor conditions" and "workers" in the IPS model are given more weight, whereas under Differentiation Strategy, where competition is based on high cost and high value added, "market demand conditions" and "professionals" are given more weight. Countries can identify their competitiveness structure and the appropriate competition strategy through the strategy stimulation.
6. Optimal Strategy and Term-Priority Matrix
To derive an appropriate policy prescription for enhancing competitiveness, Optimal Strategy and Term-Priority Matrix are suggested from macro and micro approaches. Optimal Strategic Mix is used to show optimal policies in accordance with the stage of economic development at the macro level. Once the strategic implications are clarified, a series of concrete strategies suitable to each country in different stages of economic development should be followed to pursue further enhancement of national competitiveness. Term-Priority Matrix is utilized to suggest strategy guidelines for different terms and priorities at the micro level. Once countries identify both strong and weak criteria, they can formulate the strategy planning for further competitiveness enhancement by combining the Terms and Priorities of policies into a single matrix.