Barriers and Opportunities for Enhancing Capital Flows
In the COMCEC Member Countries
96
finance; Economist Intelligence Unit, Country Commerce;
Encyclopaedia Britannica, Annual Yearbook; Freedom House,
Annual Survey of Political Rights and Civil Liberties; Heritage
Foundation, Index of Economic Freedom; IMF, Annual Report
on Foreign Exchange Restrictions; International Institute for
Management Development, World Competitiveness Yearbook;
International Labour Organisation, International Labour
Statistics Yearbook; UN Development Programme, Human
Development Report; UN, Monthly Bulletin of Statistics; UN,
Energy Statistics Yearbook; Social Security Administration,
Social Security Programs Throughout the World; World Bank,
World Development Report, World Development Indicators
and Doing Business; World Economic Forum, Global
Competitiveness Report.
The overall business environment score is derived as an
unweighted average of the ten category scores. Alternative
weights based on the correlation coefficients of FDI inflows
in 2007-2011 with the individual category scores did not
yield markedly different results. The use of average business
survey results (which tend to vary widely) yielded similar
rankings to the equal-weight method. The use of equal
weights is in part a reflection of ignorance about the relative
importance of various determinants of business decisions. It
may be supported by empirical findings on the importance
of policy complementarities, which suggest that economic
performance depends on good policies being applied across
the board, that is, very good polices in one area cannot offset
poor policies in another. The equal-weight method is likely
to be a closer reflection of the latter point than a weighting
system that assigned above-average significance to some
categories.
The weights for deriving category scores from individual
indicators are in four cases based on correlation coefficients
between indicators and average inflows of FDI in 2005-2009
and on business survey results. For the remaining six
categories, all indicators have equal weights in deriving
category.
Market opportunities
GDP at PPP 0.16
GDP per head at PPP 0.10
GDP growth 0.16
Share of world trade 0.14
Growth of exports 0.08
Growth of imports 0.08
Weights