1、Tomas Casas i Klett,University of St.Gallen(FIM-HSG)Guido Cozzi,University of St.Gallen(FGN-HSG)ELITE QUALITYINDEXEQx2024Measuring long-term economic and human development prospects146 Indicators;12 Pillars;4 Political Economy Index Areas;and Power and Value Sub-IndexesELITE QUALITY REPORT 2024The S

2、ustainable Value Creation of Nations151 COUNTRY SCORES AND GLOBAL RANKINGSFIFTH ANNIVERSARY EDITIONElectronic copy available at:https:/ Quality REPORT 2024COUNTRY SCORES AND GLOBAL RANKINGSGlobal academic partnerAcademic leadershipStudent leadershipResearch partnerElectronic copy available at:https:

3、/ of Use and DisclaimerThe Elite Quality Index(EQx)and the Elite Quality Report 2024:The Sustainable Value Creation of Nations(EQx2024 or Report)provide a unique interpretation of political econo-mies across the world and their mid-to long-term prospects.The EQx2024 is based on a methodology that st

4、arts with the collec-tion and collation of relevant,up-to-date datasets from a variety of organizations and sources(see Section 7.2 for the complete list).The datasets conceptually fit with the EQx and its theoreti-cal basis(Casas-Klett,2024,in press).The detailed EQx methodology is described in Mea

5、suring Elite Quality(Casas-Klett,Cozzi,Diebold,&Zeller,2020),a paper whose main tenets have evolved since it was first written to support the EQx2021,with changes summarized in Section 2.4.It was developed and inspired by a team of academics and practitioners with the aim of supporting Value Creatio

6、n business models in elite systems and incentivizing the institu-tional arrangements that foster such models.The analysis and interpretations of the results contained in the Elite Quality Re-port 2024,such as the commentaries on the country score-cards,are the result of individual or collective work

7、 and do not necessarily represent the views of the editors,the project team or other project participants.Elite Quality,the Elite Quality Index(EQx)and its underlying methodologies are the exclusive intellectual property of the Foun-dation for Value Creation(FVC)protected internationally by copy-rig

8、ht and/or trademark registration.All rights reserved 2024.The EQx2024 is the fifth in a series of annual reports that aim to elicit a discussion among academics and initiate conversa-tions with a broad range of other interested stakeholders.The EQx project is an innovative and timely initiative in o

9、ur age of disruption,positioned at the intersection between academia,business and policymaking.The EQx2024 was produced from datasets collected,collated and transformed by a committed international research team.The Reports underlying datasets and all included information are subject to change witho

10、ut notice.For country classifications,the Report uses the ISO 3166-1 alpha-3 country codes defined by the ISO 3166 Maintenance Agency.The terms country and nation as used in the EQx2024 do not always refer to a terri-torial entity/state as understood by international law and prac-tice.The term might

11、 also refer to self-contained economic areas that are not states,but for which statistical data are maintained on a separate and independent basis.The editors,contributors and research team cannot guarantee that the information contained in the underlying datasets are correct,that there are no error

12、s,or that calculations and de-scribed methodologies have been consistently applied.The edi-tors,publisher,contributors,and producers of the EQx2024 are not responsible for the suitability or fitness of the contents,sup-porting information or interpretation and analyses included in the Report for any

13、 purpose.The research team,authors,part-ners,contributors,editors and the Foundation for Value Creation accept no liability for any content of the Report or its parts,nor for any implications,decisions made,or actions taken on the basis of the Report.The research team,authors,partners,contributors,e

14、ditors,and the Foundation for Value Creation might not own or control the rights of the underlying datasets or information(data and infor-mation)used in the Report.They are also not responsible for any use that any party might make of the data and information.Unless formally licensed,acquisition of

15、the Report implies no authorization for third-party products or services derived from any data and information or any content referred to or included in the EQx2024.The research team,authors,partners,contributors,editors and the Foundation for Value Creation are not responsible for the transformatio

16、n by any third parties of the information in this Report,or for the actions of anyone who might infringe upon the integrity of the Report or its underlying data and information.Any transformation of the Report and its related information must be clearly and visibly acknowledged,together with the man

17、datory citation to the source.Data and information which have been duly credited in Chapter 7,References,are subject to the terms of use of these third parties.In summary,while every care has been exercised in preparing,compiling,and publishing the data contained in this Report,no responsibility wha

18、tsoever can be accepted in respect to any such information,data,analysis or opinion,any loss arising out of any use,or for any errors or omissions contained herein.When the EQx2024 Report,parts thereof,its Country Scores or Global Rankings,directly or indirectly obtained,are distributed or reproduce

19、d,the attribution to the source shall be cited as:Casas-Klett,T.&Cozzi,G.(2024).Elite Quality Report 2024:The Sustainable Value Creation of Nations.Zurich:Seismo.https:/doi.org/10.33058/seismo.30892.0001Any readers and users of the Report,whether they have ob-tained it via download or otherwise,agre

20、e to make all reason-able efforts to comply with these terms themselves and to pro-mote compliance with their own end users.Parties interested in partnering with the non-profit Foundation for Value Creation can e-mail us at:alex.tonnelitequality.orgElectronic copy available at:https:/ Sustainable Va

21、lue Creation of Nations Measuring long-term economic and human development prospectsElectronic copy available at:https:/ OF CONTENTS ivEXECUTIVE SUMMARY 11.INTRODUCTION 21.1 Measuring Sustainable Value Creation to Safeguard the Future.21.2 The NextGen Value Creation Barometer 2024:Prioritizing Oppor

22、tunities for the Young.101.3 Why Small Nations have Great Elites.161.4 EQx2024 Power and Value Sub-Indices at a Glance.181.5 Building and Shaping the EQx Community.202.UNPACKING THE GLOBAL ELITE QUALITY INDEX 222.1 Conceptual Framework and Definitions.222.2 EQx Architecture .232.3 EQx Pillars.242.4

23、EQx Methodology.282.5 The PanelEQx(PEQx2024)Dataset:Measuring Elite Quality over Time for Academic and Policy Purposes.322.6 Critically Reflecting on Normalization.372.7 Data Interpretation and Black Swan Events in the EQx.402.8 The Elite Quality Index as a Resource for International Business Educat

24、ion.413.EQX2024 RESULTS 443.1 Elite Quality Country Scores and Global Rankings.443.2 State of Elites Framework:Country Mapping.483.3 Value Configuration Framework:Value Creation and Extraction and Shares of Overall Economic Activity.503.4 Pillar Results.523.5 Outstanding Country Performances by Pill

25、ar.64Table of ContentsivElectronic copy available at:https:/ ANALYSIS AND INTERPRETATION 664.1 Country Scorecards:Deep-dive Analyses.68Argentina.68Chile.70China.72Ethiopia.74Georgia.76Ghana.78Japan.80Norway.82Peru.84Portugal.88Singapore.90Spain.92Switzerland.94The United Kingdom.96The United States.

26、984.2 Indicator Scorecards.100Artificial Intelligence for Value Creation.100Finetuning the Political Economy for Value Creation in the Real Estate Sector.102The Elite Business Model of Drugs:A Fatal Form of Value Extraction .106The Unseen Price:Suicides Impact on Value Creation.112The Rail Revolutio

27、n:Solving the Climate Crisis or Taking the Wrong Track?.116Unicorns:The Engine of Creative Destruction and Elite Circulation.1204.3 EQx-Indicator Family Analyses.122The Billionaires EQx-Indicator Family 2024.122The Diversity&Inclusion EQx-Indicator Family 2024.126The Ecology EQx-Indicator Family 202

28、4.128The SDG EQx-Indicator Family 2024.1325.INDICATORS 1345.1 Indicator Weighting Table Overview.1345.2 Indicator Table:Definitions and Rationale.1366.COUNTRY SCORECARDS 1747.REFERENCES 3267.1 Bibliography.3267.2 Data Sources and Indicator References.3287.3 Contributor Citations and Recognition.3427

29、.4 Artistic Acknowledgments.344vElectronic copy available at:https:/ Abbey Library of St.Gallen(Stiftsbibliothek)in Switzerland has roots that can be traced back to medieval times,serving as a repository of knowledge for over a millennium.Luca Zanier Photography,Corridors of Power Project.Electronic

30、 copy available at:https:/ Quality Report,EQx20241Executive Summary Elite Quality is Macro-level Sustainability Elite business models generate the most income and provide the necessary coordination capacity to realize the full potential of an economys human,financial,and knowledge capabilities.High-

31、quality elites running Value Creation business models that create more value for society than they appropriate are sustainable.Low-quality elites that operate Value Extraction models based on value transfers are not.3.Among Western nations,the improved performance of the Netherlands(rank#3,up 3 plac

32、es)stands out,as does Germany(rank#8,unchanged).The US is not far be-hind(rank#16,up 5 places),even though the scale,tech-nologies,and narrative powers of its political economy should see it at the apex of the ranking.The country contin-ues to extract from the young and sits at a lowly#79 in the Nex

33、tGen Value Creation Barometer,an issue that politics has no capacity to address(Political Value,#75).4.The BRICS Plus countries show mixed performance,ranging from high to rather poor scores(see Table below).Can the success of some emerging nations inspire the elites of laggard countries to curb ren

34、t-seeking?5.To hone in on elite business models and their Value Creation/Extraction,the EQx2024 indicators rely on in-creasingly unique and customized datasets.For instance,the Housing Affordability Index(HAI)and the Construction supply gap(CSG)detail for a given country the extent to which construc

35、tion and real estate are a source of Value Creation or responsible for extractive shortages,rent inflation,or price bubbles.6.As is the case every year,a minor cause for movements in the EQx is the inclusion of new indicators.This year,a num-ber of new indicators have been added to measure how na-ti

36、ons are dealing with ecological issues and managing prog-ress towards the achievement of the Sustainable Development goals(SDGs).Other caveats should also be borne in mind when interpreting ranking changes,especially in times of in-flation,war,or even the dramatic reduction in the number of unicorns

37、.Is overall global Elite Quality going up or down?If the latter is the case,many countries are doing better this year as a result of being comparatively less extractive,not because they are producing more value.The intention is to address this issue in the EQx2025 with the introduction of a measurem

38、ent for the Elite Quality of the world:the World-EQ benchmark.What are the Main Findings of the EQx2024?1.Singapore(rank#1,up 1 position from the EQx2023)moves back to the top of the ranking again after losing out to Switzerland(rank#2,down 1 position)last year.These are two very different political

39、 economies whose chief similarity,besides their small size,is the significant Sustainable Value Creation of their elite business models.2.Asias Elite Quality is on the rise.Of the top six leading countries,three are Asian,with Japan(#4,position unchanged)and Korea(#6,up 13 places)exhibiting stel-lar

40、 performance.Moreover,the continents two emerging superpowers,China(#21,up 1 position)and India(#63,down 4 places),continue to excel given their income levels.The correlation analysis(see page 5)shows that based on Elite Quality,Chinas GDP per capita(PPP)is predicted to hypothetically equal US$53,14

41、5(well above its current US$21,482),while Indias would stand at US$17,322(rather than the current US$8,400),and Indonesias(rank#45)would increase to US$36,311(well above the present US$21,654).This news from Asia provides positive signals for global growth prospects in the coming years.CountryRankTr

42、end vs EQx2023ScoreSingapore1165.3Switzerland2-164.8Netherlands3364.5Japan4064.4New Zealand5-264.0Korea,Rep.61363.7Israel7-263.6Germany8063.4Sweden9162.7Denmark10162.5United Kingdom11-262.3Canada12062.2Australia13-662.0Finland14061.5Austria15061.5United States16561.3Norway17-461.0Qatar18560.4France1

43、9-360.2Estonia20-259.9EQx2024 Top 20 Countries CountryRankTrend vs EQx2023ScoreChina21159.6United Arab Emirates32-1256.2India63-449.5Brazil64549.4Egypt,Arab Rep.841347.3Russian Federation103045.1South Africa117-3444.2Ethiopia119-1843.8Iran,Islamic Rep.1291142.5BRICS plus CountriesThe EQx is the Glob

44、al Political Economy Index The EQx2024 is the fifth comparative international ranking of Elite Quality.It covers 151 countries,uses 146 indicators,and measures conceptual elements including Power,Creative Destruction,and Unearned Income.Elite Quality at the macro-level is based on the forthcoming Su

45、stainable Value Creation of Firms,a micro-level measure-ment for leaders,boards,and capital suppliers seeking to transform their business models towards an inclusive future.Electronic copy available at:https:/ the existence of elite agency and its associated coordi-nation capacity,there is chaos in

46、the political economy and in society as a whole.But this fact does not give elites a free pass.The fundamental assumption of the elite theory of economic development(ETED)is that the Sustainable Value Creation of elite business models holds the key to a better future in terms of economic and human d

47、evelopment.The benchmarking and analysis of the variances in Elite Quality across countries and within regions lies at the core of the EQx.The EQx2024 offers,for the fifth consecutive year,Country Scores and Global Rank-ings for 151 countries based on 146 indicators.Predictions of Elite Quality can

48、be SurprisingThe elite theory of economic development contends that Elite Quality is the leading indicator of future economic growth and human development.Why?Because the Sustainable Val-ue Creation(or Extraction)of elite business models are the key transmission mechanism between the micro-level eco

49、nomic activity of firms and the aggregate macro-level outcomes of the economy.As with previous editions of the EQx,the key findings are not the global rankings themselves but the subse-quent steps that are taken to analyze the outcomes.These in-clude the interpretation of the fitted regression line

50、that emerg-es from the EQx correlation with GDP per capita(PPP)as depicted in Visuals 1.1 and 1.2:1.IntroductionChapter 1:Introduction1.1 Measuring Sustainable Value Creation to Safeguard the FutureVisual 1.1:EQx correlation with GDP per capita(PPP)EQx Score range50403020100EQx Country Sc

51、oreGDP per capita PPP in USDNote:Vertical axis plots GDP per capita,adjusted for PPP,in current intern.US$.Orange dashed line indicates a fitted regression line.Adjusted R-squared:0.611Spearman correlation between EQx scores and GDP:0.797Source:The World Bank,2023.Random selection of country codes a

52、re printed in case of country overlaps.Electronic copy available at:https:/ Quality Report,EQx202431.Asia(and especially China,India,and Indone-sia)will drive global growth for years to come.Chinas(rank#21)GDP per capita(PPP)is predicted to hypothetically equal US$53,145(well above its current US$21

53、,482),while Indias(rank#63)would stand at US$17,322(rather than its current US$8,400).Indonesias(rank#45)would increase to US$36,311(well above to-days US$21,654).Asias inclusive elites will drive global prosperity and growth for the next decade and beyond.2.High Elite Quality today may be insuffici

54、ent for tomorrow.Countries with a high overall EQx ranking like Switzerland,Singapore,the US,or Norway find them-selves in negative territory when their EQx scores are re-gressed against GDP per capita(PPP).The implication is again clear:prosperous countries that wish to maintain their relative succ

55、ess must guard against the emergence of elite business models based on extractive value transfers and engage in continual structural and statutory reform to maintain Value Creation.3.Rich countries that still have scope for growth.Put your money on Japan,Korea,and the UK.Despite their diverse challe

56、nges,these three large and prosperous econ-omies all have sophisticated capital markets that are open to global investors and will see comparative growth.4.Must do better in terms of Elite Quality.A number of rich and emerging economies including Italy,Argenti-na,Kazakhstan,Australia,Sweden,and Pola

57、nd must make marginal gains in terms of their Elite Quality to es-cape the middle Elite Quality trap that endangers their fu-ture growth prospects.5.In danger of regression.The elite systems of emerging countries like Nigeria,Pakistan,Turkey,and South Africa must have serious conversations about dea

58、ctivating their extractive business models for the sake of their future eco-nomic prosperity and the prospects for their non-elites.Visual 1.2 also illustrates where future economic growth will likely come from.India,Indonesia,and China are poised to grow on the back of the Sustainable Value Creatio

59、n of their elite business models.Immense amounts,ranging from 1.4 to 2.4 times their current PPP,could be added to their national incomes.To the extent that the EQx does a good job of captur-ing relative Elite Quality,and the elite theory of economic development can be validated,East and South Asia

60、are set to be the next engines of global economic growth.Residuals as a%of GDPVisual 1.2:Residuals(as a%of GDP)as an indication of future growth prospects,sample of 32 countriesNote:Residuals are calculated as the difference between fitted values and GDP per capita,as a percent of GDP per capita(GDP

61、 p.c.adjusted for PPP,in current intern.USD).Source:The World Bank,2024.Electronic copy available at:https:/ EQx2024 Contains Rich Analytical Possibilities:The NextGen Value Creation Barometer,the EQx-Indicator Families and Specific Indicator SetsThe EQx2024s munificent dataset can be conceptually s

62、liced and diced to supply insights on specific social,economic,and political phenomena.Two types of EQx data subsets have been formalized:the Barometer and the EQx-Indicator Family.The Barometer approach refers to a subset of data that has been developed with a partner organization and has a weighti

63、ng scheme applied to indicators that differs from the relative weights used for the EQx.The EQx-Indicator Family approach retains the relative EQx indicator weights.A third diagnostic approach is to select indicator sets to explain a particular elite business model,such as real estate and con-struct

64、ion.The EQx2024 includes:The NextGen Value Creation Barometer(NGVCB)Developed in conjunction with the St.Gallen Symposium and the Board Foundation,its aim is to establish the Value Creation/Extraction that occurs from this genera-tion to the next.The NGVCB uses 33 indicators dis-tributed over five c

65、ategories:Equitable Opportunities;Education and Human Capital;Health and Well-Being;Innovation and Technology;and Ecology and Natural Capital.The 2024 iteration is led by Denmark,followed by Israel and Switzerland(see the analysis and discus-sion of the methodology on page 10).Indicator families The

66、 SDG EQx-Indicator Family is a new addition based on the United Nations Sustainable Development Goals(SDGs),a framework comprised of 17 goals,169 targets,and 232 unique indicators providing tangible ways for both countries and corporations to track their progress towards achieving sustainable develo

67、pment(see the analysis and discussion on page 132).This indicator Family tries to answer questions like:How does Elite Quality influence progress towards the SDGs?or,Could there be a trade-off between realizing the SDGs and Value Creation in the economy?The Ecology EQx-Indicator Family adds 5 indica

68、tors to its original 10 to further underscore the need to inte-grate environmental considerations at the heart of elite-led economic activities(see the analysis and dis-cussion on page 128).Such an approach would not only help in safeguarding the planet but also ensure that Value Extraction,in whate

69、ver domain,is identi-fied,weighted,and mitigated.The EQx advocates a holistic and balanced view of sustainability and eco-nomic development,placing elite agency at the center of inclusive outcomes and growth.The Ecology EQx-Indicator Family is therefore a measure of elite commitment to fostering a s

70、ustainable future,making ecological concerns essential in comparatively assess-ing Elite Quality on a global scale.The Diversity&Inclusion EQx-Indicator Family rationale is straightforward:any type of discrimination from gen-der to religion has a business model logic,constitutes a form of rent seeki

71、ng,and compromises Value Creation.Those discriminated against face barriers that hinder or prevent them from realizing their potential for Value Creation.Moreover,society suffers a serious loss,while the overall Value Creation potential of the economy suf-fers(see the analysis and discussion on page

72、 126).Elite quality depends on elite business models.The links be-tween specific industrial sectors and the macro-level through the elite business model transmission mechanism is a key area of inquiry and a benchmark for policymaking.Certain EQx indicators are designed to provide insight into specif

73、ic sectors,sometimes on a stand-alone basis and sometimes in combina-tion with others.Indicator sets This year,two new indicators put the spotlight on the real estate and construction sectors(see page 102).In partnership with SwissForecast,the Housing Afford-ability Index(HAI)and the Construction su

74、pply gap(CSG),have been developed from industry datasets to establish for a given country the extent to which con-struction and real estate are either a source of Value Creation or responsible for extraction from non-elites via business model activities such as creating artificial housing shortages.

75、The origins of rent inflation and price bubbles,and the beneficiaries of these value transfers,can thus be assessed.Indicator interpretation The EQx2024 provides a new analytical lens to eluci-date any phenomena in the political economy or even in society as a whole.For instance,drug abuse is not a

76、social problem at origin.Drugs are first and foremost an elite business model.This most fatal form of Value Ex-traction is analyzed on page 106 through the Death rate from substance use disorders(SUB)indicator,and the various policy approaches of different countries,many embedded in intra-elite cont

77、ests,are brought to light.Chapter 1:IntroductionElectronic copy available at:https:/ Quality Report,EQx20245Elite Quality at your Fingertips by the University of St.Gallen:Open Access Country Comparison ToolsAs one of its flagship research projects,the University of St.Gallen freely provides the EQx

78、 country comparison tool-set on its website where you can visualize Elite Quality country comparisons based on the PanelEQx(PEQx)data.The aim is to make analyses of Elite Quality accessible to the general public,as well as to students and faculty,in accordance with the universitys educational missio

79、n:From insight to impact.There is also a second and equally vital Elite Quality Country Comparison:Compare up to five countries regarding their overall Elite Quality and the Sub-Indices of Power and Value,based on the EQx2024.The website is a collaboration between the University of St.Gallen and the

80、 Foundation for Value Creation.Three Elite Quality comparison tools are now available:https:/unisg.ch/elitequalitymotivation for allowing this access:to foster elite transfor-mational leadership at both the macro-level of policymak-ing and the micro-level of the firm.The tools essentially al-low use

81、rs to compare elite systems across the world based on their aggregate Sustainable Value Creation.For in-stance,it is possible to check and compare the Power of a countrys elites and how much Value they create relative to those elsewhere.Electronic copy available at:https:/ Elite Quality Country Comp

82、arison at the Pillar Level:Compare up to three countries based on the EQx2024 Pillars.Elite Quality Historical Country Comparison:Compare up to five countries over time(since 2005)for their overall Elite Quality,Power,or Value,based on the PanelEQx2024.Chapter 1:IntroductionRegulatory CaptureHumanCa

83、ptureCoalition DominanceFirm DominanceTaking IncomeUnearned IncomeProducer ValueCapital ValueLabor ValueState CaptureCreative DestructionGiving IncomeElectronic copy available at:https:/ Quality Report,EQx20247Elite Quality Country Comparison Tools:SnapshotThe Elite Quality Country Comparison Tools

84、are meant for all those curious about the state of the world and its future.They are designed for political economy analysts,students,re-searchers,journalists,policymakers and politicians,investors,business leaders,and others that wish to know how national elites compare to each other and address Va

85、lue Creation and Extraction.As such,the tools allow you to:1.Compare countries on the quality of their political and economic elites to determine their relative future human and economic growth possibilities.2.Inform your professional decision-making in a variety of ways,ranging from assessing count

86、ry risk for foreign direct investment projects to how your NGO is like-ly to fare in a particular jurisdiction.3.Perform individual country analyses of Sustainable Value Creation and establish which parts of the political economy work and which require weighted structural re-forms and elite transfor

87、mational leadership.Surprise 1:Elites are a mathematical certainty;they are inevitableSurprise 2:Elites supply essential coordination capacity to societiesFact 1:Elites can be high-quality value creatorsFact 2:Elites can also be low-quality value extractorsHypothesis:Elite Quality determines economi

88、c and human developmentAction:We measure Elite Quality through the Elite Quality Index(EQx)Takeaway:The EQx is a political economy index that measures the ability of national elite business models on aggregate to create value,rather than extract it.Basic Notions about Elites and Elite QualityDefinit

89、ion:Elites are narrow,coordinated groups that run the largest income generating business models in an economy and which successfully accumulate wealth.4.Craft proposals for the transformational leader-ship of elite business models for boards,the CEO,or top management teams so that the organizations

90、profits are based on Value Creation activities like innovation or inclusive international business rather than on extractive transfers based on market dominance or government subsidies.5.Make policy proposals for structural reforms and institutional change to adjust rules,regulations,and the legal s

91、ystem so that value creators are incentivized,and value extractors are nudged to undertake more inclusive activities.Electronic copy available at:https:/ and Weighted Structural Reforms ensure that there are Incentives for Value Creation(and that Value Transfers are Disincentivized)Elite Quality is

92、the macro-level conceptual element most rele-vant for economic and human development.The EQx is at the forefront of various suggested measurements to articulate Sus-tainable Value Creation and create a toolbox for elite coali-tions wishing to design policies and strategic initiatives towards the tra

93、nsformation of their business models.Many of the con-tributions in the EQx report use the Country Scorecards to sug-gest such policy changes.The key is to adjust the legal,regu-latory,and other incentive systems so that business models engage in Value Creation rather than in Value Extraction.Structu

94、ral reform trumps the orthodox monetary and fiscal pol-icy mix and its broad,short-run measures.To succeed,struc-tural reforms must be weighted to balance and optimize Val-ue Creation and Value Extraction through trade-offs.Broad(short-run)policy measuresTargeted(long-run)policy initiativesEconomic

95、policy leversAggregate supplyIncentive systemMonetary massAggregate demandEconomic theoryMainstreamMacroeconometric modelingand economic forecasting(DSGE,time series,et al.models)Keynesian,neoclassical synthesis,monetarism NonconventionalWeighted transfers general equilibrium(WTGE)macroeconometric m

96、odelElite theory of economic development(ETED)Economic policy mixMonetary policyFiscal policyOrthodox measuresWeighted structural reformInstitutional changeElite businessmodel transformationElite leadershipVisual 1.3:The ETED in the economic policy mix:A weighted structural reform approach for the i

97、ncentive system(Source:Figure 7.1,Casas-Klett,2024,in press)Chapter 1:IntroductionElectronic copy available at:https:/ Quality Report,EQx20249Transcending traditional approaches utilized in ESG ratings,firms are assessed on their business models and how much Value these create or extract/transfer fr

98、om society.It is in-tended that the rating will adjust the valuation of equity and debt instruments,as well as the overall valuations of firms.The all-important elite business model transformation to-wards higher Value Creation levels is contextually enabled by both the top-down incentive structures

99、 that emerge from the economic policy mix(see Visual 1.3)and the bottom-up transformational leadership of CEOs and boards intent on implementing strategies to improve their Sustainable Value Creation rating.The Sustainable Value Creation of Firms:The Logical Next StepThis report defines Elite Qualit

100、y as The Sustainable Value Creation of Nations.But how does the weighting and trade-off between Value Creation and Value Extraction occur at the micro-level of the firm or organization?The EQx macro-level project will next be paralleled by an initiative for companies:The Sustainable Value Creation o

101、f Firms.The initiative,based on Casas-Klett&Nerlinger(2023),will first cover assessments of Sustainable Value Creation(SVC)for approximately 100 listed global firms.The theoretical foundation for micro-level SVC measurements will mirror the EQx architecture and conceptual elements.Every firm extract

102、s value from society that it both monetizes(Value transfer-IN)while also injecting value back into society(Value trans-fer-OUT).Obviously,firms also create value that is monetized(Net Value Creation).The starting point for the SVC measure-ment is to conceptually establish transfer-IN and transfer-OU

103、T through Metrics(the firm-level equivalents of EQx indicators).These quantities,depicted in the value spectrum of Visual 1.4,are then weighted and every firm will receive a rating reflecting its Value Creation.Value creationValue extractionValueextractionValuecreationValue appropriation(Revenue,R/R

104、)Valuetransfer-OUTValue createdbutnot appropriatedbacValue createdandappropriatedValue appropriatedbutnot createdNet value creationValue Creation Position(VCp)of principal business modelValuetransfer-INVisual 1.4:The value spectrum(also referred to as the business model value creation spectrum)(Sour

105、ce:Figure 2.11,Casas-Klett,2024,in press)Electronic copy available at:https:/ The NextGen Value Creation Barometer 2024:Prioritizing Opportunities for the YoungNow in its third year,the NextGen Value Creation Barometer sheds light on the global state of intergenerational fairness.As a collaboration

106、between the St.Gallen Symposium,the Foundation for Value Creation,and the Board Foundation,the Barometer is the EQx component that focuses on those aspects of national elite models that either deliver a legacy of Value Creation or,conversely,extract value from young and future generations.In order t

107、o achieve these aims,the Barometer assesses five key categories,building on a literature review of intergener-ational equity,as well as a global,cross-generational survey that asked respondents to rank the importance of key inter-generational issues(Gaspar,et al.2022).The first category,Ecology and

108、Natural Capital,focuses on the extent to which dominant elite business models deplete or preserve natural resources and ecosystems for future generations.This cate-gory is deemed to be the most important of the five and therefore carries a weight of 30%,compared to 17.5%for the other four,to acknowl

109、edge the significance of healthy planetary ecosystems as a foundation for any future Value Creation.The second category,Equitable Opportunities,measures the distribution of economic opportunities across generations,focusing on factors such as social mobility,youth unemployment,and government debt.Th

110、e third cate-gory,Education and Human Capital,stresses the importance of the present generations Value Creation for the next,in terms of investments in and inclusive access to high-quality learning and education.The fourth category,Health and Well-Being,measures the quality and key outcomes of na-ti

111、onal health care systems,while the fifth category,Innova-tion and Technology,explores the capacity provided to the next generation to drive scientific discovery and develop disruptive business models.Within these categories,indicators have been given specific weights.This was done to account for the

112、 relative relevance of a specific indicator(such as CO2 emissions within the Ecology and Natural Capital category and the Youth unemployment rate for Equitable Opportunities).Moreover,the Barometer also weights those indicators that most strongly relate to elite agency,i.e.,the extent to which activ

113、e Value Creation efforts are being made for the next generation(e.g.R&D as%of GDP,Government education expenditure).Such indicators were weighted higher than those that point only to outcomes(e.g.Life expectancy,Internet access),as these tend to depend more strongly on a countrys overall income leve

114、l.The findings from this years Barometer once again underscore the importance of focusing on the long-term dimensions of Val-ue Creation and Extraction,the conceptual foundation of the EQx,and provide several noteworthy results:As in previous years,many smaller,European economies top the list,with S

115、candinavian countries such as Denmark(#1),Sweden(#4)and Norway(#7)all scoring particularly well.Denmark,the top-ranked country in the 2024 Barometer,scores particularly well across the categories of Equitable Op-portunities and Education,which can be seen as the result of the significant public inve

116、stments made by the Danish state into public goods.Remarkably,Denmark,which ranks#10 in the overall EQx,combines a large role for the state with a cut-ting-edge ecosystem for Innovation and Technology,with the success of Novo Nordisk the most prominent recent example.This also in part explains why D

117、enmark ranks relatively highly in the Ecology&Natural Capital category;it is the country with the most green patents per capita,and has one of the worlds highest shares of renewable energy in its energy mix.Chapter 1:IntroductionElectronic copy available at:https:/ Quality Report,EQx202411This years

118、 findings once again highlight that long-term Value Creation is a multifaceted concept,with countries leading in some categories whilst being laggards in others.Across the wealthy OECD economies at the top of this years rankings,great investments in health,education,and technology are built on an ex

119、tractive relationship with nature,leading to poor scores in the Ecology and Natural Capital category.To truly create sustainable value for young and future generations,re-ducing CO2 emissionsthe indicator given the highest weight in the Barometeris of paramount importance.Israel retains its#2 rankin

120、g in the 2024 Barometer,but the events that began on October 7th,2023 will upend everything(EQx data is mostly prior to that tragedy).Peace is the most important of all public goods and with two wars now raging on the European Unions doorstep,the portents should be of concern for all young people wo

121、rrying about the future.Compared to 2023,the performance of China has fallen sig-nificantly(from#54 to#73).This is mainly due to a strong drop in its ranking in the Equitable Opportunities category,which can be explained by increased social inequality(as measured by the Gini coefficient),rising gove

122、rnment debt and a stark increase in the Youth unemployment rate.The United States has also fallen in the 2024 Barometer(from#76 to#79)and remains behind China.On top of its highly unequal wealth distribution,the country suffers from the practices of diverse elite business models that create high lev

123、els of Sub-stance abuse and Government debt levels that are certain to limit the future Value Creation of the young.A general obser-vation that can be made is that for large powerful nations that score well in many areas and sit at the top of the international hierarchy,overall Value Creation is at

124、risk when there is ex-traction from the next generation.The relatively poor performance of China and the US contrasts with the gains made in two other important economies.Note-worthy improvements have been in South Korea(rising from#17 to#13),in part due to the advances made in the category of Innov

125、ation and Technology and evidenced by increased la-bor productivity growth and higher investment in research&development.Also,the East Asian nation(which ranks#6 in the overall EQx)has increased Public spending on education,ex-plaining its top performance in the most recent Programme for Internation

126、al Student Assessment(PISA),which saw several Eu-ropean countries fall significantly behind.For now,South Korea is even ahead of Japan(#14),despite the latters improvement(up from#19 last year).Both countries exemplify the only path forward for aging societies:to leave a strong legacy for the next g

127、eneration.This has all the more merit in societies where pensioners represent the main voting block and elite business models are still often run by literal golden agers.Visual 1.5:NextGen Value Creation Barometer 2024 country comparisonUSAChinaSwitzerlandNote:The spiderweb axes show a countrys Rank

128、.Electronic copy available at:https:/ 1.6:NextGen Value Creation Barometer 2024 Global Rankings with component categoriesNextGen Value Creation Barometer RankDifference to NGVCB 2023Difference to EQx2024Ecology&Natural CapitalEquitable OpportunitiesEducation&Human CapitalHealth&Well-BeingInnovation&

129、TechnologyDenmark1092425392Israel20588261031Switzerland30-1572516154Sweden40554411268Netherlands50-2955121910New Zealand62-111842723Norway7-17Germany8United Kingdom9-22327120287Slovenia4024Cyprus1028Finland12-2299748326Korea,Rep.Japan145-1078

130、6553213Australia15-4-2138283916France16-12Estonia17-Austria5Belgium19-531107664318Slovak Republic20282947294640Czech Republic234Spain22-229012422826Croatia233234083324838Italy24076713530429Cuba2560Portugal26-1-32Ireland27-4-1131932

131、81222Singapore135Latvia29-2945491111449Thailand30-2776531071130Lithuania30427Hungary32-5Greece33036Bulgaria348Poland35-53Senegal3651Tunisia37-57082131175156Jamaica38449Costa Rica39469Chile40-2-10112

132、126253543Panama4888Romania42-3-76194646239Bolivia436426590410195Dominican Republic44474North Macedonia454962Kyrgyz Republic464100Morocco474746Turkey48-8637Colombia49-3752Peru508Mauritius51-628485467879Qatar5231-3

133、41451797621Algeria53-363Tajikistan5424325519956399Namibia55376Philippines6Ecuador57-46Uruguay58-1-068Albania594280Canada60-13-48Jordan62459Malaysia62-18-35Armenia658Moldova64-23268724

134、38105115Georgia652344Timor-Leste662354United Arab Emirates67-8-35Botswana68-4050Honduras695135Tanzania70-8284Bosnia and Herzegovina71-5691Venezuela,RB7250726China73-19-521Indonesia74-22-29Pa

135、raguay7546Uzbekistan257Serbia931Ukraine78-997United States79-3-63Gambia,The136Mexico81-7-294Nepal82-0120El Salvador8382111Trinidad and Tobago84-58110Niger8528128Egypt,A

136、rab Rep.6641Argentina6565Azerbaijan88-17-225NextGen Value Creation Barometer RankDifference to NGVCB 2023Difference to EQx2024Ecology&Natural CapitalEquitable OpportunitiesEducation&Human CapitalHealth&Well-BeingInnovation&TechnologyNextGen Value Creation Baro

137、meter RankDifference to NGVCB 2023Difference to EQx2024Ecology&Natural CapitalEquitable OpportunitiesEducation&Human CapitalHealth&Well-BeingInnovation&TechnologyKuwait89-22-3Kenya90-64621038911582Kazakhstan83Ethiopia924273929119118105Cambodia93-7-26Libya94165112

138、2143417390Sri Lanka95-2058Ghana96-19-2771Liberia973133Belarus81Nigeria99243872357114998Turkmenistan47Rwanda101-2-285India102-5-3955Brazil8467Nicaragua2393137Vietnam105-25-573Saud

139、i Arabia106-34-524Malawi109110123Zambia2112124Togo109-16-33986121134103Iran,Islamic Rep.17461Cte dIvoire111-29-38304493136138Burkina Faso1141127Guatemala16119112Benin2142Congo,Dem.Rep.2133108Banglade

140、sh116-5-689South Africa5110770Mozambique43107Syrian Arab Republic857147Gabon4110677Oman121-3-78Guinea2129Burundi123-10-7141Iraq697118Mongolia125-13-5326Equatorial Guinea1262

141、0435Mali25117Bahrain1772Guinea-Bissau37121Lesotho45150139Myanmar100101Sierra Leone132-59-733Eswatini8145116Lebanon28142Madagascar20140Yemen,Rep.131151U

142、ganda137-10-6143Russian Federation138-1-353Lao PDR139-11-5234Papua New Guinea29149Cameroon141-8-35102Pakistan142-16-109119Mauritania143-3-9144Afghanistan0144148Haiti35138114Chad146-3-36439150148132

143、Congo,Rep.22130Zimbabwe148-10-8472Sudan27108131Central African Republic150-1-51150Angola151-1-46146Chapter 1:IntroductionNote:A difference of 9 means that a country drops by 9 ranks compared to the respective other indicator;a difference of+

144、9 indicates an improvement of 9 ranks.Electronic copy available at:https:/ Quality Report,EQx202413More encouraging news comes from the performance of two large Western economies:Germany(#8)and the United Kingdom(#9).Despite their respective economic woes their elite systems are certainly doing some

145、 things right,including in the categories of Innovation&Technology(where they place#9 and#7 respectively)and Education and Human Capital(#23 and#20 respectively).Some of the emerging countries that perform notably well for intergenerational fairness are Cuba(#25),Senegal(#36),Tunisia(#37),and Costa

146、Rica(#39).To the degree that the Barometer is accurate,their youth will have opportunities to create value in the years to come.The rankings in the NextGen Value Creation Barometer dif-fer from the overall EQx.The biggest surprise might be that Singapore,the overall EQx2024 winner,places a rather lo

147、wly#28.Despite outstanding scores in the Health and Well-being category(#1),the city states performance in Ecology and Natural Capital(#104)and Equitable Oppor-tunities(#110)leave much room for improvement.This un-derlines that the intergenerational value relationship,which the Barometer seeks to ca

148、pture,is a distinct socio-economic phenomenon.As such,it ought to be discretely understood by policymakers,business elites,and society at large,to address disparities and boost the Value Creation prospects of the young.Felix Rdiger,St.Gallen Symposium and Tomas Casas-Klett,University of St.Gallen,Sw

149、itzerlandVisual 1.7:NextGen Value Creation Barometer,5 categories and 33 component indicatorsNextGen Value Creation Barometer in partnership withEquitableOpportunitiesEcology and Natural CapitalGreen patents per capitaEnvironmental Performance IndexDeforestation rateFertilizer usage kg per hectarTer

150、restrial land protectedCO2 emissions(metric tons per capita)Municipal waste recycling rateRed meat consumption kilograms per capitaSocial mobility(upward)(dev.fm optimum)Gini coefficient on net national wealth dist.-levelGovernment debt as%of GDPInflation(dev.fm optimum)Gross capital formationYouth

151、unemployment ratei.1_MOBi.1_GWLiii.9_DBTiv.11_DOIv.11_GCFiv.12_YUNiii.9_GPAiii.9_EPIiii.9_DERiii.9_FUSiii.9_TLPiii.9_CDOiii.9_MWRiii.9_METAcademic Freedom IndexPupil-teacher ratioSchool life expectancyPISA mean scoresTop universitiesGovernment education expenditurei.3_AFIiii.7_PTRiii.7_EDUiii.7_PISi

152、ii.7_UNViii.7_GEELife expectancy womenLife expectancy menUHC Service coverage indexDeath rates from substance useSuicide rateFinancial burden of healthcareHealth Efficiency Indexiii.7_LEWiii.7_LEMiii.7_SCIiii.8_SUBiii.8_SUIiv.10_FBH iv.10_HEIDomestic market diversificationEntrepreneurshipVenture cap

153、ital financeR&D as a%of GDPInternet accessLabor productivity growthii.4_HHIii.6_ENTii.6_VCKii.6_RNDiii.7_INTiv.12_LPGEducationand Human CapitalHealthand Well-BeingInnovationand Technology17,5%30,0%17,5%17,5%17,5%Electronic copy available at:https:/ of the NextGen Value Creation BarometerThe Baromete

154、r uses five categories,comprising a total of 33 component indicators(selected from the 146 indicators included in the full EQx2024).They serve as measurements to highlight intergenerational relationships,both in terms of Value Creation and extractive transfers.The categories selected build on a lite

155、rature review of intergenerational equity,as well as a global,cross-generational survey that asked respondents to rank the importance of key intergenerational issues(Gaspar,et al.2022).The methodology of the Barometer has evolved since its initial pilot in 2022,with three upgrades that are of partic

156、ular importance.First,while its five core categories of long-term Sustainable Value Creation have remained unchanged,further indicators have been added to each category to provide a richer,more comprehensive assessment.This applies in particular to the category of Ecology and Natural Capital,which n

157、ow assesses environ-mental sustainability in multiple dimensions:climate impact and action(e.g.,CO2 emissions,CDO,iii.9 and Red meat consumption kilograms per capita,MET,iii.9),the circular economy(e.g.,Municipal waste recycling rate,MWR,iii.9)and impact on biodiversity(e.g.,Terrestrial land protect

158、ed,TLP,iii.9 and Fertilizer usage kg per hectar,FUS,iii.9).Second,we have introduced different within-category weights for each individual indicator.This was done to account for the relative relevance of a specific indicator(such as CO2 emissions within the Ecology and Natural Capital dimension and

159、the Youth unemployment rate for Equitable Opportunities).Moreover,we aimed to weigh those indicators that most strongly demonstrated elite agency,i.e.,the extent to which ac-tive Value Creation efforts for the next generation are being made(e.g.,R&D as a%of GDP,RND,ii.6 and Government education expe

160、nditure,GEE,iii.7).These were weighted higher than mere outcome indicators(e.g.Life expectancy,LEW/LEM,iii.7 or Internet access,INT,iii.7)that tend to depend more strongly on a countrys overall income level.Third,we have allocated a stronger weight to the dimension of Ecology and Natural Capital(30%

161、),relative to the other four dimensions(17.5%each).This was done to acknowledge the significance of planetary boundaries,particularly the worlds climate system and biodiversity,for any future Value Creation.Its increasingly clear that environmental crises are humanitys crises,closely interlinked wit

162、h our future health,well-being,economic prosperity,and capacity to invest in education and innovation.Different aspects of sustainable development and Value Creation interrelate and depend on each other,as in resilience researcher Johan Rockstrms(2018)thinking on how a healthy biosphere provides the

163、 basis for a society and economy consistent with the aims of the UN Sustainable Development Goals.Chapter 1:IntroductionElectronic copy available at:https:/ Quality Report,EQx202415Electronic copy available at:https:/ Why Small Nations have Great ElitesWe have spent several years researching and try

164、ing to under-stand why a number of small nations lead the world in a num-ber of the metrics considered to be critical to a healthy society including global competitiveness,GDP per capita,prudent levels of debt,PISA scores,confidence in government,and innovation.We have now turned our attention to El

165、ite Quality and concluded that countries that have a smaller distance be-tween their elites and the general population tend to thrive.Why might this be the case?A successful nation must first and foremost be very good at creating value and then turning it into wealth.High levels of general prosperit

166、y will follow.One fruitful path forward is through high levels of exports.That means that a countrys products(and services)must have a comparative advantage to prevail over domestic competitors in foreign markets.This is normally achieved through technological superiority.Private markets are mechani

167、sms to create value and gain stat-ure internationally.Governments should therefore be support-ive of private initiatives,fostering conditions that encourage high performance such as providing an outstanding public education system,excellent infrastructure,and a trusted rule of law.Yet there is more.

168、In this context and in many others,it is the elites that play a decisive role.Here are some general observations:1.Cohesion:As elites are conferred a disproportionate amount of power compared to matters that are decided by elections(one person,one vote)it is important that society considers that suc

169、h power is legitimate.If elites are of high quality and fulfill their role conscientiously then trust and Zusammenhalt will help to bind society together,notwith-standing the superior privileges that elites may have.If the elites abuse this trust or are seen as extracting rather than adding value,wi

170、despread mistrust,greater friction,and bad feelings within society will soon emerge and eventual-ly lead to dysfunctionality.2.Trust:The degrees of separation between elites and the general populace are narrower in smaller societies and so the opportunities to validate trust are greater,as are the c

171、onsequences of destroying it.People have closer relation-ships and have more data points to call out elites if they are seen to be violating trust or disappointing expecta-tions.This frequency of feedback loops and a higher sig-nal to noise ratio ensures greater social cohesion and higher responsive

172、ness to social concerns by elites.3.Meritocracy:The idea that rewards and positions are based on individual talent and effort rather than family background or social connections is critical to a well-func-tioning elite.The elite enjoy greater credibility and good-will from the public if there is a h

173、igh degree of social mo-bility and the possibility of entering into the ranks of the elite is possible,regardless of background.This contributes to a sense of fairness and motivates Value Creation and continual striving for upward mobility,the key to social progress.Meritocratic systems place the mo

174、st qualified and skilled individuals in leadership positions,resulting better decision-making,improved efficiency,and the over-all advancement of progress.4.Openness:Due to their size,it is impossible for small nations to source the best global talent locally and yet such human capital is essential

175、to successfully competing at the highest echelons of the global economy.Therefore,it is important for these nations to be open to outsiders and attract the best possible candidates based on merit rather than nationality.The majority of C-Suite members of Swiss multinational corporations come from ar

176、ound the world,as do the professors at leading universities such as the ETH or the University of St.Gallen.We see similar patterns in other small successful nations such as the Netherlands and Singapore.5.Elite circulation:Constant renewal at the top is very im-portant,so that younger,more capable a

177、nd ambitious po-tential members of the elite are afforded the opportunity to join the elite and become leaders.Instances where elites cling to their positions of authority irrespective of age and on the basis of favor are a bad sign and counterproductive to a vibrant,forward-looking culture.For exam

178、ple,Prime Minister Lee Hsien Loong of Singapore will step down in November 2024 at the age of 70,notwithstanding his ability,reputation,and legacy,while in Finland,the aver-age age of cabinet members is just 45.We have identified a Group of Eight nations included in the EQx2024 that reflect the attr

179、ibutes discussed above in their exceptional EQx rankings and scores:Singapore(Rank#1),Switzerland(Rank#2),Netherlands(Rank#3),Israel(Rank#7),Sweden(Rank#9),Denmark(Rank#10),Finland(Rank#14)and Ireland(Rank#26).James Breiding,Founder of S8nations and fellow,Center for International Development,Harvar

180、d University Chapter 1:IntroductionElectronic copy available at:https:/ Quality Report,EQx202417Visual 1.9:Overview of EQx and sub-index ranks for S8nationsVisual 1.8:S8nations 2024 country comparisonDenmarkIrelandNetherlandsSwedenFinlandIsraelSingaporeSwitzerlandElectronic copy available at:https:/

181、 EQx2024 Power and Value Sub-Indices at a GlanceChapter 1:IntroductionVisual 1.10:EQx2024 Power Sub-Index global map(colored according to Power Country Scores)Further to the EQx country scores map provided on the inside cover,additional maps for the Power and Value Sub-Indices are presented here.Not

182、e the use of different colors to indicate the distance between the Power and Value scores of the fea-tured countries.These provide many interpretative possibilities to explain how a countrys political economy relates to its hu-man and economic development outcomes.They reflect elite agency in the us

183、e of Power to shape inclusive or extractive institutional arrangements.Sub-Index CountryScores6560505545Electronic copy available at:https:/ Quality Report,EQx202419Visual 1.11:EQx2024 Value Sub-Index global map(colored according to Value Country Scores)When examining the maps and related scores two

184、 thoughts should be kept in mind:First,Power is defined as future potential Value Extraction.Assuming a homogenous tendency for Value Extraction by elites across the world,Value scores will,in the mid-to long-term,equalize with Power scores.However,due to discrete elite leadership profiles,cultural

185、issues,historical experiences and other factors,the propensity for elites to extract varies across nations.The second point to be mindful of is whether and where Power is not used for Value Extraction but rather for Value Creation.Elite systems that have low Power scores have managed to create an ef

186、fective set of checks and balances for their elites.Elite systems where the Value scores are higher than those for Power,possess elites that that keep their own Power in check and self-restrain their Value appropriation.By doing so,they create the necessary incentives to enlarge the overall size of

187、the pie.Electronic copy available at:https:/ EQx research project was born with a spirit of openness,inclusiveness,and broad international participation.The con-ceptual framework and accompanying infrastructure are de-signed to foster the growth of a vibrant community motivated by transforming elite

188、s and Sustainable Value Creation.We en-gage with both institutions and individuals,from users who are stimulated by the EQx rankings to those who wish to be-come stakeholders in the project and contribute as partners,researchers or patrons.Do you wish to Partner with the Foundation for Value Creatio

189、n(FVC)?The non-profit Foundation for Value Creation leads the EQx outreach efforts,supports our research and pub-lications program and develops other formats to advance Sustainable Value Creation narratives.We would be delighted to hear from potential benefactors.You may wish to associate your insti

190、tution with the FVCor become involved personallyfor a variety of reasons.You could be a concerned citizen or running an elite business model;in either case there are many ways to support ideas that grow the pie in the political econ-omy.Together we can help steer our countries institutions and elite

191、 business models towards Sustainable Value Creation.Start a conversation with us now at:partnervaluecreation.orgCall to ResearchersThe EQx2024 Report is a call to all researchers interested in joining the EQx academic community.We will be undertaking projects of both a theoretical and empirical natu

192、re,some targeted at publication in leading peer-reviewed journals,while others will focus on the task of providing practical insights for policymakers and firms,essential to making a real impact on business model transformation.Some research partners may wish to take responsibility for work in a par

193、ticular country.We also encourage the submission of original ideas for new indicators that describe Value Creation and Value Extraction phenomena in the economy.If you are in-terested in joining this unique research opportunity,or just learning more about our plans,get in touch with us at:researchel

194、itequality.orgThe EQx for Readers and Followers The project aims to be meaningful to those who care about taking the long view,building a sustainable so-ciety,transforming the political economy,generating ideas for new business models,using power for the greater good,creating value,investing in the

195、future,or for others who are just interested in global rankings and current affairs.The EQx can be followed on key social media platforms at LinkedIn,Facebook,X and via our website:www.elitequality.org.Chapter 1:Introduction1.5 Building and Shaping the EQx CommunityElectronic copy available at:https

196、:/ Quality Report,EQx202421“Whether one likes it or not,elites play a big role in a nations success or failure.They can promote all-round well-being;but they can also be exploitative,stalling the nations overall progress.The newly created Elite Quality Index(EQx),under the academic leadership of the

197、 University of St.Gallen,is an exciting experiment in scoring and ranking the quality of elites in different nations.This work can potentially play a role in helping nations reform their leadership,thereby contributing to overall social welfare.”Kaushik Basu,Professor of Economics and Carl Marks Pro

198、fessor of International Studies,Cornell University;Former Chief Economist of the World Bank“Mainstream economic theory might have reached its limits in terms of practical application.Fiscal stimuli packages have indebted many countries,while monetary policies have given rise to the bane of inflation

199、.At the same time,Sustainable Value Creation at the micro-level is all too often ignored in macroeconomic policymaking.In China we believe that courageous structural reform is an effective way forward out of crises and in support of inclusive economic development.Reforms must then be based on adjust

200、ing the incentive system so that elite business models create rather than transfer value.The elite theory of economic development provides a framework for such structural reform and captures complex trade-offs that require state capacity while at the same time referencing culture and history.Compari

201、ng countries based on Elite Quality and their creation of value is both innovative and difficult.The Elite Quality Index(EQx)is a first valuable initiative in this direction and should inspire debate between researchers,policymakers,and the concerned general public across the world.”Zhang Jun,Profes

202、sor,School of Economics,China Center for Economic Studies,Fudan University,Shanghai,China“The rise of elites with foresight explains Japans transformation into a superpower in the 19th century and the post-war miracle.Its inability to let go of past successful experiences led to the bubble economy a

203、nd subsequent stagnation.Elite quality,as operationalized in the EQx global index,is a distinctly productive framework for comparative evaluation.By describing the micro-level sustainable value creation fundamentals of the political economy,it provides a detailed elucidation of current economic real

204、ity and foresight into the growth prospects of nations.”Etsuro Shioji,Professor,Department of Commerce,Chuo University andSpecially Appointed Professor,Hitotsubashi Institute for Advanced Study,Hitotsubashi University“By analyzing elite behavior and rent seeking,the EQx2024 report contains a trove o

205、f new insights for political economists.This innovative framework furnishes policymakers with a fresh set of tools to navigate the complexities of the global landscape.The integration of Global Trade Alert data on protectionist measures is particularly welcome,allowing for a nuanced understanding of

206、 how government interventions and trade dynamics affect a nations ability to create sustainable value.The EQx report is an essential resource for anyone seeking to understand and navigate the ever-evolving world of political economy.”Simon Evenett,Professor,University of St.Gallen;Founder,St.Gallen

207、Endowment for Prosperity through Trade Electronic copy available at:https:/ 2 presents the conceptual political economy frame-work of the EQx anchored by the dual notions of Power and Value and discusses how these are operationalized within the EQx architecture.The discussion proceeds to review the

208、index construction methodology that has been applied to the EQx.2.Unpacking the Global Elite Quality IndexChapter 2:Unpacking the Global Elite Quality IndexVisual 2.1:Macro perspective of Elite Quality:The economic impact of elite business model choicesGrow the slice The economyElite Quality:LowElit

209、e Quality:HighGrow the pie The EQx proposes an analytical framework to interpretand possibly transformthe state of the worlds political econo-mies.It is based on a simple idea.The EQx posits that the business models chosen and run by elites determine economic and human development.That is,elites(the

210、 who)affect hu-man and economic development outcomes(the what),some-times directly and mostly indirectly via their sway on institu-tions(the how)that set the rules of the game.These rules bestow on elites a license to operate.Both the how and the what have been theoretically discussed at great lengt

211、h and are amply measured.Measuring the who element in the po-litical economy is the research gap that we seek to pursue.We do so at the national level,i.e.by considering the aggre-gate national elite systems in terms of the Value Creation and Value Extraction impacts of their primary business models

212、.Elites are a mathematical certainty and exist in every society on earth.Their business models generate the most income and are run by leaders possessing the strongest coordination capacity over societys key resources,such as human,financial,and other capital.Moreover,the business models of elites s

213、uccessful-ly accumulate wealth.Crucially,these business models can be located on a continuum,which ranges from Value Creation to Value Extraction.The latter represent rent seeking,where“a rent is an unearned reward sought through a quest for privilege”2.1 Conceptual Framework and Definitions(Hillman

214、&Ursprung,2015,p.3).While rent-seeking models are beneficial for the operators,they result in social loss.The EQx terms elites that run business models creating more value than they extract,high quality.They grow the whole(economic)pie to increase their own wealth and,in doing so,enrich society as a

215、 whole.Visual 2.1 describes this metaphor visually.Low quality elites,on the other hand,do the opposite and increase their own slice of the pie at the expense of non-elites.In short,elites can be high-quality value creators,or low-quality value extractors.Obviously,a value creating busi-ness model c

216、an be transformed into a rent seeking one,or vice versa.This fluidity motivates the annual release of the EQx with the aim of highlighting constructive changes towards transfor-mational leadership made by elites and policymakers.The EQx proposes that from a sustainability perspective the operation o

217、f Value Creation business models is in the long-term best interests of the elites,their families,and associates.By doing this,not only do elites grow their own wealth,but do so by growing non-elite wealth too,without prejudicing the opportunities of non-elites,thereby accruing social legitimacy.Soci

218、al and political stability are,after all,essential for pros-perity.Furthermore,we argue that the prosperity of a nation as a whole depends primarily on the nature of the business models chosen by elites;more specifically,whether elites allo-cate societys key resources such as savings,talent,or land

219、to value-boosting projects or to projects based on value transfers away from producers.At one extreme,rentier capitalism is when“economic and Political Power allows privileged indi-viduals and businesses to extract a great deal of such rent from everybody else”(Wolf,2019).In contrast,high-quality el

220、ites have a transformative role in the political economyand on society in generalas,by definition,they give more than they take.Electronic copy available at:https:/ Quality Report,EQx2024232.2 EQx Architecture The EQx is a political economy index that measures the overall Elite Quality of nations in

221、 terms of the ability of elite business models to create value,rather than rent seek,as evidenced by aggregated datasets.At the top of the EQx architecture(see Visual 2.2),all of the components of the Index come together to produce the EQx,with its Country Scores and Global Rankings.We de-con-struct

222、 and operationalize Elite Quality through Sub-Indices I and II:Power and Value.The Value Sub-Index I provides direct evidence of Value Creation and Extraction through elite business models,even though the latter might be easier to measure,since the results of rent seeking are more visible.The Power

223、Sub-Index II conceptualizes the potential for Value Extraction,since there can be no Value Extraction without power.Hence,power is not Value Extraction per se,but rather a necessary,albeit insufficient condition for it to take place.In many countries,elites enjoying high degrees of power invest in a

224、nd operate inclusive Value Creation business models.Visual 2.2:EQx Architecture (Source:Derived from Figure 6.3 in Casas-Klett,2024,in press)(x1)Index Level 1(x2)Sub-Indices Level 2(x12)Pillars Level 3(x146)Indicators Level 4Electronic copy available at:https:/ of EQxs two Sub-Indices contain a poli

225、tical and an eco-nomic dimension.The former indicates where the rules of business are determined and Value Creation/Extraction is en-abled,and the latter denotes where Value Creation/Extraction is actually implemented via suitable business models.This conceptual 2x2 brings to life the EQxs matrix-li

226、ke 4 Index Areas.Firstly,Political Power measures the capture of three kinds of rules:rules of the state,business regulation,and the rules of human labor.Secondly,Economic Power measures elite dominance in the economy,at both firm and industry level,as well as in terms of creative destruction.Thirdl

227、y,Polit-ical Value measures Value Extraction in the political dimen-sion;the states unearned income,its taking of income,and its giving of income.Fourthly,Economic Value measures Value Extraction from the economys three markets:products and services,the capital markets,and the labor markets.The 4 In

228、dex Areas act as a matrix,the 4 quadrants of which are represented in Visual 2.3.Visual 2.3:The Four Index Areas:The Power and Value Sub-Indices and their Political and Economic Dimensionsjobs via Human Capture(i.3).State Capture addresses how distributional coalitions capture the state and its gove

229、rn-ment branches,for example,through Political corruption(COR,i.1).Regulatory Capture suggests the extent to which rules and regulations,both in terms of process and output,have been captured by interest groups.Human Capture ac-counts for the power of labor and civil service coalitions,the power of

230、those who can implement discriminatory practices,and the power of elite business models to influence wages and working conditions.2.3 EQx PillarsEach EQx Index Area is then complemented by 3 conceptu-ally related Pillars;yielding a total of 12 Pillars in all(see Visual 2.4).The purpose of the Pillar

231、s is to define and create conceptual lenses through which we can approach,under-stand and measure specific phenomena.The Political Power Pillars(i)were selected to address the capture of 3 kinds of rules:the rules of the state via State Capture(i.1),the rules of business regulation via Regulatory Ca

232、pture(i.2),and the rules for labor markets and civil service Chapter 2:Unpacking the Global Elite Quality IndexElectronic copy available at:https:/ Quality Report,EQx202425Coalition Dominance(ii.4)FirmDominance(ii.5)CreativeDestruction(ii.6)StateCapture(i.1)RegulatoryCapture(i.2)HumanCapture(i.3)Cap

233、italValue(iv.1 1)LaborValue(iv.12)ProducerValue(iv.10)GivingIncome(iii.7)UnearnedIncome(iii.9)P Po ow we er rSub-Index IV Va al lu ue eSub-Index IIEconomic Power(ii)Index AreaPolitical Power(i)Index AreaEconomic Value(iv)Index AreaPolitical Value(iii)Index AreaTakingIncome(iii.8)Index PillarsLevel 1

234、Level 2Level 3Visual 2.4:The 12 Level 3 Pillars in the EQx ArchitectureThe Economic Power Pillars(ii)measure elite Coalition Dominance(ii.4)and Firm Dominance(ii.5)within the economy,as well as their opposite:the extent of Creative Destruction(ii.6).Coalition Dominance examines the Eco-nomic Power o

235、f leading industries by measuring the degree of business diversity and the distribution of power in an econo-my through indicators such as the Economic Complexity Index(ECI,ii.4).Firm Dominance measures the power of single businesses within the economy,using indicators such as Top 3 firms revenues a

236、s%of GDP(FRG,ii.5).We borrow Schum-peters(1942)concept of Creative Destructionthe replace-ment of outdated business practices with innovative new struc-turesfor the third Economic Power Pillar,which includes measures for Entrepreneurship(ENT,ii.6)and Venture capital finance(VCK,ii.6).The aim is to m

237、easure the pressures for renewal and disruption that exist within an economy and fuel Value Creation.The Political Value Pillars(iii):Giving Income(iii.7),Taking Income(iii.8)and Unearned Income(iii.9),reflect policy decisions in the political sphere that relate to redistribu-tion in its broadest se

238、nse:“from one subset of society to ben-efit a different subset”(Acemoglu&Robinson,2012,p.76).An important point here is that we only consider the merits of such redistribution in terms of Value and try to assess whether it has been extracted or created for each surveyed indicator.Giving Income measu

239、res how the government manages and uses public finances,in terms of the provision of public goods such as education or the amount of subsidies distributed in an economy.Taking Income addresses how the state col-lects such income,as in Tax revenue as%of GDP(dev.fm optimum)(DTR,iii.8),or whether it al

240、lows the existence of business models that take the ultimate valuelifeas in Death rates from substance use disorders per 100,000 peo-ple(SUB,iii.8).The Unearned Income Pillar focuses on the exploitation of natural resources,such as Natural resources rents as%of GDP(NRR,iii.9),or of the future at the

241、 expense of the present,like Government debt as%of GDP(DBT,iii.8).Thus,the Political Value Pillars offer a picture of the degree to which production has been channeled into or shift-ed away from innovative and wealth-creating sectors of the economy(Porter,1990).The Economic Value Pillars(iv)directly

242、 measure the ex-tent of Value Creation and Value Extraction from the econo-mys three markets:the products and services markets,the capital markets and the labor markets.Producer Value(iv.10)estimates the value created or the rents extracted by producers and suppliers in the market for goods and serv

243、ices.Capital Value(iv.11)measures the value created or the rents extracted both directly and indirectly through participation in the financial market.Labor Value(iv.12),which includes in-dicators such as Unemployment rate(UEM,iv.12)and the Human flight and brain drain(BRN,iv.12),allows us to assess

244、the value created or the rents extracted in the labor markets,for example,from interventions in both supply and demand.Electronic copy available at:https:/ 2:Unpacking the Global Elite Quality IndexElectronic copy available at:https:/ Quality Report,EQx202427What is Power?The capacity to enforce one

245、s preferences;Power also has the potential to facilitate Value Extraction.What is Value?The outcome of productive activities;its creation increases the overall economic pie.What is Political?The dimension where business model rules are determined,and Value Creation/Extraction is enabled.What is Econ

246、omic?The dimension where Value Creation/Extraction is implemented via suitable business models.Electronic copy available at:https:/ of Indicators and Dataset Collection(Step 3)All 146 EQx indicators provide evidence of Value Creation or Value Extraction in the political economy,either at present,or

247、potentially in the future.As a whole,their aim is to capture and measure all relevant aspects of Elite Quality,according to the Elite Quality theoretical framework,summarized in the Intro-duction to this Report.For the full list of EQx indicators,see Section 5.2.The underlying datasets are collected

248、 from a variety of re-nowned international organizations(Section 7.2 provides a comprehensive list of the data sources for each individual indi-cator).Datasets are then categorized according to whether and how they should be transformed before being utilized to create the EQx indicators.Some indicat

249、ors are obtained direct-ly from the original data;for example,Control of corruption(COC,i.1)uses one of the Worldwide Governance indicators provided by the World Bank.Other indicators are obtained after some basic transformation of the source dataset,e.g.,by setting absolute numbers in relation to a

250、 countrys total popula-tion or GDP.Another set of indicators require more complex transformation,implying data cleaning and more extensive data repurposing,as is the case for Top 3 industries as%of value added(IVA,ii.4).Generally,the most recently available data is used to compute EQx indicators.Tha

251、t is,wherever possible,the EQx2024 uses data from 2023,and in one case even from 2024.The EQx aims at being an academically grounded and statis-tically valid measure of national Elite Quality.The multi-dimen-sionality of the underlying concept is mirrored by the four-level architecture of the index,

252、which allows for an easy interpreta-tion of the state of Elite Quality in a particular country.Visual 2.5 below illustrates the 9 separate steps in the process for constructing the index.Steps 1 and 2 are detailed in Casas-Klett(2024,in press)and discussed in Sections 2.1 and 2.3 of this Report.Step

253、s 3 to 6 are summarized below.Step 8,the statistical assessment,is addressed in a peer-re-viewed paper published in Social indicator Research that crit-ically reflects on the EQx2021 rankings(Diebold,2022).Throughout the index construction process,judgment calls are inevitable.Hence,our goal is to f

254、ollow the OECDs Handbook on Constructing Composite indicators(2008),in that“trans-parency must be the guiding principle of the entire exercise”(p.17).As a result,the following Section describes exactly how the EQx is calculated,as well as the underlying assumptions.EQx Concept Step 1Discussion of th

255、e theoretical frameworkStep 2Theoretical consistent selecti-on of IndicatorsEQx Input Step 3Datacollection and preparationStep 4Handling of missing dataStep 5Normalization Step 6Weighting and aggregationEQx OutputStep 7Determination of Country Scores&Global RankingsStep 8Robustness andsensitivitySte

256、p 9Visualization of results and publicationVisual 2.5:EQxs 9 step construction process Chapter 2:Unpacking the Global Elite Quality Indexly2.4 EQx MethodologyElectronic copy available at:https:/ Quality Report,EQx202429Handling of Missing Data(Step 4)Fortunately,the datasets considered for the EQx a

257、re,for the most part,characterized by being relatively complete.Gener-ally,the EQx approach to missing values aims to avoid any systematic bias in the index scores as a result of missing data-points.That is,a lack of data should not penalize or favor any country but should solely influence the accur

258、acy of its score.High data quality is achieved in three main ways.Firstly,the EQx solely considers indicators(as well as countries)that meet several minimum data requirements.Datasets are only includ-ed in the EQx analysis if they cover a minimum of 15%of the countries under consideration.Additional

259、ly,they must provide recent information on a countries Elite Quality,i.e.,no later than 2019(although there are,on occasion,some exceptions to this rule).The selection of countries for the EQx2021 was based on the following criteria:countries were included if their index score was based on at least

260、40 datapoints,and more specifically,on at least 3 datapoints per Index Area and 1 datapoint per Pillar in at least 11 Pillars.The EQx2024 in-cludes the same countries as the EQx2021.Secondly,if recent data is not available for only a small num-ber of countries,the missing datapoints are imputed with

261、 the latest available data.Thirdly,the EQx implements an“available-case analysis”(Little&Rubin,2002,p.54),where indicators are not omitted if they have missing values but included if they fulfill the above mini-mum requirements.As a consequence,if the value for an indi-cator is missing for a particu

262、lar country,the weight of the miss-ing indicator is distributed among the remaining indicators of the same Pillar,in proportion to their respective weights.The EQx methodology thus builds on the premise that indicators within the same Pillar measure similar aspects of Elite Quality.For the EQx2024,a

263、 countrys Index Scores is derived from a minimum of 67 datapoints(in the case of Equatorial Guinea).Of the 146 EQx2024 indicators,almost 80%cover at least half of all 151 countries included in the index,50%cover at least 89%of countries,and almost 20%cover all 151 coun-tries.On average,a countrys in

264、dex scores is computed using 113 datapoints.An obvious concern is that missing values are not completely random but based on a systematic pattern(OECD,2008,p.24),as data availability might be related to a countrys Elite Quality.This could represent an important endogeneity bias for the EQx.However,a

265、 positive relationship between Country Scores and data availability would not necessarily indicate bias.Provided that the existing indicators are unbiased,the EQx scores would not be biased,just less precise.By using less,but correct information,the state of Elite Quality would still be depicted.We

266、are confident that this argument applies to the EQx,since it uses data from renowned and trustworthy international organizations.Still,data constraints might hamper the cross-country compa-rability of EQx Country Scores.Some indicators stem from different years,while others cover a heterogenous set

267、of coun-tries.The latter implies that each Country Score relies on a different set of indicators(Little&Rubin,2002,p.54),which might limit the meaningfulness of the international ranking.However,while these important limitations should be kept in mind,we are confident that the EQx offers valuable in

268、sights on aggregate Elite Quality in the considered countries.An uncertainty and sensitivity analysis performed on the EQx2021 suggests that the ranking positions of the top 50 countries are largely robust to modifications in key modelling assumptions.Ranking positions of middle and lower performing

269、 countries appear to be more sensitive towards methodological choices,and especially the availability of data.Any interpretation or conclusion on the Elite Quality of these countries based on the exact rank should therefore be treated with caution,and rank-ing positions should not be taken at face v

270、alue but rather be seen as indicative(Diebold,2022).Electronic copy available at:https:/ of indicator Values(Step 5)Because indicators initially have different scales and measure-ment units,normalization is necessary prior to aggregating the data to“avoid adding up apples and oranges”(OECD,2008,p.27

271、).Initially,a logarithmic transformation is applied to indicator datasets:firstly,if Pearsons second coefficient of skewedness exceeds unity,indicating strong skewedness(Belfiore&Favero,2019,p.63);and secondly,if the indicator is not already based on an existing index.This is to improve the distribu

272、tion of the data and thus yield more meaningful indicator scores.In total,17 of the 146 EQx indicators are based on a log transformation.Subsequently,data is standardized,i.e.,converted to a com-mon scale(with mean zero and standard deviation one)by calculating z-scores:where xq,c indicates the valu

273、e of indicator q of country c,and Iq,c denotes the standardized value.This improves the compa-rability of datasets with large differences in scales and units,as is the case with the EQx indicators.Next,and only if neces-sary,outliers are winsorized to fall within a 2,+2 interval.The resulting values

274、 are then rescaled so that the indicator scores all range between 0 and 100,using:Lastly,and again,if necessary,indicators are adjusted for po-larity.That is,they are transformed so thatconsistently across all datasetsa value close to 100 indicates a high level of Elite Quality,and a value close to

275、0 represents a low level of Elite Quality.For reflections on the index normalization scheme,see(Section 2.6).Weighting Scheme(Step 6a)The weighting scheme of any index is decisive since it rep-resents an important determinant of the resulting scores and rankings.By weighting index elements,different

276、 levels of rele-vance can be attributed to them.Best practice in index con-struction suggests that weights must be explicitly consistent with the concept of the index and fully transparent.In other words,first,a weighting scheme must reflect what the index aims to measure and second,each of the data

277、sets that constitute the index must have their weight assigned in a documented and traceable manner.The weight of each indicator in the EQx depends on its weight within its Pillar,the weight of that Pillar within its Index Area,the weight of that Index Area within its Sub-Index,and the weight of tha

278、t Sub-Index within the overall EQx.What does the EQx aim to measure?Again,the aim is to portray the overall Elite Quality of nations in terms of the ag-gregate Value Creation of a countrys elite business models as evidenced by aggregated datasets.Sub-Index weightsThe EQx sees Power as a necessary co

279、ndition for Value Ex-traction and rent seeking.The Power Sub-Index I is thus a pre-dictor of potential future Value Extraction.Therefore,the rela-tive weighting for the two Sub-Indices,Power and Value,is conceptual and has been determined by the authors after thor-ough deliberation:the Power Sub-Ind

280、ex I has a weight of 1/3 whereas the Value Sub-Index II is weighted at 2/3.Index Area weightsThe EQx could also have been called the political economy index because it measures Power and Value in the political economy.Accordingly,each of the EQxs two Sub-Indices con-tain a political and economic dim

281、ension.The weights of the resulting two Index Areas within Power Sub-Index I and Value Sub-Index II are also the result of the conceptual design of the EQx and the authors judgments:the weights for both are es-tablished at roughly 1/3:2/3(conceptual deliberations 2 and 3).This determines the weights

282、 of all four Index Areas:Political Power(PP),Economic Power(EP),Political Value(PV)and Eco-nomic Value(EV).For Power Sub-Index I,the rationale is that Economic Power is supreme,while Political Power reflects po-tentially extractive processes if these successfully transition into the economic arena.F

283、or Value Sub-Index II,the rationale is the higher significancein terms of direct impact on citizens and economic agents of the economic over the political in the overall Value Creation processes of the political economy.Chapter 2:Unpacking the Global Elite Quality IndexzElectronic copy available at:

284、https:/ Quality Report,EQx202431Anticipating the linear aggregation scheme discussed below,the three conceptual deliberations in weighting imply the fol-lowing index area weights within the overall EQx:11.1%(PP),22.2%(EP),22.2%(PV),and 44.4%(EV).Pillar and indicator weightsWhile the weights of the S

285、ub-Indices and Index Areas are determined by conceptual deliberations,a panel of experts is used to determine the weights of the Pillars and indicators.A Budget Allocation Process(BAP)is employed to establish the weighting of the Pillars within each of the 4 Index Areas,as well as weighting the indi

286、cators within each of the 12 Pillars.Visual 2.6 summarizes the structure and weighting scheme used in the EQx.Section 5.1 lists all indicators with their re-spective weights,both within their Pillar,as well as within the overall EQx.Visual 2.6:EQx weighting overviewLevel 1Level 2Level 3Level 4Concep

287、tual Deliberation 1Conceptual Deliberation 2,3Budget Allocation ProcessBudget Allocation ProcessEQx146 IndicatorsIndividual Indicators within Pillar weights12 PillarsIndividual Pillar within Index Area weightsIndexPowerValuePolitical PowerEconomic PowerPolitical ValueEconomic Value1/32/3Sub-Index IS

288、ub-Index IIIndex Area(i)Index Area(ii)Index Area(iii)Index Area(iv)1/31/32/32/3Aggregation Scheme(Step 6b)Finally,the EQx applies a linear aggregation scheme.This implies constant and full compensability between each aggre-gated element at the respective aggregation level(OECD,2008,p.33).Within Pill

289、ars,indicators are assumed to mea-sure similar aspects of Elite Quality,and as a consequence,full compensability is intended.A similar reasoning applies to the aggregation of Pillars within Index Areas.Moreover,a linear aggregation scheme transmits the relative impor-tanceas determined by the underl

290、ying weighting schemeof the elements that are aggregated at the respective level to the index(Santeramo,2017,p.131).Therefore,Index Areas and Sub-Indices are also linearly aggregated,to en-sure a full transmission of the relative weights as implied by the theoretical framework.Electronic copy availa

291、ble at:https:/ The PanelEQx(PEQx2024)Dataset:Measuring Elite Quality over Time for Academic and Policy PurposesWhat is the role of elite agency in a countrys economic and human development?Can we measure when elites are good or bad for their nations?Since 2020,the annual EQx re-ports have presented

292、a data-driven answer to these questions.The reports reveal a temporary snapshot of how a countries elites perform comparatively to each another over one par-ticular year.Two key questions then arise:how does Elite Quality evolve over time?Is it possible to measure the evolving impact of elite busine

293、ss models since 2005?To answer these questions,the annual EQx reports represent a natural starting point.Howev-er,there are some technical limitations.For instance,due to the unavailability of some historical data,it isnt possible to com-pute the EQx back in time for all the 146 indicators used in t

294、he 2024 report.Furthermore,the annual EQx reports are only partially comparable to each another.This is because each annual iteration attempts to improve the index by adapting the list of indicators to incorporate current events or newly dis-cussed aspects of Elite Quality.Nevertheless,to analyse ho

295、w Elite Quality is related to other aspects of human and economic development,an empirical and stable measure of Elite Quality over time would likely provide interesting new insights.Thus,in 2023 we proposed the PanelEQx(PEQx),a histori-cal measure of annual Elite Quality,starting in 2005.The PEQx c

296、onceptually corresponds to the EQx.In particular,the PEQx maintains the conceptual framework and resulting multi-level architecture of the EQx.However,taking into ac-count the unavailability of some historical data,the PEQx is computed using only a subset of EQx indicators.Moreover,it is only availa

297、ble for a subset of EQx countries.The size of this subset depends on the amount of missing values a given researcher is willing to accept in the context of his or her research aims.The PEQx provides a high quality,compara-tive empirical measure of Value Creation and Extraction by a countries elite o

298、ver time.Additionally,it represents a flex-ible and promising tool for researchers interested in empiri-cally analyzing the topic of Elite Quality.MethodologyHow can Elite Quality be measured over time?The PEQx al-ways follows the EQx methodology for a particular year,i.e.,the PanelEQx2024 is based

299、on the EQx2024.Taking into account the availability of historical data,the PEQx uses the 73 EQx indicators that generally all have an-nual data going back to 2005.By ensuring that the PEQx is based on a common set of indicators each year,the compa-rability and meaningfulness of the data over time is

300、 ensured.However,other considerations are also required.For exam-ple,reducing the number of indicators per Pillar also implicit-ly affects the underlying weighting scheme of the EQx.Fol-lowing the EQx methodology,the weight of a missing indicator(or Pillar)is distributed among the remaining indica-t

301、ors of the same Pillar(or remaining Pillars of the same Index Area)in proportion to their respective weights.The resulting dataset provides the data for the PEQx at all in-dex levels between 2005 and 2024.That is,the dataset covers all available historical indicator values in a normalised format as

302、indicator scores as well as the weighted and aggregated index values of countries at the Pillar,Index Area,Sub-Index and overall EQx level,for each year between 2005 and 2024.The PEQx only uses publicly available data retrieved from renowned international organizations.However,limitations on the ava

303、ilability of data,especially for the earliest years,poses issues in assuring the meaningfulness and comparabil-ity of index values over time.This is because index country scores that are computed based on differing sets of indicators are less comparable to one another,thus restricting the infor-mati

304、ve value of the implied country ranking over time.For instance,for the 73 generally available EQx indicators used for each PEQx year,up to 54%of values per year are not available for the countries Afghanistan and Timor-Leste.On the other hand,the aim is to comparatively measure Elite Quality for as

305、many countries as possible.In this context it is important to note that the selection of countries affects the com-putation of all index values via the normalization process.We address this trade-off as transparently as possible.Data will be made freely available for use at www.elitequality.org/peqx

306、.Researchers interested in investigating Elite Quality can specify the maximum proportion of missing values that they are com-fortable with and then use the PEQx for the implied set of countries.The table below indicates the number of countries included in the PEQx depending on the maximum proportio

307、n of missing values in the underlying dataset.Chapter 2:Unpacking the Global Elite Quality IndexElectronic copy available at:https:/ Quality Report,EQx202433Visual 2.7:Table with sets of PanelEQx countries subject to data availability(percentage of missing values)Note:The table indicates the number

308、and set of countries covered by the PanelEQx,depending on the maximum proportion of missing values allowed for.Percentage of missing values allowed for any country and yearImplied nr.of countriesCountries(additionally)included1035Australia,Austria,Belgium,Bulgaria,Canada,Switzerland,Czech Republic,G

309、ermany,Denmark,Spain,Estonia,Finland,France,United Kingdom,Greece,Croatia,Hungary,India,Ireland,Israel,Italy,Lithuania,Latvia,Mexico,Netherlands,Norway,Poland,Portugal,Russian Federation,Slovak Republic,Slovenia,Sweden,Thailand,United States,South Africa2066Argentina,Armenia,Azerbaijan,Bangladesh,Br

310、azil,Chile,China,Colombia,Costa Rica,Cyprus,Dominican Republic,Ecuador,Georgia,Honduras,Indonesia,Jamaica,Japan,Kazakhstan,Korea,Rep.,Sri Lanka,Morocco,Malaysia,New Zealand,Pakistan,Peru,Philippines,Paraguay,Romania,Tunisia,Turkey,Ukraine30110Angola,Albania,Benin,Burkina Faso,Bosnia and Herzegovina,

311、Belarus,Bolivia,Botswana,Cameroon,Congo,Rep.,Egypt,Arab Rep.,Ethiopia,Ghana,Guatemala,Iran,Islamic Rep.,Jordan,Kenya,Kyrgyz Republic,Cambodia,Lebanon,Moldova,Madagascar,North Macedonia,Mongolia,Mozambique,Mauritius,Namibia,Niger,Nigeria,Nicaragua,Panama,Saudi Arabia,Senegal,Singapore,El Salvador,Taj

312、ikistan,Trinidad and Tobago,Tanzania,Uganda,Uruguay,Uzbekistan,Venezuela,RB,Vietnam,Zambia55151Afghanistan,United Arab Emirates,Burundi,Bahrain,Central African Republic,Cte dIvoire,Congo,Dem.Rep.,Cuba,Algeria,Gabon,Guinea,Gambia,The,Guinea-Bissau,Equatorial Guinea,Haiti,Iraq,Kuwait,Lao PDR,Liberia,L

313、ibya,Lesotho,Mali,Myanmar,Mauritania,Malawi,Nepal,Oman,Papua New Guinea,Qatar,Rwanda,Sudan,Sierra Leone,Serbia,Eswatini,Syrian Arab Republic,Chad,Togo,Turkmenistan,Timor-Leste,Yemen,Rep.,ZimbabweElectronic copy available at:https:/ Results of the PanelEQx,allowing up to 10%of Missing Values per Coun

314、try and YearA fairly restrictive requirement of only up to 10%of missing values for the 73 considered indicators for any country and year results in a PanelEQx covering 35 countries.Table 2 sum-marizes the PEQx ranking between 2005 and 2024 regarding overall Elite Quality,as well as the Sub-Indices

315、for Power and Value.The ranking reveals interesting differences in the state of Elite Quality across the considered countries over time.Note:Countries are sorted according to their PEQx ranking at the EQx level in 2024.A positive difference indicates a relative improvement in Elite Quality between 2

316、005 and 2024,and a negative difference indicates a decline in the ranking position.Visual 2.8:PEQx ranking at EQx and Sub-Index levels for 2024 and the differences to 2005As discussed,as a result of the methodological adjustments,the PEQx2024 rankings will differ from the EQx2024 rank-ings.This allo

317、ws for a unique analysis over time and could suggest policy recommendations.Switzerland leads the PEQx ranking steadily,in 2005 as well as in 2024.The largest im-provement in Elite Quality is displayed by Israel.The Middle Eastern country gains an astonishing 17 ranking positions in CountryEQx level

318、 ranking in 2024Difference to ranking in 2005Power sub-index ranking in 2024Difference to ranking in 2005Value sub-index ranking in 2024Difference to ranking in 2005Switzerland102210Israel217103224Denmark3012-933Netherlands443752Germany5443712Finland6-41012-1United Kingdom7-27210-5Sweden8-45111-2Fra

319、nce9462173Austria10-411-614-4Belgium11684183Spain126133131Norway13-31629-7Australia14223-966Canada15-117-6153Czech Republic16-120-380United States17-109-723-7Slovenia18-615419-16Thailand19331-1411Italy203149225Ireland21-1027-1216-12Greece2292632012Portugal23-224-221-4Hungary24021525-3Lithuania251189

320、32-8Estonia26-619130-17Latvia271221029-1Poland28125-1274Croatia29-2283241Slovak Republic30-529-426-3India31130-2312Bulgaria32-2323281Mexico33034033-3Russian Federation34033035-1South Africa35035-14341Chapter 2:Unpacking the Global Elite Quality IndexElectronic copy available at:https:/ Quality Repor

321、t,EQx202435Visual 2.9:The PanelEQx2024:The Top 10 and the Bottom 10 Countries in 2024Tomas Casas-Klett,Guido Cozzi,Cline Diebold and Alexander Tonn,University of St.Gallenoverall Elite Quality between 2005 and 2024(readers should keep data availability constrains in mind,with highly topical developm

322、ents not(yet)mirrored in index scores,see also Section 2.7).Denmark performs steadily in overall Elite Quality(rank#3 in both 2005 and 2024),but with some in-teresting dynamics playing out at the Sub-Index level:Danish elites appear to have become more powerful(dropping by 9 ranking positions in the

323、 Sub-Index for Power)but have used this power to deepen their commitment to Value Creation rather than Extraction over time(moving up by 3 ranking po-sitions in the Sub-Index for Value).The United States,on rank#17 in 2024 in the PEQx2024,display a decline in Elite Quality over time,dropping by 7 ra

324、nking positions both in the Power and the Value Sub-Index,and 10 ranking positions overall.Visual 2.9 illustrates the individual trajectories of countries assessed using the PEQx over time.Electronic copy available at:https:/ 2:Unpacking the Global Elite Quality IndexElectronic copy available at:htt

325、ps:/ Quality Report,EQx202437Normalization Scheme based on z-Scores(the Baseline EQx Scheme)The EQx normalization process that is applied to raw indica-tor data relies on the computation of z-scores.That is,data is standardized,by calculating z-scores:where xq,c indicates the value of indicator q of

326、 country c,and denotes the standardized value,with a mean of zero and a standard deviation of one.Importantly,any outliers then undergo the process of“Winsorization”that limits extreme values to reduce the effects of outliers.In this case they are winsorized to fall within a 2;+2 interval,before the

327、 result-ing values are rescaled so that indicator scores all range be-tween 0 and 100,using:Normalization Scheme based on Min-Max(the Alternative Method)The alternative option standardizes values according to the Min-Max procedure,applying:This data scaling technique yields values with a range 0,1.N

328、ext,values are rescaled to fall within a 0,100 interval,applying:Initiated in 2020,the EQx project is the first systematic at-tempt to empirically measure Elite Quality:the relative Sus-tainable Value Creation of elites in proportion to their rent seeking.This is done by means of an index,because co

329、mpos-ite indicators can account for the multi-dimensionality of such an investigated phenomenon without losing the underlying information base.Indicators thus facilitate the communication of key insights to decision-makers as well as the interested public.However,there is no objective way to constru

330、ct an index,and any changes to the EQx underlying assumptions and computational methods can have considerable effects on the resulting country rankings(Diebold,2022).Hence,the overarching objective of the EQx is to make all index assump-tions,as well as the underlying decision-making process,as tran

331、sparent and justifiable as possible.Each annual iteration provides a new opportunity to evalu-ate the index and make judgments on how it might be im-proved.The most expeditious way to achieve this is by refin-ing the selection of indicators,meaning that new ones may be added,while others that are de

332、emed to be less effective at reflecting a Value Creation/Extraction phenomenon may be discarded.Another approach to improving the index is to adjust the weights allocated to individual indicators.The de-tailed EQx methodology is described in Measuring Elite Quality(Casas-Klett,Cozzi,Diebold,&Zeller,

333、2020),a pa-per whose main tenets have evolved since it was first written to support the publication of EQx2021,with the major changes summarized in Section 2.4.An important parameter with wide ranging implications for any index concerns the way that raw indicator values are nor-malized.Because indicators initially have different scales and measurement units,normalization is necessary prior to aggr