Which Countries Are Prepared for Change? A Forward-Looking View

By Martin Chrisney, Director, IDAS Institute, KPMG LLP

 

 

 

In an increasingly uncertain and unstable world, countries cannot afford to look backwards to prepare for the challenges ahead. Change happens. Rich and poor countries alike must respond to unexpected shocks and long-term structural shifts, and adapt to new market opportunities and challenges as they arise. The lesson of successful, change-ready countries is that when it comes to being prepared for change, institutions matter.

Economies rise and fall based on the quality of their institutions and the norms and rules they embody.  In the post WWII-period, countries such as South Korea, Singapore and Ireland have been able to climb the income ladder by taking advantage of global market opportunities and adapting their institutions; while others that took more rigid, inward-looking approaches fell behind. To assess beforehand if a country’s institutions are prepared for change requires a metric to gauge its capabilities.

Wealth is not enough.

The role of institutions is one of the key factors captured by KPMG’s Change Readiness Index (CRI). (The Change Readiness Index was first published by KPMG in 2013, and the latest index was published in July 2017. It captures primary data from nearly 1,400 in-country interviews and pools 125 variables from secondary sources to provide metrics of change readiness in the three pillars: Enterprise, Government, and People and Civil Society. https://www.kpmg.com/changereadiness)

The CRI tool measures the capacity of countries to adapt to and uniquely take advantage of change. Now in its fourth iteration, the CRI offers a cross-section of data on 136 countries and measures the characteristics that make them more change-ready. Using this data, we can identify the policies and institutions that are found in resilient countries.

A major finding of the CRI is that while wealth matters—the top 10 countries in the index are high-income earners—it is not enough….

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