A Social Competitiveness Index

The World Economic Forum’s Council on Philanthropy & Social Investing, of which I’m a member, was part of the World Economic Forum’s Global Redesign Initiative this year. In the wake of the economic crisis, the Forum asked their expert panels to collaborate across sectors, industries, and disciplines to develop proposals that would increase global cooperation and remove barriers to the Forum’s ability to live up to its commitment to “improve the state of the world”.

The Philanthropy & Social Investing Council has proposed the creation of a Social Competitiveness Index that is modeled on the Forum’s existing Global Competitiveness Report. Below, Matthew Bishop, US business editor of The Economist magazine, author of the book Philanthrocapitalism and chair of the World Economic Forum’s Council on Philanthropy & Social Investing, outlines the proposal.

By Matthew Bishop

Imagine if countries competed with each other to create the best environment in which social innovation can happen…

That’s the idea behind a new project we are working on, with Jed Emerson of Blended Value fame: the “Social Competitiveness Index”. The concept has been developed under the auspices of the World Economic Forum’s Global Redesign Initiative, by the Global Agenda Council on Philanthropy and Social Investment, and is now being advanced with support from the Avina Foundation together with a crack team of volunteer researchers from Deutsche Bank. We would like your help to think it through.

Three decades ago, the WEF produced its first Global Competitiveness Report (GCR), the most authoritative comparative assessment of countries’ capacity to generate economic value. Unlike traditional measures of economic development that look at levels of national income, the GCR asked about the future potential for economic growth. In doing so, it has helped policy-makers to map out and drive change to make their economies stronger and more productive.

Yet the GCR only captures the economic capacity of countries, not their ability to create social value. Other indices, such as the UN’s Human Development Report, provide comparative information on different aspects of human wellbeing – but these largely reflect countries’ accumulated social value rather than countries’ capacities to respond to new challenges on a prospective, forward looking basis.

The Social Competitiveness Index (SCI) would rank countries according to the effectiveness of their legal, fiscal, governance and cultural environment with regard to social innovation. It would drive the creation of a systematic body of knowledge about the current structure of legal, tax and other policies toward social innovation, and about what works best. In doing so, it would provide a meaningful tool for decision-makers in all sectors to benchmark a country’s ability to tackle social and environmental problems and, through case studies, identify concrete steps on how to enhance this capacity.

So what makes a country socially competitive? Our working hypothesis (which you can read about in more detail on pages 103-108 of this report) is that it’s about the capacities of government, the private sector and the non-governmental sector to do three things:

First, to innovate and create new models or technologies. This means having a strong civic sector that is able to come up with new ideas, a legal framework that allows these ideas these to be shared (freedom of expression, etc) and funding to get these ideas tested.

Second, a capacity to test these ideas and figure out what actually works. The quality of charities’ and social enterprises’ own reporting, as well as the quality of academic and media debate about the social sector is clearly important here. Yet so, too, is the openness of government, which is a crucial source of data on the nature of the social and environmental problems that needs to be tackled, as well as the effectiveness of a government’s own programmes.

Third, funding to get the ideas that work to scale. If social innovations are to reach meaningful scale they need to tap into sources of funding beyond the always limited pool of philanthropic grant capital. Governments must be ready to work in partnership with the social sector, to take new ideas and scale them up. Corporations must be willing to take new ideas of social and environmental responsibility and make them part of their mainstream business models. New legal structures for social investment will also be crucial to take ideas to scale.

We understand that creating the SCI is a huge a challenge, particularly if we are to make comparisons across countries with very different levels of development, different economic models, different social and cultural models. Over the next few weeks, we are looking forward to discussions with a number of others currently exploring this concept (or something similar). We also want your input. Have we nailed the essence of social competitiveness or are we way off the mark? Comment on this blog post. Join the discussion on our Facebook group. Join the debate on twitter with the #socindex hashtag. E-mail us at philanthrocapitalism@yahoo.com. Write a response on your own blog, or maybe be a guest on the Philanthrocapitalism blog.

What we want most of all is the debate. Even our critics share the view that something is changing in the way that the world tackles social problems, in this era of social entrepreneurship and multi-stakeholder initiatives. We all have an interest in figuring out how to turn this social innovation movement into real change in the world.

The WEF’s Global Competitiveness Report has proven itself to be a powerful tool in enhancing the performance of the world economy. As globalization moves ahead and creates new challenges, the Social Competitiveness Index has the potential to drive social innovation higher up the political agenda and make the world a better place to do good.

Over to you!