Pillar 7: Product market

What does it capture? The extent to which a country provides an even playing field for companies to participate in its markets. It is measured in terms of extent of market power, openness to foreign firms and the degree of market distortions.

 Why does it matter? Competition supports productivity gains by incentivizing companies to innovate; update their products, services and organization; and supply the best possible products at the fairest price.

 

7.01 Distortive effect of taxes and subsidies on competition

Response to the survey question “In your country, to what extent do fiscal measures (subsidies, tax breaks, etc.) distort competition?” [1 = distort competition to a great extent; 7 = do not distort competition at all] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

 

7.02 Extent of market dominance

Response to the survey question “In your country, how do you characterize corporate activity?” [1 = dominated by a few business groups; 7 = spread among many firms]. | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

 

7.03 Competition in services

Average of the scores of the three components of the following Executive Opinion Survey question: “In your country, how competitive is the provision of the following services:

(a) professional services (legal services, accounting, engineering, etc.);

(b) retail services;

(c) network sector (telecommunications, utilities, postal, transport, etc.)?”

In each case, the answer ranges from 1 (not at all competitive) to 7 (extremely competitive). | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

 

7.04 Prevalence of non-tariff barriers

Response to the survey question “In your country, to what extent do non-tariff barriers (e.g. health and product standards, technical and labelling requirements, etc.) limit the ability of imported goods to compete in the domestic market?” [1 = strongly limit; 7 = do not limit at all] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

 

7.05 Trade tariffs

Measured as the weighted average applied tariff rate, expressed in percentage points. | 2017

The weighted mean applied tariff is the average of effectively applied rates weighted by the product import shares corresponding to each partner country. Applied tariffs are considered to be the tariff rates applied by a customs administration on imported goods. They are the rates published by national customs authorities for duty administration purposes.

Source: International Trade Centre (ITC).

 

7.06 Complexity of tariffs

Score on an index that measures the complexity of a country’s tariff regime. The index ranges from 1 (very complex) to 7 (not complex). | 2017

Tariff complexity is assessed on four criteria: tariff dispersion, the prevalence of tariff peaks, the prevalence of specific tariffs and the number of distinct tariffs. This index is calculated as the simple average of the normalized score of these four criteria.

Source: International Trade Centre (ITC).

 

7.07 Border clearance efficiency

Assesses the effectiveness and efficiency of the clearance process by customs and other border control agencies in the eight major trading partners of each country. The scale ranges from 1 (worst) to 5 (best). | 2018 More details about the methodology can be found at https://lpi. worldbank.org/about.

Source: The World Bank Group; Turku School of Economics.

 

7.08 Service trade openness

 Score on the Services Trade Restrictiveness Index (STRI), which assesses the overall openness of the service sector of a country. The scale ranges from 0 (completely open) to 100 (completely closed). | 2011

The STRI measures openness for five major services sectors (financial services, telecommunications, retail distribution, transportation and professional services) and three modes of supply (cross-border supply of services, supply of services through commercial presence or FDI and temporary presence of natural persons). More details about the methodology can be found at http://iresearch.worldbank.org/servicetrade/aboutData.htm#MeasuringRestrictions.

Source: The World Bank Group.