The European Journal of Comparative Economics

ISSN: 1824-2979

EJCE Year: 2006, December. Volume: 3 - Issue: 2

Alternative Composite Lisbon Development Strategy Indices: A Comparison of EU, USA, Japan and Korea

by Almas Heshmati ; JongEun Oh

Start page: 131 - End page: 170

Keywords: Economic development; composite index; Lisbon Agenda

Jel code: C43; F15; O10; O57

Abstract:

This study addresses the measurement of two composite Lisbon strategy indices that quantifies the level and patterns of development for ranking countries. The first index is nonparametric labelled as Lisbon strategy index (LSI). It is composed of six components: general economics, employment, innovation research, economic reform, social cohesion and environment, each generated from a number of Lisbon indicators. LSI by reducing the complexity of the set of indicators, it makes the ranking procedures quite simple. The second and parametric index is based on principal component analysis. Despite the difference in the ranking by the two indices, it is shown that the United States outperformed most EU-member states. Our investigations also show evidence of significant dynamic changes taking place, as the countries of the Union struggle to achieve the Lisbon goals. The necessity of a real reform agenda in several old and new members and candidate countries emerges from our analysis. We briefly refer to two important European phenomena emerging from our data analysis and discuss the possible lessons learned from the Korean development strategy

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