I must admit I have a soft spot for “smart” indexes with which we try to capture the “complexity” around us and enclose it into a pill that our limited minds can easily ingest. The Elite Quality Index is worth a post in this blog.
The Elite Quality Index (EQx) is a political economy index that measures the overall Elite Quality of nations in terms of the ability of elite business models to create value, rather than rent seek, as evidenced by aggregated datasets.
The detailed EQx methodology was first described in a paper1 published in 2020.
A four-level architecture allows for both an overall quantification of a country’s EQ, as well as an in-depth analysis of specific political economy dimensions, such as elite power (…) Our index negatively correlates with inequality measures, which suggests that more powerful elites less inclined to run value creation business models will exacerbate inequality (…) the EQx offers a reliable framework and new tool to analyze the political economy of countries.
Elite Quality is Sustainable Value Creation
- Elites are an empirical inevitability, dominating all political economies. They provide the necessary coordination capacity for an economy’s resources, whether human, financial or knowledge based.
- High-quality elites run Value Creation business models that give back more to society than they take.
- Low-quality elites do the opposite and operate Value Extraction models based on value transfers.
A fundamental assumption made by the EQx is that Value Creation business models lead to a future with better outcomes for economic and human development
My take from the latest year report (EQx2022).2
- Singapore (rank # 1) and Switzerland (rank # 2) retain the two top positions for the third year running. Both are leaders in the Value Sub-Index, their respective weaknesses being Political Power for Singapore (rank # 20) and Economic Power for Switzerland (rank # 15).
- The UK (rank # 8) and US (rank # 15) are EQx2022 surprises, having dropped many places (down 5 and 10 places respectively).
- China (rank # 27) is the leading upper-middle income economy.
- Latin America has a clear winner in Chile (rank # 41). The largest economies urgently need to improve their Elite Quality if they are to develop, including powerhouses such as Mexico (rank # 65) and Brazil (rank # 81).
- EU countries do not particularly distinguish themselves as EQx2022 leaders, although three countries make it into the Top 10 (Netherlands, rank # 5, Sweden, rank # 6, and Estonia, rank # 10). Germany has improved by 4 places from last year (rank # 11), a solid but not outstanding performance.
- Spain (rank # 34) dropped 7 places!! With very low values in the economic power and value pillars.
The consequences of the crisis years of 2020, 2021 and 2022 will be felt for years to come. It is less evident how the most salient distributional outcomes of the COVID-19 pandemic, rapid inflation and war will play out in the national arenas of the political economy. Some elite systems, countries, and populations will emerge comparably stronger; better equipped both institutionally and technologically to pursue Value Creation and affect institutional change. But there will also be many losers. This will happen where the potential for Value Creation is spirited away because elites have invested in extractive business models that transfer value to them. It is nations where elites have used the ongoing crises to raise the Value Creation potential of their business models that will prosper.
Next Elite Quality Report EQx2023 is planned for release in the Spring of 2023.
(1) Casas i Klett, Tomas, Guido Cozzi, Celine Diebold, and Camille Zeller. ‘Measuring Elite Quality’. MPRA Paper, 25 July 2020. https://mpra.ub.uni-muenchen.de/102068/.
(2) Casas Klett, Tomas, and Guido Cozzi. Elite Quality Index 2022 (EQx2022). Zurich and Geneva: Seismo Press AG, 2022. https://doi.org/10.33058/seismo.30769.0001. Distributed under the terms and conditions of the Creative Commons license CC BY-NC-ND.
Featured Images. EQx2022. The Elite Quality Index® (EQx) and its underlying methodologies are the exclusive intellectual property of the Foundation for Value Creation (FVC).