‘Change Readiness Index’ Provides New Insight into Countries’ Ability to Respond to Change

Michelle Remo, “Big 4″ observer
April 27, 2012 /

KPMG International and the Overseas Development Institute (ODI) has released the results of their new ‘Change Readiness Index’ which provides insight into which countries are better prepared to cope with change and take advantage of the resulting opportunities.

The Change Readiness Index captures government capability and the capability of a country as a whole – including the private sector and civil society – to manage and respond effectively to change.

“You only need to look at the impact of recent food, fuel, and financial crises on countries around the world to see the importance of achieving a greater understanding of a country’s change readiness,” said Timothy A. A. Stiles, KPMG’s Global Head of International Development Assistance Services.

“The results of the Index are surprising and, when verified, are expected to provide important new insight for policy development and donor action aimed at strengthening government and national capability.”

The Change Readiness Index takes a forward-looking perspective by capturing the underlying factors that are likely to determine a country’s capability for managing change, which in turn may be an important factor in supporting sustained growth in the long term.

The Index combines data from a number of existing indicators with new measures that have been identified to capture specific elements of change readiness that are not currently being captured, including risk management capabilities, efforts to promote economic diversification, strong governance, and social safety nets.

“Understanding a country’s capacity to handle new and unexpected developments is critical to advancing effective policy,” said ODI Director Dr. Alison Evans.

“This Index begins to paint a new picture and is an exciting starting point. We will be enhancing and refining the Index over time to make it an even more reliable measure to help predict a country’s economic prospects.”

The concept of a Change Readiness Index was born at the 2010 Annual Meeting of the World Economic Forum and was developed in cooperation with key stakeholders and in-country experts to create a new framework for measuring and analyzing appropriate metrics and indicators.

Many of the key determinants of the Change Readiness Index relate to conditions which affect the ability of private markets and enterprises to adjust to change, particularly rapidly evolving patterns of global demand and production.

Thus, many of the indicators included in the Index relate to policies and capacities which facilitate healthy, dynamic, and responsive markets.

Mr. Stiles concluded: “Clearly, this data must be viewed in combination with other information on issues that will affect economic prospects such as political stability, sovereign debt, or endowments of capital, labor, and natural resources.”

Over the coming years, KPMG and ODI will continue to research and refine the Index and report on the progress of countries to enhance and strengthen their change readiness capacity.

 

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