The Market for Global Indices: Supply and Demand
The GIN Project Team has spent the past few months analyzing the content of global indices, such as the Ease of Doing Business Index and the Fragile States Index, and the indices’ relationships to one another. All of the indices’ indicators, the pieces of information used by indices to score countries, are scattered across spreadsheets and networks. The team is now gearing up to create the Measuring and Evaluating the Transparency of Assessments (META) Index to further explore methodological concerns. We have explored questions of how indices are created, shared, and interconnected. However, we have not yet devoted a significant portion of our work to examining the question, “Why?” To answer it, we first have to identify who creates indices and what their motivations are. Then, we may address new, resulting questions that will inform further research. This post aims to provide a preliminary response to the question “Why?” and to accumulate some of the questions that result from answering.
Before delving in too deep, it is important to understand what indices are and the context in which they rose to significance. Global indices rank or rate countries’ performance in a given category according to scores based on data. This data could consist of anything as objective as GDP to data as subjective as civilian survey responses.
At a surface level, indices’ scoring systems seem innocuous. However, well known indices have the power to impact countries’ behaviors. Poor performers on an index are subjected to a variety of domestic and intergovernmental pressures that push their governments to make changes to improve their ratings. For example, if a country receives a poor score by a well respected international credit rating agency, they will likely have to pay higher rates on their bond issues. A poor score on the Ease of Doing Business Index may cause public policy oriented NGO’s within a country to pressure the government into reforming business policy. Moreover, well-known indices have the power to agenda-set, as countries will make strategic policy changes that correspond to their rankings in order to produce better results. This is a simplistic sampling of the “soft power” of indices, but it illustrates the way that they function to “govern at a distance.”2
Given their soft, but potent, power, it is unsurprising that global indices have rapidly proliferated over the past few decades. Upwards of 178 such indicators are regularly published today, the vast majority of which were created after 1990. However, there are many ways to exert power. Why have indices become such a favorable option?
Globalization has deeply entangled the economic and political wellbeing of countries. Attempting to exert economic or military power over another country costs more than ever, both in terms of risk and expense (both financial and political) paid by the acting country. By contrast, it is cheaper and easier than ever to collect and share information and data due to technological advancement. Producing indices, or supporting organization that do, is generally cheap incomparison to economic, militaristic, or even political intervention. Speaking strictly economically, the cost of producing indices has fallen as the price of other forms of power exertion have risen. Thus, we see an increase in both supply and demand for global indices.
All that has been said thus far regards indices as tools of state power expansion. Talking about the influence of indices only in terms of state power can help identify the basic market forces at play. However, doing so takes a narrow view on the question of why global indices are being created. There are a wide variety of index producers and consumers that are not governments. IGO’s and NGO’s use indices to advance their interests, which are different than governments’ interests. For example, these organizations may create indices in order to increase visibility, which indirectly generates profits through organizational funding. This visibility can come from scholars and the media, who frequently cite indices in their work. Academics and journalists generate demand for indices because they provide quantifiable, ostensibly objective sources of information. Taken together, these distinctions illustrate the limitations of thinking of indices only as forces to expand state power. Instead, it is important to recognize that the “market” is composed of a lot of actors with a lot of different interests. Boiling it down to one primary goal, like “expanding state power,” conceals a crucial piece of the narrative.
More importantly, the recognition of this variety of actors poses further questions. Indices cost time and money to produce… so what is the cost to producers? How widely does it vary, and based and what? What kind of “profit” do producers accrue? How is this different for different types of suppliers? Also, who is producing what? That is to say, what types of producers are producing what types of indices, and why? The GIN Project’s analysis identified a marked difference in the types of indices being referenced by media sources and scholars. Why is this occurring, and how do these different types of demand and variant economic implications influence what is being produced and who is producing what? How do ideological alignment, country of origin, and funding sources affect what types of indices NGO’s produce?
These questions of supply and demand are immensely relevant to our research. They are the “Why?” that sheds light on the “How?” Therefore, they serve as a springboard to future research at the GIN Project. In an effort similar to the META Index, we hope to compile producer profiles for the indices that we have deconstructed. These profiles would include information such as organization type, organization source of funding (and index source of funding, if distinct), organizational “mission statement,” country of origin or international constituency, and political or ideological orientation. We could then seek to identify trends or relationships between these features of the producer and aspects of the index, such as transparency, type of index, and influence of the index (the latter feature can be analyzed in greater detail by looking at the difference between scholarly and media access of an index). It is our hope that producing these profiles will not only enrich our understanding of completed research, but provide the basis for further inquiry.
Ultimately, the GIN Project is committed to investigating the ever-expanding, increasingly complex landscape of global performance indices. Understanding the raison d’être of these rankings and ratings will contextualize the research that we have done thus far and identify new questions to explore. Diversifying our research by addressing new kinds of questions is our next step forward. We are excited to see what discoveries await!
About the Author
Abby is a sophomore at UT Austin pursuing a degree in Politics, Philosophy, and Economics and a certificate in Human Rights and Social Justice. She is interested in international development, refugee issues, and foreign and economic policy.
Bibliography
Kelley, Judith G., and Beth A. Simmons. 2015. “Politics by Number: Indicators as Social Pressure in International Relations.” American Journal of Political Science 59 (1). Blackwell Publishing Ltd: 55–70. doi:10.1111/ajps.12119.
Cooley, Alexander. “The Emerging Politics of International Rankings and Ratings; A Framework for Analysis.” Ranking the World. Edited by Alexander Cooley and Jack Snyder. Cambridge University Press: 1–38.
- Alexander Cooley. Ranking the World. 4
- Judith G. Kelley & Beth A. Simmons. Politics by Number. 58.
- Alexander Cooley. 5.
- Judith G. Kelley & Beth A. Simmons. 55.
- Judith G. Kelley & Beth A. Simmons. 56.
