Productive Capacities Index

UNCTAD’s Productive Capacities Index is a dynamic and practical tool to support developing countries in understanding the status of their productive capacity and how this can be improved.

It builds on UNCTAD’s long-standing work on productive capacities, which are essential for generating inclusive and sustained economic growth and achieving sustainable development.

The PCI covers 194 economies for the period 2000-2022. The set of productive capacities and their specific combinations are mapped across 42 indicators. This makes our PCI multidimensional in its analytical abilities.

The PCI can help diagnose the areas where countries may be leading or falling behind, spotlighting where policies are working and where corrective efforts are needed. It suggests a roadmap for future policy actions and interventions under each of its eight components: human capital, natural capital, energy, ICTs, structural change, transport, institutions and the private sector.

The PCI was developed in response to the ECOSOC resolution (E/RES/2017/29), encouraging UNCTAD “to pursue its methodological work to measure progress in and identify obstacles to the development of productive capacities in developing countries”.

The PCI has been peer-reviewed and validated at national and regional levels by leading technical experts across the UN system, as well as by academics and government stakeholders.

Stakeholders in select countries have been trained on how to use the index in their development policymaking processes. UNCTAD stands ready to conduct more training sessions at the request of countries.

What are productive capacities?

UNCTAD has long defined productive capacities as “the productive resources, entrepreneurial capabilities and production linkages, which together determine the capacity of a country to produce goods and services and enable it to grow and develop.”

• Productive resources are factors of production, including different types of productive resources and capital. They include financial capital and physical capital, the latter comprising both machinery and equipment (typically operating at the firm / farm level) and infrastructure.
• Entrepreneurial capabilities are the skills, knowledge, and information which enterprises have. They comprise entrepreneurship, entrepreneurial capabilities, and technological capabilities. They include the important skills required for investment, production and establishing linkages at the firm / farm level.
• Production linkages are flows among productive units (firms / farms) of goods and services, knowledge, technology and information, and productive resources, including human resources). They include exchanges among productive units of different sizes (micro, small and medium-sized enterprises and large ones), and ownership structures (domestic / foreign, public / private), operating in different sectors.

What role do productive capacities play?

Developing productive capacities, plays a central role in setting in motion the long-term process of structural transformation, which is the backbone of sustainable development. The available evidence shows no nation has developed without fostering productive capacities and structural economic transformation.

Building the economic resilience of developing countries remains a daunting challenge. It depends fundamentally on creating, maintaining and using productive capacities to realize development objectives. This requires a shift from the current fragmented and project-based interventions towards coherent, economy-wide and programme-based approaches to removing binding constraints on development. Actions and interventions at the domestic level need to be supported and complemented by additional robust international support.

The PCI makes an important contribution to these efforts. The index draws on decades of extensive research and policy analysis work, as well as lessons learned from UNCTAD’s technical support to the most vulnerable countries in developing key aspects of their trade and productive structures.

The index is the first comprehensive attempt to measure productive capacities in all economies and construct a multidimensional index that can provide country-specific insights and diagnostics of productive capacity development.

PCI and its components

The overall index summarises the state of productive capacities in economies worldwide by computing scores that range between 0 and 100 (boundaries not included).

PCI also offers country scores to help in understanding the sources of systemic vulnerabilities and identifying the enablers of economic growth, including progress towards national and global development targets.

For statistical and measurement purposes, the overall PCI index is further broken down into the following eight categories: information and communication technologies (ICTs), structural change, natural capital, human capital, energy, transport, the private sector and institutions.

Human capital
Human capital captures the education, skills and health conditions possessed by population, and the overall research and development integration in the texture of society through the number of researchers and expenditure on research activities. The gender dimension is reflected by the fertility rate which at each increase reduces human capital score.

Natural capital
Natural capital estimates the availability of extractive and agricultural resources, including rents generated from the extraction of the natural resource, less the cost of extracting the resource. To capture commodity dependence, natural capital decreases as the material intensity increases.

Energy
This category measures the availability, sustainability and efficiency of power sources. For this reason, it is composed by use and access to energy, losses in distribution and renewability of energy components and sources, and includes the GDP generated by each unit of oil to highlight further the importance of optimal energy systems.

Transport
Transport measures the capability of a system to take people or goods from one place to another. It is defined as the capillarity of roads and railway network and air connectivity.

Information and Communication Technology (ICT)
Information and Communication Technology estimates the accessibility and integration of communication systems within the population. It includes fixed line and mobile phones users, internet accessibility and server security.

Institutions
Institutions aim at measuring political stability and efficiency through its regulatory quality, effectiveness, success in fighting criminality, corruption and terrorism, and safeguard of citizens’ freedom of expression and association.

Private sector
Private sector is defined by the ease of cross-border trade, which includes time and monetary costs to export and import, and the support to business in terms of domestic credit, velocity of contract enforcement and time required to start a business.

Structural Change
Structural change refers to the movement of labour and other productive resources from low-productivity to high-productivity economic activities. This shift is currently captured by the sophistication and variety of exports, the intensity of fixed capital and the weight of industry and services on total GDP. Structural change can also happen within a given sector provided that binding constraints in a particular sector are identified and effectively addressed.

Data Sources and Approach

PCI publicatons

Productive Capacities Index: 2nd Generation - Enhanced Statistical and Methodological Approach with Results
UNCTAD launched the Productive Capacities Index (PCI) in 2021. The first version of the PCI covered the period 2000-2018 and 193 economies. This document presents outcomes and findings related to work undertaken to update the Productive Capacities Index in 2022 and 2023. The report details the methodological and technical changes made to PCI released on 20 June 2023.

PCI visualization

The interactive maps presented below have been designed to help users explore PCI data over time and space. Visualizing data spatially is a critical tool for revealing geographical patterns. The PCI results presented cover 194 economies over the period 2000–2022.

Measuring and benchmarking productive capacities globally reveals significant gaps, not only between developed and developing economies, but also among developing countries themselves. The Productive Capacities Index demonstrates that differences in socio-economic development across countries and regions are a consequence of gaps in their productive capacities.

Structurally weak and vulnerable economies, including the least developed countries (LDCs) and landlocked developing countries (LLDCs) perform particularly poorly on PCI.

World map - PCI overall and component indices

Regional maps - PCI overall and component indices

Average overall PCI scores for all economic groups improved in 2000–2022, although to varying degrees. However, there are significant gaps in the average scores observed across and between the different groups. With regard to LDCs and LLDCs, their overall PCI scores was driven by their high levels of natural capital, which entrenches increased commodity dependence rather than facilitating economic diversification or structural transformation. Overall trends also show communality among all groups, namely, a steeper rise in the first half of the period and a more moderate increase in the second half.