HE government of each country tries to provide the

possible high level of the life quality of its population. In

practice governments handle the above-mentioned

problem through various reforms. As the quantitative

assessment of reforms are mostly expressed through different

indexes, we have the goal to create one integral index, that

will include as many partial indexes as possible that will

express the quantitative measurement of reforms through

time.

To create IILQ we have developed a new methodology,

which has two main parameters:

1. the change of the score of the country by different

indexes for two periods of time,

2. the change of the rank of the country by different

indexes for two periods of time.

Afterwards, we normalize the change of the score of the

indexes included in the Integral Index in (0,1) interval for

2009-2015.

Main points of the methodology that we develop are:

1. In order to create the Integral Index of Life Quality

(IILQ) we used econometric methods (cluster and

factor analysis) as with their help based on 17

indexes we calculated the scale coefficient of each

index.

2. We have considered the rank and score of country for

each period of time as the most important parameters

of the IILQ.

3. In order to measure the comparative effectiveness of

reforms in countries for each index we have

considered the change of the rank from t to (t+1)

period.

Taking above-mentioned steps we have the score of IILQ

for 2009-2015 that we can compare with the basic year and

measure comparative efficiency of reforms for the countries

of the same group.

The integral index describes the social-economic

development level and through it we assess variety of reforms

for 2009-2015. On this purpose we have suggested a new

methodology for the assessment of IILQ based on seventeen

different indexes.

The Global Competitiveness Index (GCI) released by the

World Economic Forum, which is a comprehensive tool, that

measures the competitiveness of 148 countries, contains 3 sub-

indexes: basic requirements, efficiency enhancers, innovation

and sophistication factors, that are based on 12 pillars

(institutions, infrastructure, macroeconomic environment,

health and primary education, higher education and training,

etc.) including 119 indicators[1].

The Assessment of the Comparative Efficiency of Various Reforms of

High-income Countries

1SAMSON DAVOYAN, 2ASHOT DAVOYAN, 3ANI KHACHATRYAN

1Russian-Armenian (Slavonic) University, Yerevan, ARMENIA

2,3Armenian State University of Economics, Yerevan, ARMENIA

Abstract— The acceleration of the processes of the globalization in the world economy, that tights and deepens

the integration of the economies of different countries, leads to different challenges for the authorities of those

countries. Hence, the governments of those countries develop and implement various concepts, strategic and

tactical plans. The development and the practice of planned system and its ingredients are implemented in

different directions of social life such as economic, political, institutional, social through systematic reforms. In

modern literature the assessment of abovementioned reforms is implemented by different international and

nongovernmental organizations /World Bank, International Monetary Fund, UNO, etc./ through different

indexes /Economic Freedom, Democracy, Legatum prosperity, KOF globalization Indexes, etc/. The main

objective of our research is to develop new methodology of the new integral index that we will give us an

opportunity based on indexes that quantitatively assess reforms in different directions and create one more

integral index that will mostly express the comparative efficiency of various reforms in those countries for 2009-

2015. The formation of the new integral index is based on econometric methods (cluster and factor analysis).

The analysis of the Integral Index of Life Quality, helps to outline the countries that have implemented reforms

with high and less efficiency, directions that provide high effectiveness and areas that reduce the efficiency.

Keywords— Assessment, efficiency, institutional, social, cluster analysis, government, reforms, life quality.

1. Introduction

2. Statistical Review

2.1. The Global Competitiveness Index (GCI)

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Samson Davoyan, Ashot Davoyan, Ani Khachatryan

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Doing Business released by the World Bank and

International Financial Corporation assesses business activity

for 189 countries on the basis of 11 areas of regulation

(starting a business, dealing with construction permits, getting

credits, paying taxes, etc.) with 36 sub-indexes considering the

survey results of organizations in different sectors of

economies [2]. The important way to improve the

methodology of this index is to consider the influence of the

macroeconomic factors on the business environment [3].

The Corruption Perception Index published by

Transparency International anti-corruption organization

measures the perceived levels of public-sector corruption for

177 countries based on different assessments and business

opinion surveys [4]. The countries, included in the rank of The

Corruption Perception Index, are classified on a scale of 0 to

100. The countries, that get 0 are the highly corrupt in judicial

system, media, legislative, police, business, public,

educational, military areas [5].

The Index of Economic Freedom assesses the economic

freedom of countries through 10 indicators (Business

Freedom, Trade Freedom, Fiscal Freedom, Government

spending, Monetary Freedom, Investment Freedom, Financial

Freedom, Property Rights, Freedom from Corruption, Labor

Freedom) in 185 countries [6]. All ten indicators of the Index

are scaled equally. Each of them gets 0 to 100 economic

freedom grading scale; countries that get 100 are the freest

economies of the world. The Index has been published by The

Heritage Foundation and The Wall Street Journal since 1994

[7].

The Human Development Index is a summary indicator that

measures a standard of living, the literacy rate, the life

expectancy in order to compare and assess the human potential

of different countries [8]. In the viewpoint it is important to

mention the research which accounted and analyzed multiple

criterias of the standard of life in 17 countries of Eurozone [9].

The Democracy Index, compiled by the Economist

Intelligence Unit, is the classification of 167 countries by the

level of the democracy. The Index includes 60 indicators

grouped in five categories: electoral process and pluralism,

civil liberties, functioning of government, political

participation, and political culture [10].

KOF Index of Globalization compiled by the Economist

Intelligence Unit. The KOF Index of Globalization measures

the three main dimensions of globalization: economic, social

and political. In addition to three indices measuring these

dimensions, we calculate an overall index of globalization and

sub-indices referring to actual economic flows:

• economic restrictions

• data on information flows

• data on personal contact

• and data on cultural proximity.

Data are available on a yearly basis for 207 countries over

the period 1970 – 2010 [11].

The GII project was launched by INSEAD in 2007. The

core of the GII Report consists of a ranking of world

economies’ innovation capabilities and results. In 2013, the

ranking covered 142 economies, accounting for 94.9% of the

world’s population and 98.7% of the world’s Gross Domestic

Product (in US dollars). The GII relies on two sub-indexes: the

Innovation Input Sub-Index and the Innovation Output Sub-

Index, each built around pillars. Five input pillars capture

elements of the national economy that enable innovative

activities: (1) Institutions, (2) Human capital and research, (3)

Infrastructure, (4) Market sophistication, and (5) Business

sophistication. Innovation outputs are the results of innovative

activities within the economy. There are two output pillars: (6)

Knowledge and technology outputs and (7) Creative outputs.

The overall GII score is the simple average of the Input and

Output Sub-Indices.

The GPI measures the relative position of nations’ and

regions’ peacefulness. The GPI comprises 23 indicators of the

existence of absence violence or fear of violence. The

indicators were originally selected with the assistance of an

international panel of independent experts in 2007 and have

been reviewed by the expert panel on an annual basis. All

scores for each indicator are normalised on a scale of 1-5,

whereby qualitative indicators are banded into five groupings

and quantitative ones are either banded into ten groupings or

rounded to the first decimal point. The overall composite score

and index was then formulated by applying a weight of 60

percent to the measure of internal peace and 40 percent for

external peace. The index includes such indicators as Number

of external and internal conflicts fought, Relations with

neighbouring countries, Level of perceived criminality in

society, Political instability, Military expenditure as a

percentage of GDP, Financial contribution to UN

peacekeeping missions, Level of violent crime, etc. [12].

Legatum Prosperity Index is an annual ranking, developed

by the Legatum Institute, of 142 countries. The ranking is

based on a variety of factors including wealth, economic

growth, education, health, personal well-being, and quality of

life. The index is based on 89 different variables. The 8 sub-

indexes are:

• Economy

• Entrepreneurship & Opportunity

• Governance

• Education

• Health

• Safety & Security

• Personal Freedom

• Social Capital

2.2. Doing Business

2.3. The Corruption Perception Index

2.4. The Index of Economic Freedom

2.5. The Human Development Index

2.6. The Democracy Index

2.7. KOF Index of Globalization

2.8. The Global Innovation Index (GII)

2.9. The Global Peace Index (GPI)

2.10. Legatum Prosperity Index (LPI)

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Samson Davoyan, Ashot Davoyan, Ani Khachatryan

E-ISSN: 2944-9006

Volume 2, 2022

The TTCI assesses 140 economies worldwide based on

the extent to which they are putting in place the factors and

policies to make it attractive to develop the travel and tourism

sector. The Index scores from 1 to 6 the performance of a

given country based on three main subindexes: 1. regulatory

framework; 2. business environment and infrastructure; and 3.

human, cultural and natural resources [13].

The EPI ranks how well countries perform on high-

priority environmental issues in two brad policy areas:

protection of human health from environmental harm and

protection of ecosystems. So two objectives that provide the

overarching structure of the EPI are Environmental Health and

Ecosystem Vitality. Environmental Health measures the

protection of human health from environmental harm.

Ecosystem Vitality measures ecosystem protection and

resource management. The two objectives are further divided

into nine issue categories that span high-priority

environmental policy issues, including air quality, forests,

fisheries and climate and energy among others. Underlying the

nine issue categories are 20 indicators calculated from

country-level data and statistics [14].

The GGGI was first published in 2006 by World Economic

Forum. It benchmarks national gender gaps of 142 countries

on economic, political, education- and health-based criteria.

The index examines such areas of inequality as economic

participation and opportunity, educational attainment, political

empowerment, health and survival. The highest possible score

is 1 (equality) and the lowest possible score is 0 (inequality)

[15].

The Social Progress Index, was created in 2014 by Harvard

professor Michael Porter, in cooperation with World

Economic forum experts, researchers from the Massachusetts

institute of Technology, etc. The Social progress index

measures a comprehensive array of components of social,

environmental performance and aggregates them into an

overall framework.

The Index has been structured around 12 components and

54 indicators consolidated into three dimensions of Social

Progress: Basic Human needs (measures how well a country

provides for its people’s essential needs), Foundations of

wellbeing (measures whether a population has access to basis

of healthy life) and Opportunity [16].

The Basel AML /Anti-Money Laundering/ index was

created to evaluate levels of riskiness in different countries-

taking money laundering and financing of terrorism as main

indicators for measuring political and corruption risks in a

country. The idea of developing has been discussing since

2000-s, and first published in 2012.

The Basel Anti-Money Laundering (AML) Index was

developed by the Basel Institute on Governance. The Basel

AML Index was first published in 2012 and since then has

been the only measure to rank countries according to their risk

of money laundering and terrorist financing.

The Basel AML Index overall score is derived from 14

indicators, and is based on publicly available sources such as

the FATF, Transparency International, the World Bank and

the World Economic Forum. The scores are aggregated as a

composite index using a qualitative and expert-based

assessment [17].

The Global Information Technology Report features the

Networked Readiness Index which assesses the factors,

policies and institutions that enable a country to fully leverage

information and communication technologies for increased

competitiveness and well-being.

The Networked Readiness Index measures, on a scale from

1 (worst) to 7 (best), the performance of 143 economies in

leveraging information and communications technologies to

boost competitiveness and well-being [18].

The Global Enabling Trade Report (GETR) series has

been published by the World Economic Forum since 2008, on

an annual basis. The assessment has been based on the

Enabling Trade Index (ETI), which was developed within the

context of the World Economic Forum’s Enabling Trade

program, with the help of leading academia and partner

organizations and companies.

The Enabling trade assesses the extent to which

economies have needed capacities, infrastructures and services

facilitating the free flow of goods.

All trade-enabling factors are grouped in four main

categories (or sub-indexes):

1. market access / measures the extent and

complexity of a country’s tariff regime, as well

as tariff barriers faced and preferences enjoyed

by a country’s exporters in foreign markets/,

2. border administration / assesses the quality,

transparency and efficiency of border

administration of a country/,

3. infrastructure / assesses the availability and

quality of various infrastructures of a country/,

4. operating environment / measures the quality of

key institutional factors impacting the business

of importers and exporters active in a country/.

These four areas /sub-indexes/ are in turn subdivided

into components /pillars/, that capture more specific aspects

within their respective broad issue areas. Pillars are composed

of a number of indicators [19].

2.11. Travel and Tourism

Competitiveness Index (TTCI)

2.12. Environment Performance Index (EPI)

2.13. Global Gender Gap Index (GGGI)

2.14. Social Progress Index (SPI)

2.15. The Basel AML Index

(Money Laundering,Terrorism, Financing)

2.16. The Networked Readiness Index (NRI)

2.17. Enabling Trade Index (ETI)

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E-ISSN: 2944-9006

Volume 2, 2022

In this article we have chosen 27 the most representative high-

income countries by the classification of the World Bank. We

have considered following high income countries: Australia,

Austria, Belgium, Canada, Croatia, Czech, Denmark, Estonia,

Finland, France, Germany, Hungary, Italy, Japan, Latvia,

Lithuania, Netherlands, New Zealand, Norway, Poland,

Portugal, Russia, Slovakia, Slovenia, Sweden, UK, USA.

For this group of countries we consider 17 indexes by

different international organization and describe the

improvements in the economies of above-mentioned countries.

The purpose of the assessment is:

 the interconnection between indexes for the different

groups of countries,

 the quantitative assessment of the level of influence

between those indexes.

In our article we had the objective to generate the indicators

that describe the directions and the results of social-economic

reforms.

In our research we had the challenge to find out the scale

coefficients of each index in the integral index. In our previous

researches we solved this problem with the help of

experimental and panel methods. In this article we developed

our methodology based on econometric methods and used the

tools of both cluster and factor analysis.

With the help of SPSS program we have done cluster

analysis that divides observed objects into homogenous groups

(clusters), that have the same descriptive. It means that we

solve the problem of the classification and the structure of the

data. Moreover, we discover the interconnection and the

relationships between the objects of the group. The optimal

number of cluster is 4 that is defined with the help of

Hierarchical clustering. In addition, through K-means

clustering we have the final centers of each cluster and the

distance of each object from the center (Table 1).

Table 1. Clusters' final centers

Index

Clusters

TTCI

4.14

4.08

3.96

4.03

EPI 76.37 69.29 52.28 42.67

NRI

5.48

4.55

3.96

3.46

GGGI .77 .70 .69 .67

CPI 81 57 40 30

75.3

67.0

63.6

54.1

8.82

7.26

5.59

5.44

79.6

71.7

66.2

55.5

GPI 1.41 1.68 2.16 2.25

GCI

5.2

4.5

4.2

3.9

Basel AML

4.57

4.70

5.63

6.73

ETI

LPI 2.837 1.063 -.186 -.790

SPI 85.31 76.14 65.18 57.55

Human

Development

Index

.90 .83 .74 .64

Index

Clusters

GII 57.0 44.4 34.0 29.7

KOF 82.97 78.34 60.64 54.08

As we can see from Table 1 the first cluster provides the

maximum values. In other words the countries that have the

best results are grouped in this cluster. In the contrast, Cluster

4 has the worst values.

Furthermore, in order to define latent variables of objects,

with the help of SPSS program we used another statistical

method, factor analysis. Based on the results of

Communalities, we find out the importance of each object and

hence, the scale coefficient of each index (Table 2).

Table 2. The Scale coefficient of each ingredient of the Integral

Index of Life Quality

Indicator

Scale

coefficient

Indicator

Scale

coefficient

LPI 0.071 GCI 0.060

SPI

0.071

KOF

0.060

GII 0.069 HDI 0.057

NRI

0.068

GPI

0.052

CPI 0.067 EF 0.051

ETI 0.066 DI 0.051

EPI 0.061 GGGI 0.039

TTCI

0.061

Basel AML

0.038

DB 0.060

With the help of the scales we found out the summing

influence of 17 indexes for each country and its place in the

group.

For the solution of the problem we used this formula.

Integral Index=scale*Index1+ scale*Index2+

scale*Index3+ ...+ scale*Index17

Finally we create the rank of countries by the integral index

[18].

The Integral Index of Life Quality contains following pillars

including almost 700 indicators:

 Economy and Growth,

 Financial Sector,

 Social development, social-protection and labour

 Education

 Innovationa, Scient and Technology

 Health

 Environment and Climate change

 Infrastructure

 Private Sector

 Public sector,

 Political sector,

 Crime

 Internation cooperation.

With the help of our methodology we first summarized the

above-mentioned 17 indexes and attained 1 general index.

∑

.int ,

jindex NH

(1)

3. Methodological Approach

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E-ISSN: 2944-9006

Volume 2, 2022

jindex

.int

- the Integral Index of Life Quality,

i and j are indexes

i = 1,2,….17 – seventeen indexes. For example, i = 4 The

Economic Freedom Index,

j2=1, 2,....27 high-income countries we evaluated

j=1 - Australia, j=2 – Austria, … j=27 - USA

- the scale of each index,

- the rank of the j country by i index

For example, Germany is ranked 8 among 27 countries for

2009-2015 by the Global Competitiveness Index (considering

the change of rank and score), therefore

The first stage of creating the index was the rearrangement

of the indexes included in analyze. The principle of

rearrangement was based on the changes of the ranks and

scores of the above mentioned indexes for two periods of time.

We also normalized the score of each index to bring them to

the same interval and make them more comparable. Then we

adjusted the change with scale coefficients substantiated

methodologically [20].

Figure 1. IILQ in reports for 2009-2015 compared with the base

year (2009) in 27 high-income countries

Figure 1 represent IILQ in reports for 2009-2015 compare

with the base year (2009) in 27 high-income, figure 2

represent IILQ by the new methodology for 2009-2015

compare with the base year (2009).

Figure 2. IIT by the new methodology for 2009-2015 compared

with the base year 2009 in 27 high-income countries

Figure 3 represent IILQ in reports and by the new

methodology in 27 high-income countries 2009-2015.

Figure 3. IILQ in reports and by the new methodology in 27

high-income countries for 2009-2015

Putting the indicators of

and

in the equation we

will have j

∑

.int ,

jindex NH

(2)

For j1=1, 2,....27 –high income countries we assess

the average of the summary for 6 years.

(

) /6 (3).

According to the suggested methodology, we measure IILQ

for 27 high-income countries, considering the change of rank

and score adjusted with scale coefficients for 2009-2015. The

results witness, that the reforms for 2009-2015 have more

effectively implemented in Estonia, Poland, Netherlands,

Germany, Latvia, Lithuania, but less effectively in Hungary,

France, Portugal among 27 high-income countries.

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E-ISSN: 2944-9006

Volume 2, 2022

 The level of the comparative effectiveness of reform

that are implemented in high income countries for

2009-2015 with the help of both integral and partial

indexes.

 For each country the areas of reform that provide high

efficiency and the directions that reduce the value of

the Integral Index for the observed period of time.

 In the context of integral reforms the directions of

reforms are outlined that are considered essential to

implement rapidly for development of each country.

REFERENCES

[1] The Global Competitiveness Report, The World Economic Forum,

weforum.org.

[2] Doing Business Report, The World Bank, doingbusiness.org.

[3] Marek Sedlacek, A business strategy and usage of chosen Result

indicators as a tool against global crisis impacts on companies in

automotive industry, International of economics and statistics, Issue 1,

Volume 1, 2013.

[4] Corruption Perceptions Index 2012: Full Source

Description/Transparency International, p. 45, 2012,

www.transparency.org.

[5] Samson Davoyan, Ashot Davoyan, The issues of the improvement of the

methodology for the assessment of reforms, Recent Advances in

Mathematics, Statistics and Economics, Proceedings of the 2014

International Conference on Economics and Statistics, Italy, Venice,

March 15-17, 2014, p. 192-199.

[6] Ambassador Terry Miller, Kim R. Holmes, Edwin J. Feulner, “2012

Index of Economic Freedom”, The Heritage Foundation and The Wall

Street Journal, New York, p. 62, 2012, www.heritage.org.

[7] Samson Davoyan, Tatevik Sahakyan, The assessment of reforms in

different countries by social-economic development integral index,

World Academy of Science , Engineering and Technology, Issue 79

Stockholm, July 2013, p. 1324.

[8] United Nations Organization, UNDP.org

[9] Jiri Krupka and Romana Provaznikova, Analysis of standard of living

models based on multiple criteria decision analysis, International journal

of economics and statistics, Volume 2, 2014

[10] Economist Intelligence Unit, www.eiu.com.

[11] http://globalization.kof.ethz.ch/

[12] Global Peace Index 2014: measuring peace and assessing country risk,

Institute for Economics and Peace, p. 38.

[13] World Economic Forum, http://www.weforum.org/issues/travel-and-

tourism-competitiveness/

[14] http://epi.yale.edu/

[15] World Economic Forum, https://agenda.weforum.org/topic/global-

issues/gender-parity/

[16] http://www.socialprogressimperative.org/about/origins

[17] https://index2015.baselgovernance.org/sites/default/files/aml-

index/Basel_AML_Index_Report_2015.pdf

[18] http://reports.weforum.org/global-information-technology-report-

2015/report-highlights/

[19] http://www3.weforum.org/docs/WEF_GlobalEnablingTrade_Report_20

14.pdf

[20] Samson Davoyan, Tatevik Sahakyan, The assessment of the

effectiveness of reforms in various countries, Advances in Environment

Sciences, Development and Chemistry, Proceedings of the 2014

International Conference on Energy, Environment, Development and

Economics, Santorini Island, Greece, July 17-21, 2014, p. 405-416.

Samson Davoyan, Armenia, Doctor of Economic Sciences, professor

member of Association of Economists of Armenia, lecturer professor in

Russian-Armenian (Slavonic) University, director of Gyumri branch of the

Armenian State Economic University. Samson Davoyan was a student in

1965-1967 in Yerevan State University, faculty of economics, section of

economic cybernetics, in 1967-1970 in Novosibirsk State University,

personal programme study, in 1970-1973 post-graduate school of Central

Economic-Mathematical Institute , in 1976- Candidate of Economic Science,

in 1980- docent (associate professor), in 1994-1995 “Market economics and

financial analysis” specialization retraining course in Vienna joint Institute of

World Bank and U.N.O. and in Prague university by Charles, from 2003-

professor, from 2003- Doctor of Economic Science (phone: 00374 91434283;

e-mail: gbesei@mail.ru).

Ashot Davoyan, Armenia, PhD, senior researcher in “Ambert” research

centre at Armenian State University of Economics, MBA, bachelor and master

degree at Yerevan State University, master school at George Town University

in the USA for 2006-2007, Finance academy in Switzerland in 2008,

“Business Management” Start-up project of Skolkovo in Moscow for 2013

(phone: 00374 55401070; e-mail: ashot_davoyan@yahoo.com).

Ani Khachatryan, Armenia, Post-Graduate Student at Armenian State

University of Economics, lecturer at Armenian State University of

Economics, Gyumri Branch, since 2011. For 2005-2011 studied at Armenian

State University of Economics Gyumri Branch, both Bachelor and Master

degree on Business Organization. (phone: 00374 98166151; e-mail:

ani.kh88@mail.ru, anikhachatryansamveli@gmail.com ).

To sum up, following results are established:

4. Conclusion

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E-ISSN: 2944-9006

Volume 2, 2022