ИСТИНА

A country’s economic performance is a multidimensional characteristic that comprises a variety of indicators reflecting different social processes and phenomena. In order to compare the results achieved by different countries one has to construct a kind of a composite indicator aggregating specific measures of a variety of social patterns. Despite of a huge set of studies and a continuous discussion still there remains a need for a suitable measure that will not be sensitive to subjective preferences concerning the relative significance of specific social and economic features. The question is how to aggregate partial measures using appropriate weighting coefficients that will not rely on subjective judgments. In line with a number of studies that try to avoid any references to expert assessments in the choice of the weighting coefficients in construction of a composite indicator we propose a rather simple but comprehensive approach based on principal component analysis widely used in multidimensional statistics. The first principal component is known to be used as an aggregate economic indicator. Unfortunately, it is not an appropriate measure in a typical situation when the proportion of total factors’ variance explained by the first principal component is not sufficiently large. In this case one may use a number of the first principal components which together explain a major part of the factors’ variance and apply either expert assessments or implicitly the shares of explained variance as weighting coefficients. Still this approach usually implies significant loss in variance of initial factors that is taken into consideration. However we argue that the problem of our concern has a rather straightforward solution. The whole set of principal components with appropriately chosen weighting coefficients namely equal to the proportions of the corresponding explained variance can serve as a universal “natural” aggregate measure of various types of economic activities. The proposed methodology is applied to evaluate the national competitiveness and to build the corresponding ranking of the countries in Eurasian region.