This site uses cookies to provide you with a more responsive and personalized service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.

Bookmark Email Print this page

Energy Costs and Policies

2013 Global Manufacturing Competitiveness Index


As energy becomes scarcer and costs continue to rise, executives participating in the 2013 GMCI reported that those nations with the ability to provide access to clean and renewable energy at competitive costs would have an advantage over their competitors. And while respondents also indicated that the level of investment in energy infrastructure, as well as the comprehensiveness and efficiency of energy policy also contributed to a nation’s competitiveness, increasing demand and limited supply coupled with market forces that drive prices up resulted in energy costs being the most important driver in this category.

Supplemental research provided in Figure 15 reveals that China’s electricity costs were on par with Canada and higher than the U.S.;  however, they were significantly lower than other emerging economies, including Brazil and India and also developed nations, such as Japan and Germany. Figure 15 also reveals that China and India’s environmental performance, measured by Environmental Performance Index (EPI), lagged the three developed nations — Germany, Japan, and the U.S.

The desire to rapidly grow in order to improve their lower per capita disposable income, and thus, quality of life, could be the cause for higher emissions and lower EPI in China and India. In contrast, Brazil’s higher EPI may be attributed to the massive coverage of the Amazon rainforest that it currently enjoys. Additionally, it may not be surprising that Germany, which traditionally has a high focus on clean energy, had the highest EPI score among the top 10 competitive nations.

Though the U.S. ranked better than China in electricity costs and in environmental performance, China’s rise to the top, overtaking the U.S. in new clean energy investments in 2009, and the government’s commitment to increase further the share of renewable energy could have tipped executives to rank China as the most competitive nation.

Over the long term, a number of factors — including government policy and the emergence of new and more efficient energy technologies — will influence the level of impact energy costs have on a nation’s overall competitiveness, and may also result in some countries leapfrogging their competitors. For example, open markets and falling levels of energy import dependence in the U.S., as well as new discoveries in areas such as shale gas, have the potential to make the country energy secure. Or in Brazil, where large oil reserves and abundant access to oil shale, natural gas, and uranium will soon result in the country not only being self-sufficient, but also a major exporter of energy. As stated earlier, Brazil’s prospects for energy independence are likely to partially explain its anticipated rise from the eighth to the third spot in the GMCI in the next five years. On the other hand, Germany appears to be already rapidly progressing in adoption of renewable sources, with clean energy now accounting for roughly a quarter of electricity production compared to about 12 percent for the U.S.

2013 Global Manufacturing Competitiveness Index

Main page: Return to the 2013 Index overview
Continue reading: Country analyses, appendix A

Related manufacturing competitiveness links

Manufacturing competitiveness hub
Meet Craig Giffi


Return to the top of page