Investment climate; market competition international comparison 1990-2011

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Description topics

Mark-up

A measure of competition and profit margin of companies in a market.

Total economy

For the total economy (all sectors of industry) the mark-up is calculated as the Gross Domestic Product (GDP) divided by the wage sum of employees.

Source: European Commission, AMECO database.

Only the wage sum of employees. Excluded is virtual salary of self-employed.
Domestic product equals the sum of value added of industries (basic prices), balance of taxes and subsidies on products.
GDP is equal to the value of the income generated in the Netherlands.

Broken down by sector

Per sector the mark-up is calculated as the value added in the sector divided by the wage sum of employees in the sector.

Source: European Commission, AMECO database.
Only the wage sum of employees. Excluded is virtual salary of self-employed.

0000b Agriculture, forestry and fishery

0000b Agriculture, forestry and fishery (A+B) = NACE rev. 1, categories A and B. This category is made up of the categories:
01 Agriculture and related service activities.
02 Forestry and logging.
05 Fishing and aquaculture.

1000g Industry, excluding construction

1000g Industry, excluding construction, NACE rev. 1, categories C, D and E.

Category C Mining and quarrying.
Category D Manufacturing.
Category E Electricity, gas, steam and air conditioning supply.

D Manufacturing

D Manufacturing = NACE rev. 1, category D.
Category D Manufacturing.

F Construction

Category F Construction = NACE rev. 1, category F.

Services

Services = NACE rev.1, categories G - P.

G Repair of consumer goods and trade.
H Accommodation and food service activities.
I Transportation, storage and communication.
J Financial institutions.
K Renting, buying and selling of real estate.
L Public administration, public services and compulsory social security.
M Education.
N Human health and social work activities.
O Sewage and refuse disposal, culture, sports, recreation and other service activities.
P Activities of households as employers; undifferentiated goods- and service-producing activities of households for own use.

Public procurement

Public procurement is the purchase of products, services, public works or stocks of an (external) market party by the central or local government, which takes place after comparison of the received registrations (tenders) of several market parties. This indicator is a 'Structural indicator' of Eurostat and measures the value of the part of public purchase of goods or services that are put out to tender in public via the 'Official Journal of the European Communities, Supplement S'. The indicator is expressed as a percentage of the Gross Domestic Product, or as a percentage of all public purchase. The indicator reflects the degree in which the market is influenced by the government, because by buying its goods or services at specific companies, competitors or new entrants to the market are crossed.

Source: Eurostat, Structural Indicators.

Percentage of GDP

Public procurement as a percentage of Gross Domestic Product (GDP).

Percentage of total public procurement

Public procurement as a percentage of all public procurement.

Barriers

The indicators 'Barriers to entrepreneurship' and 'Barriers to trade and investment' originating from the Organisation for Economic Co-operation and Development (OECD). This indicator is updated every 5 years. Alternative figures for the intervening years see the indicators 'Public procurement' and 'Price convergence'. The score ranges from 0 to 6, where a higher figure indicates more barriers. For a description of how the scores are determined please see the link in paragraph 3 in the general explanation.

Source: OECD Indicators of Product Market Regulation (PMR).

To entrepreneurship

One of the indices of product market regulation (PMR) of the OECD. It concerns a weighted average of indicators at a lower level, namely:
- lack of transparency in legislation and government;
- administrative burdens on starting entrepreneurs;
- limitations on market processes'.

To trade and investment

One of the indices of product market regulation (PMR) of the OECD. It concerns a weighted average of indicators at a lower level, namely:
- explicit barriers for trade and investment (barriers against foreign holdings, procedures discriminating foreign enterprises, import levies etc.);
- other obstacles for international trade' (especially legislation).

Price convergence

The indicator 'Price convergence' is originating from Eurostat and is a criterion for the market integration of the various EU-member states. Large differences in prices between countries would not appear in an completely integrated European market. Allocation of production processes to regions where production can take place the most efficiently, and having an open economy, is assumed to lead to a high degree of price convergence. Information on price convergence in Europe is vital for the monetary policy of the European Central Bank. This indicator shows the average price level of several countries as an index, where in every year under review EU-27=100.

Source: Eurostat.

Firing costs

The indicator Firing costs measures the costs of necessaries for the announcement, dismissal payments and fines due at dismissing a superfluous employee, expressed in the number of weeks of salary.

Source: The World Bank, Doing business.

Difficulty of firing index

Dismissal protection (Difficulty of firing index) consists of eight components which relate to the procedures and rules that apply at the dismissal of one or a large group of employees in a country. Rules on informing third parties at dismissal, or obtaining authorisation of for example government agencies stipulate the score of a country on this index. A low index corresponds with relatively simple dismissal procedures, a high index corresponds with relatively complicated dismissal procedures.

Source: The World Bank, Doing business.

State support

State support is a kind of intervention in which the national government supports certain economic activities financially. This indicator includes state support to specific industries (agriculture, fishery, manufacturing, coal, transport excluding railways and other services), and state support which is given on ad hoc basis to individual companies, for example to save or reorganise a company. Also subsidies for Research & Development, environmental subsidies, subsidies for specific regions, subsidies for small companies, and subsidies for creating jobs.For methodological reasons, aid to the financial sector is not included in these figures. Support to the financial sector is regarded by Eurostat as a crisis measure which disturbs an accurate picture of spending on aid to industry and services.

Source: Eurostat, Structural Indicators.