A Simplified Model for Approximating “World Power Index (WPI)”
A Simplified Model for Approximating “World Power Index (WPI)”

Summary/Abstract: Modern societies are characterized by an intensive interaction among participants to social-economic life, with a large literature being consecrated to the evaluation of the competitive capacity of the market-players. Both the micro-level of this complex mechanism (enterprises, different types of authorities, and civic organizations) and the inter-countries relationships have been studied. The most comprehensive quantitative measure provided by the second approach is perhaps the World Power Index (WPI), which comes from three capacities sub-indices – material (MCI), semi-material (SCI), and immaterial (ICI) - all of these constructed on the Data Bank-World Development Indicators. More specifically, MCI refers preponderantly to the tangible, physical assets and capabilities of a country (infrastructure, economy, and military strength); SCI comprises factors like social well-being, human capital, and institutional quality; and ICI estimates the intangible components of a nation’s power (its culture, values, and international reputation). Due to its complexness, WPI requests laborious computational efforts, until now being accessible estimations only for the period 2015-2022. The presence of WPI for more extended intervals would be extremely useful in many analyses, and the main target of this paper is to find a simplified technical solution for its determination. The following equations were regressed using available data: i_WPI=f(i_c, i_NW, i_POP, i_GDPppp, i_ε), in which i_ is the country symbol, NW – the national wealth, POP – the population, and GDPppp - gross domestic product at the purchasing power parity, $2011. Since the initial sample contains only 6 observations (2015-2020), the database was extended with four successive resampled series (each of which was deduced from the primary data). The model was solved by weighted LS, and the residuals were subjected to the BDS test which attested the econometric acceptability of the proposed model. The final part of the paper mentions some discussion problems.

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