Countries do not respond to change in the same way. Indeed, around the world there are examples of economies that are better able to manage change and capitalise on new opportunities than their neighbours and peers. Equally, recent history has demonstrated that some developing countries possess a stronger capacity to react and respond to economic crises and natural disasters than others. This difference in the ability to manage change is determined by what we refer to as a country’s ‘capability’.

At the 2010 World Economic Forum (WEF), an informal discussion took place around the need for a reliable and appropriate method for assessing the capabilities of a developing country to cope with, respond to – and as required – proactively stimulate positive change. In response, KPMG International, in cooperation with researchers from the Overseas Development Institute (ODI), have proposed a number of key determinants that impact a country’s capability to manage change, and have reviewed over 30 existing indices to assess this ability.  

A new Capability Index would equip key stakeholders (such as development agencies, developing country governments, business, research institutes and NGOs) with a critical tool to identify important areas that require focused improvement within developing countries to improve the capability to manage change.

We hope this paper will provide a foundation to stimulate further discussion within governments and the development community, and encourage decision-makers to join our initiative to create a comprehensive Capability Index.