EVALUATING COUNTRIES’ PROSPERITY USING A HYBRID APPROACH WITH ELECTRE III AND K-MEANS: A COMPARISON OF PRE AND POST-COVID-19 PANDEMIC SCENARIOS

What the paper says

This study presents an approach to assess the prosperity of countries by integrating the K-means clustering algorithm with the ELECTRE III multi-criteria ranking method. Using data from the Prosperity Index compiled by the Legatum Institute, 167 countries were analyzed considering 12 indicators. Although the Prosperity Index itself provides a composite ranking, by averaging the 12 indicators, integrating K-means with ELECTRE III adds significant value by uncovering nuanced groupings among countries based on their multifaceted performance. This combination enables policymakers to better understand overall rankings and specific patterns of strengths and weaknesses among similar countries. The approach proposed in this study aims to provide insights through visualizations of country clusters, preference relations established by ELECTRE III, and the resulting rankings. In addition, a robustness analysis was conducted using Monte Carlo simulations, with 10,000 runs performed to explore variations in the ELECTRE III parameters through probability distributions. The approach was implemented considering the scenarios of 2019 and 2023, aiming to capture the circumstances before and after the COVID-19 pandemic. The results indicate that developed countries were allocated to preferred clusters in both years analyzed. However, when applying the approach to assess the variation between the two periods, these countries were assigned to the lowest-ranked cluster. Practically, this methodology can assist policymakers in identifying critical areas for improvement, detecting performance shifts over time, and recognizing peer nations with similar prosperity profiles for potential benchmarking and collaborative development initiatives.