Conduits of Capital

Financial centre predictions from the SVM
are combined with actual financial centre
assessments to produce the GFCI—a set of
financial centre ratings. The GFCI is dynamically
updated either by updating and adding to the
instrumental factors or through new financial
centre assessments. These updates permit,
for instance, a recently changed index of rental
costs to affect the competitiveness rating of the
centres. No weightings are assigned to each
instrumental factor, although the SVM uses each
respondent’s assessments in combination with
the instrumental factors to predict the factors
that are most important to each respondent.
Different respondents place different emphasis
on different factors. The process of creating the
GFCI is outlined diagrammatically.
It is worth drawing attention to a few consequences of basing the GFCI on instrumental factors and questionnaire responses:
• Several indices care used for each competitive factor and there are alternatives available;
• A strong international group of ‘raters’ is being developed as the GFCI progresses;
• Sector-specific ratings are created by using the business sectors represented by questionnaire respondents. This
makes it possible to rate London as competitive in Insurance (for instance) while less competitive in Investment
Management (for instance);
• The factor assessment model can be queried in a ‘what if’ mode—“how much would London rental costs need to fall
in order to increase London’s ranking against New York?”; and,
• Part of the process of building the GFCI is extensive sensitivity testing to changes in factors of competitiveness
and financial centre assessments. The accuracy of predictions given by the SVM is regularly tested against actual
assessments.
6.2 Appendix B – GFCI Instrumental Factors
One of the two main inputs to the GFCI is a list of instrumental factors (105 in GFCI 16). Shown below are the 105 factors
and the R-Squared of the correlation with GFCI—a higher R-Squared implies stronger correlation.
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