Logistics Performance Index: Methodological Issues

Published date01 November 2020
Date01 November 2020
Logistics Performance
Index: Methodological
Satyendra Nath Chakrabartty1
This article addresses limitations of Logistics Performance Index (LPI) and sug-
gests remedies. Reliability of the instrument used in LPI may be better found by
Angular Association method or Bhattacharyya’s measure, using only the frequen-
cies or probabilities of item–response categories without involving assumptions
of continuous nature or linearity or normality for the observed variables or the
underlying variable being measured. The suggested methods also avoid test of
uni-dimensionality, assumption of normality, bivariate normality. The problems of
outlying observations and linear assumptions in principal component analysis for
finding reliability theta are also avoided in each proposed method. Geometric
mean approach provides a better alternative to compute LPI scores avoiding
scaling and calculation of weights satisfies many desired properties and reduces
level of substitutability between components, facilitates statistical test of equal-
ity of two geometric means and identifies critical areas for corrective measures.
Such identifications are important from a policy point of view. The graph of LPI
for a country over a long period of time reflects pattern of growth of LPI for the
country. The method helps to rank and benchmark the countries, if the target
vector is taken as LPI score of the best performing country.
JEL Codes: C43, C54
Likert scale, reliability, composite index, geometric mean, multi-staged sampling
1 Indian Ports Association, New Delhi, India.
Corresponding author:
Satyendra Nath Chakrabartty, Indian Ports Association, New Delhi 110003, India.
E-mail: chakrabarttysatyendra3139@gmail.com
Foreign Trade Review
55(4) 466–477, 2020
© 2020 Indian Institute of
Foreign Trade
Reprints and permissions:
DOI: 10.1177/0015732520947860

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