Best economy in the world: Competitiveness and the best economy in the world

The best economy in the world can be understood as the economy which has reached high levels of competitiveness. Definitions of competitiveness move from a general perspective to more firm-specific and country-specific understandings. In this sense, there are several definitions of competitiveness that must be considered before one can build a particular understanding of the best economy in the world.

Buckley et al (1988) propose a general definition of competitiveness and emphasize the impact of strategic choices on competitiveness. For Buckley and his colleagues, competitiveness is about "efficiency (reaching goals at the lowest possible cost) and effectiveness (having the right goals)." The crucial point is such "choice of industrial goals" because "both the ends and the means toward those ends" are included in competitiveness.

The Competitiveness Advisory Group (1995) proposes that competitiveness entails "elements of productivity, efficiency and profitability." Competitiveness, however, "is not an end in itself or a target... [but] a powerful means to achieverising living standards and increasing social welfare- a tool for achieving targets."Accordingly, competitiveness is achieved, "by increasing productivity and efficiency in the context of international specialization, [this is so, because] competitiveness provides the basis for raising peoples' earnings in anon-inflationary way." The OECD (1997) undertakes an overarching understanding of competitiveness and indicates that competitiveness is "the ability of companies, industries, regions, nations or supra-national regions to generate, while being and remaining exposed to international competition, relatively high factor income and factor employment levels." In so defining competiveness, the Competitiveness Advisory Group and the OECD highlight a specific "end" (or a country objective) that becomes essential for a country to be considered as the best economy in the world.

The relevance of such objective becomes fundamental for other interpretations of competitiveness and thus further developing the concept. Scott and Lodge (1985), for example, focus on country competitiveness and propose that competitiveness is a "country's ability to create, produce, distribute and/or service products in international trade while earning rising returns on its resources." Others put more emphasis on the economic structure of countries. For the OECD (1992), "competitiveness is the degree to which a nation can, under free trade and fair market conditions, produce goods and services which meet the test of international markets, while simultaneously maintaining and expanding the real income of its people over the long-term."

The development of the understanding of competitiveness underlines several elements that can be considered as essential for the best economy in the world. In short, as the World Competitiveness Yearbook (IMD World Competitiveness Center, 2014) highlights, competitiveness is "ability of a nation to create and maintain an environment that sustains more value creation for its enterprises and more prosperity for its people"; or to put it shortly, competitiveness refers to the way in which a country "manages the totality of its resources and competencies to increase the prosperity of its people" (IMD World Competitiveness Center, 2014). Such achievement of increased prosperity is at the core of the best economy in the world.

 

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Recommended readings

Buckley, P. J., Pass, C. L., & Prescott, K. (1988). Measures of international competitiveness: A critical survey. Journal of marketing management, 4(2), 175-200.

Competitiveness Advisory Group — Ciampi Group (1995)."Enhancing European Competitiveness". First report to the President of the Commission, the Prime Ministers and the Heads of State.

IMD World Competitiveness Center (2014). IMD World Competitiveness Yearbook 2014. Lausanne: IMD World Competitiveness Center.

OECD (1992). Technology and the Economy: The Key Relationships. Paris: OECD.

OECD (1997). Industrial Competitiveness: Benchmarking Business Environments in the Global Economy. Paris: OECD.

Scott, B. R., & Lodge, G. C. (1985).US competitiveness in the world economy. The International Executive, 27(1), 26-26.


Suggested Websites

The IMD World Competitiveness Center's Yearbook