Country Competitiveness: Some Important Aspects in the Assessment of Country Competitiveness

Country competitiveness refers to the ability of the government to generate prosperity for its people. There are several implications in this understanding of competitiveness. It implies that countries with high levels of competitiveness are able to better manage their economic and human capacities. In this context, the government has a great impact in the achievement of country competitiveness. For example, the level of regulation in a particular country may hinder the ability of a country to increase its competitiveness. The infrastructure also contributes to country competitiveness by providing the adequate context to improve the conditions related to competitiveness. From this understanding of country competitiveness, however, is clear that competitiveness goes beyond the economic performance of a given country.

Considering the wide range of factors necessary for the assessment of country competitiveness, it is necessary to develop a sound conceptual framework on which to form the basis for the rigorous and systematic collection of data. The method of collecting data, in a sense, provides the mechanisms for effectively "measuring" competitiveness. Such a conceptual framework may consider the following dimensions.

As previously indicated, country competitiveness can be assessed on a multiplicity of factors. Government efficiency plays a fundamental role in country competitiveness. Factors related to government efficiency include public finances, fiscal policy, the regulatory framework and societal framework. For example, a strong justice system that provides stability to society and ensures personal security characterizes high competitiveness countries. In addition business efficiency has a defining impact on country competitiveness. Business productivity, the conditions of the labor market (e.g., costs and availability of skills), availability of finances and management practices are essential for country competitiveness. Factors included under the business efficiency category capture the level of businesses' investment on the development of their employees and the dominant attitudes and values among business executives.

The general infrastructure, and the technological and scientific infrastructures as well as the health system, concerns for the environment and education, play a highly significant role in determining the level of country competitiveness. Infrastructure-related factors also capture the quality of life that a particular country offers to its population. In this regard, for example, a country with high levels of competitiveness tends to have strong educational systems and a sound R&D investment strategy.

Finally, factors that influence the performance of the economy are fundamental for our understanding of country competitiveness. These factors include the diversification and growth of the domestic economy, international trade, international investments, employment and prices.

There are, however, other aspects that have a meaningful impact on country competitiveness but that are difficult to capture when competitiveness is assessed. This includes cultural aspects, perceptions and affective factors which ultimately bear significant effects on the evolution of country competitiveness.


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Recommended readings

Buckley, P. J., Pass, C. L. & Prescott, K., 1990. Measures of International Competitiveness: Empirical Findings from British Manufacturing Companies. Journal of Marketing Management, 6(1), pp. 1-13.

Budd, L. & Hirmis, A. K., 2004. Conceptual Framework for Regional Competitiveness. Regional Studies, 38(9), pp. 1015-1028.

Garelli, S., 2007. Competitiveness of Nations: The Fundamentals in the IMD World Competitiveness Yearbook 2006. Lausanne: IMD World Competitiveness Center.

Kitson, M., Martin, R. & Tyler, P., 2004. Regional Competitiveness: An Elusive yet Key Concept? Regional Studies, 38(9), pp. 991-999.

Kravis, I. B. & Lipsey, R. E., 1992. Sources of Competitiveness of the United States and of its Multinational Firms. The Review of Economics and Statistics, LXXIV(2), pp. 193-201.

Lall, S., 2001. Competitiveness, Technology and Skills. Vermont: Edward Elgar Publishing.

Porter, M. E., 2003. The Economic Performance of Regions. Regional Studies, 37(6&7), p. 549–678.

Suggested Websites

The IMD World Competitiveness Center's Yearbook