Economic growth rate: Competitiveness goes beyond economic growth rate
Economic growth rate measures the changes in an economy during a specific period of time. Economic growth rate is useful for determining the direction and size of a particular economy. When reflecting on the competitiveness of a country, there is a tendency to focus on economic growth rate, and to argue that competitiveness is equivalent to economic growth rate. Any assessment of competitiveness, however, needs to take into account a wide-range of economic indicators and non-economic variables to capture the depth of competitiveness.
The results presented in the IMD World Competitiveness Center's (WCC) World Competitiveness Yearbook, strive to do so. The Yearbook offers an analysis of how countries manage the totality of their resources and competencies to increase prosperity. Within such framework, competitiveness goes beyond economic growth rate to incorporate non-economic elements including political, social and cultural factors that affect competitiveness. Competitive countries provide a context that is underlined by an efficient structure and institutions, supported by policies that encourage the competitiveness of enterprises.
There is an extensive range of relevant elements of competitiveness. The WCC results thus develop four fundamental dimensions or factors of competitiveness. Each of these factors is in turn divided into sub-factors. The first factor encompassed by the WCC results is Economic Performance which undertakes a macro-economic evaluation of the domestic economy by taking into account measures of the domestic economy, international trade, international investment, employment and prices. The second factor summarized by the WCC results is Government Efficiency. This factor contemplates the extent to which government policies are conducive to competitiveness. Among the factors component are public finance, fiscal policy, institutional framework, business legislation and societal framework. Business Efficiency is the third factors covered by the WCC results. Business Efficiency analyzes the extent to which the national environment encourages enterprises to perform in an innovative, profitable and responsible manner. It does so by studying a country's productivity and efficiency, its labor market, finance, management practices and the prevalent attitudes and values. The WCC results also consider an Infrastructure factor. The latter analyzes the extent to which a country's basic, technological, scientific and human resources meet the needs of business. This factor incorporated measures of basic infrastructure, technological infrastructure, scientific infrastructure, health and environment and education.
From the preceding summary of competitiveness factors, it becomes clear that an analysis based on economic growth rate measures is ultimately narrow. Economic growth rate is useful to assess the direction and performance trends of a particular economy. If the aim, however, is to go beyond economic growth rate to establish an in-depth analysis that allows for an exhaustive assessment of country competitiveness, then a more comprehensive framework is needed. To put it shortly, competitiveness is greater than an assessment overly focused on economic growth rate.
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Suggested websitesThe IMD World Competitiveness Center's Yearbook