GDP by Country: Competitiveness—an assessment beyond GDP by Country
GDP by Country is used to assess the size of the world's economy and so to pinpoint the largest national economy. Competitiveness goes beyond such understanding. The results presented in the IMD World Competitiveness Center's(WCC) World Competitiveness Yearbook, offer an analysis of how countries manage the totality of their resources and competencies to increase prosperity. Within such framework, competitiveness goes beyond measures of GDP by country and productivity because there are 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.
To capture an extensive range of the relevant elements of competitiveness, the WCC results 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 the competitiveness factors, it becomes clear that an analysis based on GDP by country measure is ultimately narrow. GDP by country is useful to observe the growth (or otherwise) of a particular economy. If the aim, however, is to go beyond economic growth to encompass the sources or elements that contribute to such growth and to understand what enables a country to reach high levels of competitiveness, then a more comprehensive framework is needed.
Importantly, it may be the case that the economies at the top of the GDP by country assessment also reach the highest overall competitiveness rankings. It could also be the case, however, that smaller economies are able to achieve high levels competitiveness in the overall ranking or perhaps they have an advantage in a particular factor of competitiveness. In other words, the analysis of competitiveness requires a wider scope than an assessment overly focused on GDP by country.
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