mutual gains from trade, this should not obscure the competitive dimensions of this relationship. Measuring Competitiveness For the moment, we will focus our attention on measuring competitiveness for nations and later turn to considerations for firms. Most of the major efforts to measure competitiveness include but do not limit themselves to productivity. One important effort in measuring competitiveness develops a differentiated measure based on the stage of a nation’s development. Nations are divided into three groups: developing nations that rely mainly on the existing factor endowments in their nations; a second group of nations capable of achieving growth through enhanced efficiencies; and a third group able to achieve growth through innovation. The first set of components of the measure focus on nations that depend primarily on the relative endowment of production factors such as low wage labor and natural resources. The competitiveness of these nations will depend on the ability to develop basic economic system sufficient to operate effectively in the global economy. The measures for such factor-driven economies are for the presence and quality of: Basic requirements for Factor-driven economies Institutions Property rights, intellectual property, corruption, waste in government spending, transparency of government policymaking, level of crime and violence, reliability of corporate information, Infrastructure Transportation, energy, telephony Macroeconomic environment Government budget balance, savings, inflation, interest rate spread, government debt, national credit rating Health and primary education Incidence of disease, infant mortality, life expectancy, primary education enrollment rate A second stage of development emphasizes those arrangements that enhance the efficiency of a nation. These include: Efficiency enhancers for efficiency-driven economies Higher education and training Goods market efficiency
mutual gains from trade, this should not obscure the competitive dimensions of this relationship. Measuring Competitiveness For the moment, we will focus our attention on measuring competitiveness for nations and later turn to considerations for firms. Most of the major efforts to measure competitiveness include but do not limit themselves to productivity. One important effort in measuring competitiveness develops a differentiated measure based on the stage of a nation’s development. Nations are divided into three groups: developing nations that rely mainly on the existing factor endowments in their nations; a second group of nations capable of achieving growth through enhanced efficiencies; and a third group able to achieve growth through innovation. The first set of components of the measure focus on nations that depend primarily on the relative endowment of production factors such as low wage labor and natural resources. The competitiveness of these nations will depend on the ability to develop basic economic system sufficient to operate effectively in the global economy. The measures for such factor-driven economies are for the presence and quality of: Basic requirements for Factor-driven economies Institutions Property rights, intellectual property, corruption, waste in government spending, transparency of government policymaking, level of crime and violence, reliability of corporate information, Infrastructure Transportation, energy, telephony Macroeconomic environment Government budget balance, savings, inflation, interest rate spread, government debt, national credit rating Health and primary education Incidence of disease, infant mortality, life expectancy, primary education enrollment rate A second stage of development emphasizes those arrangements that enhance the efficiency of a nation. These include: Efficiency enhancers for efficiency-driven economies Higher education and training Goods market efficiency
chapter8competerevised.docx