Long-term countries competitiveness fundamentals
By Adina Moloman
Source: The Global Competitiveness Report 2011-2012 by the World Economic Forum
Presenting a mix of factors important for achieving nation competitiveness and growth. The first of which is the importance of legal and administrative framework for any given country. A good example is the definition of a legal framework to help investment decisions and the organization of production. Investors are willing to establish their operation in a country when their property rights are protected. In addition to that Government attitudes toward markets is extremely necessary (regulation, attitude towards corruptions, institutions transparency) and also the proper management of public Finances is also important.
Efficient infrastructure (transport and communications Infrastructure) is the second element presented to archive global competitiveness.
The stability of the macroeconomic environment (fiscal measures to control inflation rates, control of public debt for instance) is the third pillar important for the business environment.
Health and the basic education received in a country is the forth economic element mentioned for reaching competitiveness. Higher education and training is the fifth element necessary for a country to reach this completion goal.
Goods market efficiency (open markets vs. protectionist markets; demand conditions in a country which are forcing companies to be more innovative) is the sixth pillar, followed by a seventh pillar which is the efficiency and flexibility of the labor market.
The eighth fundamental element to reach competitiveness is the financial market development. The well-functioning of the financial sector is critical for economic activities of a country. Capital must be available for private-sector investment based on well-regulated securities exchanges. Technological readiness even when the technology has not been developed within national borders is the ninth element and measures “the agility with which an economy adopts existing technologies to enhance the productivity of its industries”.
The attraction of foreign direct investment is a source of introducing new technologies in many different countries. The Mexico Manufacturing process for instance is based on FDI, which plays a key role in this country. Market size is the tenth element and is important for countries firms to reach economies of scale. Business sophistication of a country is the eleventh pillar which is divided into the quality of a country’s business networks and supporting industries given by the quantity and quality of local suppliers and the way they interact and the quality of individual firms’ operations and strategies.
The last element of competitiveness is the country technological innovation important at the long run for a country economic growth. Here is primordial the investment in research and development by both the public and the private sectors.
