Research Paper on Global Competitiveness: Socio-Economic Arguments

Introduction

The strategy of any given institution is to always compare itself against other institutions which are either locally or globally well known in their respective fields. This habit of comparison creates a healthy environment for inspiration, spread information and gives a better insight to the respective industries. The prominence of the global competitiveness idea is further shown by the more than six point five million results produced by Google search engine daily on the internet. Showing that global competitiveness draws a lot of interest from people. Principally, the global competitiveness is the set of policies, institutions, and factors that directly or indirectly influence the level of productivity in a given country. Growth and income levels in a nation are solemnly driven by the level of productivity of that nation. Knowing and understanding that income levels are closely tied to the welfare of the citizens, it is vital to study global competitiveness and use it in determining policies and predict incoming economic and social trends in their respective countries. Policy-makers in either developed or developing nations have a significant preoccupation that involves keeping the country in its competitive nature and how they can increase its competitiveness. Competitive economies can grow inclusively, meaning that there is a more like a hood that every citizen will benefit from this productive competition. Various studies also reveal the fact that most countries are far from the average competitiveness performance in term of GCI. Therefore, the purpose of this paper is to examine the factors that might promote global competitiveness rank of a nation.

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Theoretical Background

To measure competitiveness, the Global Competitiveness Index 4.0 (G.C.I) is used. It aimed at the indicators that influence the competitiveness of a country together with the institutions and policies of a country (Despotovic 1656). The GCI 4.0 examines these indicators that when put together affects the growth of a nation's productivity which is vital in improving the standard of living. The Global Competitiveness Index 4.0 has also maintained its predecessor's goal that is reconsidering what influences productivity and its measurements; from the ninety-eight indicators examined thirty-four have been retained from the last methodology while the sixty-four are new. This shows that there have been minimal but crucial changes done to the framework of GCI 4.0.

Global Competitiveness is measured by scores. These scores are from one to seven, whereby the higher the average rating the higher the degree of competitiveness. Development of GCI 4.0 has been influenced by emergence of various changes in the manner in which economies work following the invention of the 4th industrial revolution (4IR). Global Competitiveness Index is calculated as a weighted average of twelve pillars of competitiveness which are institutions, infrastructure, primary education and health, macroeconomic environment, skills, product market, market size, business sophistication, innovation, financial system, technological readiness, and labor market efficiency (Schwab 1). Notably, the Global Competitiveness Index 4.0 came with the methodology that consists of all the factors summarized into 4IR's which are the enabling environment, human capital, Markets, and innovation ecosystem. The indicators encompass adoption of ICT, infrastructure, institution, macroeconomic stability, as well as, human capital that comprises of health and skills. Further, the markets entail labor, product, market size, as well as, financial system. More importantly, the innovation environment comprises of innovation capacity and dynamism. The calculation of the Global Competitiveness Index relative weight uses the twelve pillars of competitiveness to determine the Global Competitiveness of a country. Two-thirds of information used in the calculation of the global competitiveness Index are from surveys, and only a third of the data is from statistical analysis. This creates a source of liability since the survey if not correctly done may result in wrong conclusions.

Comparing Countries

Singapore

Global competitiveness report of 2018 reveals that Singapore scored 83.5, a figure that indicates a strong performance in almost all sectors (Schwab 10). This highest global competitiveness was due to numerous economic, social, and environmental indicators such as better infrastructure, trade openness and health. The country is also regarded as the powerhouse of innovation. Economically, Singapore performs well in terms of market size and the labor market. Other critical indicators for the stated global competitiveness encompass low tariffs, better education system and non-tariff barriers to international trade.

The United States

The United States maintained its overall position at the top of the table. In 2017 they managed to scoop 84.8, this improved to 85.6 in 2018 (Schwab 14). Institutions in the US are ranked 13 with the score 74.6 which is an improvement from 2017. US infrastructure is ranked 9 with a score of 89.5; this is a drop from the previous year. In ICT adoption, the US managed to get a score of 71.2 which placed it at rank 27. Macroeconomic stability of US was ranked 34 with the score of 99.6. Health care also drops to 86.5 putting them at position 47, skills scored 86.3 and were ranked 3. The product market in the US scored 73.8 which is an improvement from 2017, ranked at 3. Labor market managed to score 81.9 which placed them ranked 1. The financial system in the US also occupies the top spot with a score of 92.1. The US falls short in market size to China scoring 99.2 taking rank two after China. Business dynamism scored and improved 86.5 taking the US to the top spot of the table. Innovation capability of the US was ranked 2 with the score 86.5 (Schwab 12)

Sweden

Sweden is the 7th country regarding global competitiveness report of 2018. The country's reputation in technology is a critical indicator that has sparred its global competitiveness. It has the highest index of technological readiness, business complication, and innovation capacity. Other important factors for the global competitiveness of Sweden entail better scientific research institutions, competent engineers and scientists, as well as, government support. Economically, the country has the highest patents per capita and increased levels of technology adoption among firms and households.

Germany

Just like Sweden, US, Singapore and other developed economies, the global competitiveness of German is influenced by various social, economic, and environmental factors such as high employment rates, low inflation rates, reduced trade restrictions, trade surplus, slight economy stagnation, better education and training, as well as, adequate and skilled workforce.

Nigeria

According to the global competitiveness report, Nigeria is ranked at position 115 (Schwab 11). This implies that the country's global competitiveness has moved two places backward. The key factors that continue to influence the competitiveness of the country encompass better health, business innovation, improved infrastructure, macro-economic environment, labor market, effective financial system, adequate skilled workers, and growing market size. Nonetheless, to increase its global competitiveness, the country should make necessary improvements in the macro-economic environment, institutions, adoption of information and communication technology, and training and hiring a skilled workforce.

Australia

The Global Competitiveness Report 2018 indicates that overall Australian competitiveness is not remarkable because most of its indicators are not ranked among the top fifty countries. As stated in the report, its global competitiveness is being influenced by economic indicators such as high tax rates, restrictive labor regulations, policy instability, as well as, inadequate government bureaucracy (Schwab 16). Nonetheless, Australia has better social indicators of excellent performance. In particular, the country has high performance in higher training and education that consequently reflects its ability to produce many competent workers. Unemployment also contributes to the low global competitiveness of Australia. It is reported that the country has acute skill shortages. Therefore, such a disparity between the number of competent employees being produced and the real name available in the workforce implies that the country depends heavily on international employees who take back their income leaving Australia to lag in terms of GDP and other aspects of economic growth and development.

Improving the global competitiveness index of Australia requires the government to reduce the country's company tax rates and set ones that are competitive with world standards. Further, the government should ensure that the state has an outstanding domestic policy setting to create a favorable business environment that produces local entrepreneurs.

Chile

From the Global Competitiveness report, it is evident that Chile leads the Caribbean and Latin American region in terms of the competitiveness index. Essentially, the country's competitiveness is fragile but may be jeopardized by various economic, social, and environmental indicators such as increased danger from trade protectionism in the US, humanitarian and financial crisis, policy ambiguity from elections in the country, as well as, interferences from environmental disasters. Intuitively, the report indicates that weak institutions and insecurity are the significant indicators that influence the global competitiveness of the country (Budd, & Amer 1015).

Canada

The global competitiveness report indicates that Canada comes close to the US, Germany, and Singapore in terms of competitiveness index. The country has the least rate of adopting information and communication technology. Further, it spends less on infrastructure. Restrictive trade policies and labor shortage are other economic indicators that influence the country's global competitiveness. Therefore, to improve its global competitiveness rank, Canada lowers its trade restrictions and court competent foreign employees. Further, it needs to come up with a better way of integrating immigrants by assisting training and recognizing international qualifications.

Italy

As compared to developed economies such as the US and Singapore, Italy had a score of 70.77 as indicated in the global competitiveness report of 2018. The stated global competitiveness is due to various social, economic, and environmental indicators. In particular, the country is one of the leading manufacturing economies across Europe. This implies that the country export large quantity of services and goods thus increasing its GDP. Further, the country has reduced dependency ration and better higher education and training for the workforce. Other indicators for the country's competitiveness entail high rate of employment, low inflation, and moderate interest rates.

Chad

Chad registered a low global competitiveness index because the country is among the leading poorest countries in Africa. About 80% of the country's population live in abject poverty. The state majorly depends on gold, oil, and uranium production that constitutes about 95% of its export and forms the highest source of revenue for the government. Some of the economic, social, and environmental factors responsible for the country's low global competitiveness rank entail high rates of inflation, decreased GDP per capita, mass unemployment, high-interest rates, prolonged military conflicts and droughts that have hindered the economic growth and development of the country. Principally, these factors indicators have hindered the manufacturing industry, infrastructure,...