HUBS 1Source: World Competitiveness Year Book 1997

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WHAT IS WORLD COMPETITIVENESS?

WHAT IS WORLD COMPETITIVENESS?

Competitiveness is the ability of a country to create added value and thus increase national wealth by managing assets and

processes, attractiveness and aggressiveness, globality and proximity,

and by integrating these relationships into an economic and social model.

Competitiveness is the ability of a country to create added value and thus increase national wealth by managing assets and

processes, attractiveness and aggressiveness, globality and proximity,

and by integrating these relationships into an economic and social model.

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The main components of this definition are the

following:

The main components of this definition are the

following: An Economic and Social Model Assets and Processes Attractiveness and Aggressiveness Globality and Proximity Added Value National Wealth

An Economic and Social Model Assets and Processes Attractiveness and Aggressiveness Globality and Proximity Added Value National Wealth

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An Economic and Social ModelAn Economic and Social ModelIn theory, every nation is free to define its own

economic and social approach to managing competitiveness.

However, in reality, regional and international agreements limit the margin of manoeuvrability

that nations have.

Economic policies and business rules are being harmonised world-wide with a strong emphasis

on market economics. From a social point of view, nations have preserved more sovereignty.

In theory, every nation is free to define its own economic and social approach to managing

competitiveness.

However, in reality, regional and international agreements limit the margin of manoeuvrability

that nations have.

Economic policies and business rules are being harmonised world-wide with a strong emphasis

on market economics. From a social point of view, nations have preserved more sovereignty.

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Assets and ProcessesAssets and ProcessesCompetitiveness may stem from inherited assets

such as natural resources, land and population size (e.g. Brazil, Australia, India), and/or from

processes that determine their present ability to create added value (e.g. Japan, Switzerland,

Singapore).

The industrial revolution in Britain was a vital process which transformed the country's

natural assets, coal and iron, into added value.

Competitiveness may stem from inherited assets such as natural resources, land and population size (e.g. Brazil, Australia, India), and/or from

processes that determine their present ability to create added value (e.g. Japan, Switzerland,

Singapore).

The industrial revolution in Britain was a vital process which transformed the country's

natural assets, coal and iron, into added value.

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Attractiveness and Aggressiveness

Attractiveness and Aggressiveness

Determining a nation's competitiveness can only be done

by testing it in international markets. Nations approach the

process of internationalisation by being attractive and/or

aggressive.

Determining a nation's competitiveness can only be done

by testing it in international markets. Nations approach the

process of internationalisation by being attractive and/or

aggressive.

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Attractiveness and Aggressiveness

Attractiveness and Aggressiveness

Some nations focus on attractiveness, i.e. creating a domestic environment

that is conducive to foreign direct investments being made inside their

country, through trade, partnerships with foreign

enterprises, etc. (e.g. Ireland, Thailand).

Some nations focus on attractiveness, i.e. creating a domestic environment

that is conducive to foreign direct investments being made inside their

country, through trade, partnerships with foreign

enterprises, etc. (e.g. Ireland, Thailand).

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Attractiveness and Aggressiveness

Attractiveness and Aggressiveness

Other nations emphasise aggressively striving to enter

international markets by making direct investments outside their country through exports (e.g.

Korea, Japan).

Other nations emphasise aggressively striving to enter

international markets by making direct investments outside their country through exports (e.g.

Korea, Japan).

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Globality and ProximityGlobality and ProximityThis relationship defines the

amount of international presence a nation is seeking. Nations

manage two types of economies: one that is close at hand

(proximity), and one that is far-reaching (globality).

This relationship defines the amount of international presence

a nation is seeking. Nations manage two types of economies:

one that is close at hand (proximity), and one that is far-

reaching (globality).

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The economy of proximityThe economy of proximityThe economy of proximity - consisting of

traditional activities such as plumbers and butchers, social activities such as doctors and teachers, administrative

activities such as government and justice, and consumer supporting

activities such as after-sales services and customisation - provides added value

close to the end user.

The economy of proximity - consisting of traditional activities such as plumbers and butchers, social activities such as doctors and teachers, administrative

activities such as government and justice, and consumer supporting

activities such as after-sales services and customisation - provides added value

close to the end user.

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The economy of globalityThe economy of globalityThe economy of globality - consisting of

international activities that the factors related to production need not necessarily

be actually near the end user.

Pursuing this option affects decisions regarding the degree of exposure, regulation and, eventually, social

volatility of the economy.

The economy of globality - consisting of international activities that the factors

related to production need not necessarily be actually near the end user.

Pursuing this option affects decisions regarding the degree of exposure, regulation and, eventually, social

volatility of the economy.

HUBS 12Source: World Competitiveness Year Book 1997

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Added ValueAdded ValueEconomists typically calculate added value by using a country's gross national product (GNP) or gross domestic product (GDP).

A more subtle method such as taking the GNP or GDP adjusted to purchasing

power parity (PPP), now calculated by the World Bank and the OECD, also accounts for the impact created by the general level

of domestic prices.

Economists typically calculate added value by using a country's gross national product (GNP) or gross domestic product (GDP).

A more subtle method such as taking the GNP or GDP adjusted to purchasing

power parity (PPP), now calculated by the World Bank and the OECD, also accounts for the impact created by the general level

of domestic prices.

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Added ValueAdded ValueOther methods discount inflation, currency fluctuation, etc. GNP and GDP are, however, inadequate as a means of measuring because

they do not include all aspects of added value.

For example, they do not differentiate between revenues generated by the depletion of non-renewable assets such as oil and revenues

generated by processes such as manufacturing.

Other methods discount inflation, currency fluctuation, etc. GNP and GDP are, however, inadequate as a means of measuring because

they do not include all aspects of added value.

For example, they do not differentiate between revenues generated by the depletion of non-renewable assets such as oil and revenues

generated by processes such as manufacturing.

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National WealthNational WealthNational wealth is the end result of

competitiveness.

It is composed of inherited assets, such as natural resources, and created assets which are built up over the years by a competitive

process.

Nowadays, the national wealth of many industrialised nations is mainly the result of

competitiveness that occurred over a number of years in the past.

National wealth is the end result of competitiveness.

It is composed of inherited assets, such as natural resources, and created assets which are built up over the years by a competitive

process.

Nowadays, the national wealth of many industrialised nations is mainly the result of

competitiveness that occurred over a number of years in the past.

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AnalysisAnalysis

Competitiveness:A national environment is

described through 250 criteria grouped into 8 factors.

Competitiveness:A national environment is

described through 250 criteria grouped into 8 factors.

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I Domestic EconomyI Domestic EconomyValue addedCapital formationFinal consumptionEconomic sectorsCost of livingEconomic forecasts

Value addedCapital formationFinal consumptionEconomic sectorsCost of livingEconomic forecasts

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II InternationalisationII InternationalisationBalance of paymentsExports of goods and services Imports of goods and servicesExchange rateForeign direct investmentsNational protectionismOpenness

Balance of paymentsExports of goods and services Imports of goods and servicesExchange rateForeign direct investmentsNational protectionismOpenness

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III GovernmentIII GovernmentNational debtGovernment expendituresFiscal policiesState efficiencyState involvementJustice and security

National debtGovernment expendituresFiscal policiesState efficiencyState involvementJustice and security

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IV FinanceIV FinanceCost of capitalAvailability of capitalStock markets dynamismBanking sector efficiency

Cost of capitalAvailability of capitalStock markets dynamismBanking sector efficiency

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V InfrastructureV InfrastructureBasic infrastructureTechnological

infrastructureEnergy self-sufficiencyEnvironment

Basic infrastructureTechnological

infrastructureEnergy self-sufficiencyEnvironment

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VI ManagementVI ManagementProductivityLabour costsCorporate performanceManagement efficiency

ProductivityLabour costsCorporate performanceManagement efficiency

HUBS 23Source: World Competitiveness Year Book 1997

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VII Science & TechnologyVII Science & TechnologyR+D expendituresR+D personnelTechnology managementScientific environmentIntellectual property

R+D expendituresR+D personnelTechnology managementScientific environmentIntellectual property

HUBS 25Source: World Competitiveness Year Book 1997

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VIII PeopleVIII PeoplePopulation characteristicsLabour force characteristicsEmploymentUnemploymentEducational structuresQuality of lifeAttitudes and values

Population characteristicsLabour force characteristicsEmploymentUnemploymentEducational structuresQuality of lifeAttitudes and values

HUBS 27Source: World Competitiveness Year Book 1997

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UK: Overall Performance 92 - 96

Source: World Competitiveness Year Book 1997

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France: Overall Performance 92 - 96

Source: World Competitiveness Year Book 1997

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Japan: Overall Performance 92 - 96

Source: World Competitiveness Year Book 1997

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USA: 1992 - 1996

Source: World Competitiveness Year Book 1997

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USA: 1992 - 1996

Source: World Competitiveness Year Book 1997

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China: Overall Performance 92 - 96

Source: World Competitiveness Year Book 1997

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Russia: Overall Performance 1994 - 1996

Source: World Competitiveness Year Book 1997