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The Determinants of National Competitiveness

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  • Mercedes Delgado
  • Christian Ketels
  • Michael E. Porter
  • Scott Stern

Abstract

We define foundational competitiveness as the expected level of output per working-age individual that is supported by the overall quality of a country as a place to do business. The focus on output per potential worker, a broader measure of national productivity than output per current worker, reflects the dual role of workforce participation and output per worker in determining a nation’s standard of living. Our framework highlights three broad and interrelated drivers of foundational competitiveness: social infrastructure and political institutions, monetary and fiscal policy, and the microeconomic environment. We estimate this framework using multiple data sets covering more than 130 countries over the 2001-2008 period. We find a positive and separate influence of each driver on output per potential worker. The microeconomic environment has a positive effect on output per potential worker even after controlling for historical legacies. Using our framework we define a new concept, global investment attractiveness, which is the cost of factor inputs relative to a country’s competitiveness. This analysis reveals important insight into the economic trajectory of individual countries. Our framework also offers a novel methodology for the estimation of a theoretically grounded and empirically validated measure of national competitiveness.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18249.

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Date of creation: Jul 2012
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Handle: RePEc:nbr:nberwo:18249

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References

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Citations

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Cited by:
  1. Angela Cheptea & Lionel Fontagné & Soledad Zignago, 2012. "European Export Performance," Working Papers 2012-19, CEPII research center.
  2. Lechman, Ewa, 2014. "Changing patterns of export of goods versus macroeconomic competitiveness. A comparative analysis for East-Central European countries in the period 2000-2011," MPRA Paper 53639, University Library of Munich, Germany.
  3. Foders, Federico & Vogelsang, Manuel Molina, 2014. "Why is Germany's manufacturing industry so competitive?," Kiel Policy Brief 69, Kiel Institute for the World Economy (IfW).
  4. Hyytinen, Ari & Maliranta, Mika, 2013. "Firm lifecycles and evolution of industry productivity," Research Policy, Elsevier, vol. 42(5), pages 1080-1098.
  5. Bernard M. Hoekman, 2013. "Global Governance of International Competitiveness Spillovers," RSCAS Working Papers 2013/33, European University Institute.
  6. Karl Aiginger & Susanne Bärenthaler-Sieber & Johanna Vogel, 2013. "Competitiveness under New Perspectives," WWWforEurope Working Papers series 44, WWWforEurope.

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