New evidence of competitiveness based on the global competitiveness index

The search for answers as to the determinants that most influence countries`competitiveness has been a constant concern of economists especially in the last years. As competitiveness impacts economic growth, which in turn allows providing high levels of prosperity to citizens, it turns the topic hotter and more current. Competitive economies provide greater productivity gains that impact workers`earnings through their wages. Considering the 12 pillars of the GCI Index for the first 50 countries in the 2018 Report, we intend to empirically verify which pillars are most important for the economic growth of nations. Using the fixed effects of panel data and GMM in the first differences, we conclude that the quality of institutions, innovation, and infrastructures tend to impact economic growth. The labor market is contributing to the decline in GDP, perhaps because there are strict worker protection laws in most countries, which prevent the labor market from functioning efficiently. Surprisingly, the variables market size and business sophistication present negative coefficients, perhaps because the way chosen to measure these variables is not the most appropriate, or the scores assigned are not the correct ones. In the fixed-effects model, the variables health and primary education, skills, market efficiency, and technological readiness have a positive and statistically significant impact, which in itself demonstrates the contribution of these variables to economic growth.