An Institutional Perspective Of National Competitiveness

The literature on the role of institutions in economic growth and development is well-established. In contrast, the relationship between institutional quality and competitiveness, while important, received much less attention until recently, when there has been a growing interest in incorporating variables representing institutional quality into country competitiveness indices. Such attempts take cognizance of the results from cross-country empirical findings. However, any attempt to construct a satisfactory mapping of institutions to competitiveness is fraught with difficulties, including data consistencies, omission of causal factors and the lack of theoretical foundations. Some of these difficulties stem from differences in the overall objectives of the research literature and the development of competitiveness indices. The research literature can explain why, whether and what type of institutions are important, but such findings do not lend themselves to the construction of appropriate policy variables.