VWL (Subject) / Assessment of the Competitiveness of Countries (Lesson)
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Theorie Part 2
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- Which three competing positions are there to the questions if countries compete? The positions of Krugman, Siebert and Porter.
- Describe Krugmans position. In general Nations do not compete against each other in international markets like businesses do. Details Looking at coutries competing against each other would lead to bad economic policies and would foster proectionist behaviour --> feared that this view would lead to a situation in which one country would aim to gain competitiveness at the expense of another country & to a situation in which foreign competition would be used to explain homemade problems. States that trade is not a zero sum game, but a possibility in which both partners can win.
- Describe Sieberts position. In general Nations compete with each other for the mobile factors of production (opposite of Krugman). Details Mostly competing for capital and technology, but also labor. Competition between locations among countries to become attractive for mobile production factors.
- Describe Porters position. In general Distinguishes two elements of competitiveness of nations. a) The value of the products and services sold by a country determined by the quantity sold, but also by the prices they can obtain in open markets. b) The efficieny with which these goods are produces, i.e. the productivity.
- For which companies is Porters concept relevant? For internationally as well as for nationally operating firms.
- What does Porters diamond describe in general? The different aspects of competitiveness.
- Name the four elements describing the environment in which a firm is operating according to Porter. 1) Factor conditions --> Endowment o a country with the different poduction factors (labor, capital, technology and natural resources) 2) Demand conditions (the market environment of the country) 3) Related and supporting industries (suppliers) 4) Firm strategy, structure and rivalry (way business is organized and how competitive other players operate in the country).
- What was developed based on Porters concept? The Global Competitiveness Report and the World Competitiveness Yearbook --> Try to measure the different factors which are of importance for the competitive framework in which firms are operating in different countries.
- What happened to the methodology of the Global Competitiveness Report? Was totally revised in 2006/07 report --> New methodology is continously improved.
- What does the GCR include in general? (2015/16) 114 indicators for a total of 140 countries to find out why some countries are more successful than others.
- Which data does the Global Competitiveness Report consist of? 1/3 publicly available statistics. 2/3 Results of large surveys undertaken with business leaders on-site.
- How many pillars and sub-indices are there within the Global Competitiveness Report? Which sub-indices are there? 12 pillars grouped into three sub-indices. 1. Basic Requirements 2. Efficieny Enhancers 3. Innovation Factors
- How does the relative importance of the sub-indices vary in the GCR? How are the countries distinguished? Varies with the stage of development. Countries are distinguished by their different GDP per capita in US Dollar: Below 2000: Stage 1 (Transition stage) Between 3000-8999: Stage 2 (Transition stage) Above 17000: Stage 3
- What characterizes the economies in each stage of the GCR? Stage 1: Factor-driven Stage 2: Efficieny-driven Stage 3: Innovation-driven
- How many countries does the Global Competitiveness Report include? The WEF tries to include as many countries as possible.
- Name the factors for factor-driven ecnonomies (GCR). Institutions Infrastructure Macroeconomic environment Health and primary education
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- Name the factors for efficiency-driven economies. Higher education and training Goods market efficiency Labor market efficiency Financial market development. Technological readiness. Market size.
- Name the factors for innovation-driven economies (GCR). Business Sophistication Innovation
- What does the GCR show for each covered country? -The ranking in each pillar -A comparison of the position of the country in each pillar with its peer group -Also presents the most problematic factors for doing business & its recent development.
- Who publishes the World Competitiveness Yearbook? The Institute for Management Development (IMD).
- How many criteria and sub-factors are used in the WCY? 300 criteria, 20 sub-factors.
- How many main factors are there in the WCY? The 20 sub-factors are merged into four main factors.
- Which weight do the 20 sub-factors have for the total assessment of the competitiveness in the WCY? 5%.
- Which Data are used for the World Competitiveness Yearbook? 1/3 results of large surveys undertaken with business leaders on-site. 2/3 Publicly available statistics.
- Which distinction does the WCY NOT provide? No distinction regarding the stage of development.
- Why do most results of the WCY differ from those of the GCR, even though most indicators are similar? Probably due to different methodologies.
- Which are the four main factors of the WCY? Economic Performance, Government Efficiency, Business Efficieny, Infrastructure.
- How many countries does the IMD include? Only 61.
- Major differences WEF and IMD? ....
- Do the two reports have relevance? Since reports are widely used by international Organizations --> have a considerable relevance.
- Name critical factors of the two reports. -Factors seem to be relevant, but whether the weights given to the factors reflect their importance is open to discussion. -The continious change of methodology makes it difficlt to compare the situation of the countries covered between different years. -The fact that both reports never include data on all countries also limits the comparability from year to year and between the two reports. -Necessary aggregation of data leads to a lack of transparency and some result-simplifications. -They do not always provide comparable, reliable data (but certainly offer interesting insights) -IMD: Only 61 out of 200 countries. Limited information -Both: Private companies, that earn money with these reports. -Difficult to compare surveys: Data --> not reliable, because they depend on people's mood -Concept: The alleged scientific methodology of both reports is not presented in a fully transparent way