Drivers of Global Competitiveness and Economic Growth

Drivers of Global Competitiveness and Economic Growth

Luìs Farinha (Castelo Branco Polytechnic Institute of Portugal, Portugal), Joaquim Borges Gouveia (University of Aveiro, Portugal) and Sara Nunes (Castelo Branco Polytechnic Institute of Portugal, Portugal)
DOI: 10.4018/978-1-4666-8348-8.ch002


This chapter focuses on the issue of global competitiveness of the economies, based on the dimensions analyzed by the World Economic Forum in assessing the economic competitiveness of a large sample of countries. From the different stages of development of the countries, the study aims to help us to understand what pillars contribute most to the global competitiveness. Results based on structural equation model show what dimensions within each economic development stage best explain the competitiveness, helping us to realize even the performance achieved by the most advanced economies. Understanding the association of factor groups, pillars and related items, and levels of competitiveness may help academics to conduct new studies, as well as politicians in the definition of intervention priorities.
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Theoretical Background

The countries’ prosperity is based on its capacity to compete in the global market. For this reason it is crucial to analyze its position in terms of competitiveness (Ketels, 2006; Porter, 1990; Stajano, 2009).

Key Terms in this Chapter

Efficiency Factors: It includes the items higher education and training, goods markets efficiency, labor market efficiency, financial market sophistication, technical readiness, and market size. Are the main priorities of the efficiency-driven economies, once consolidated the previous stage.

Competitiveness: Competitiveness, at regional and/or country level, is based on the ability to compete in the global market. It can be understood as a set of institutions, policies and factors, embedded in networks of innovation and entrepreneurship, able to determine the level of productivity of an economy, wealth creation, job creation, capture and return of investment, economic growth and social welfare.

Sustainable Development: Sustainable Development stands for meeting the needs of present generations without jeopardizing the ability of futures generations to meet their own needs. It encompasses the economic, environmental and social perspectives.

Global Competitiveness Report (GCR): The Global Competitiveness Report is an annual report produced by the World Economic Forum (WEF), and evaluates the scenario of global competitiveness by providing information about the drivers of productivity and prosperity. This Report remains the most comprehensive assessment of national competitiveness worldwide.

Basic Factors: Comprises macro and micro economic items of Global Competitiveness Index (GCI), calculated annually by the WEF in GCR, such as Institutions, Macroeconomic stability, Infrastructure, Health, and Basic education. Characterize the focus of the factor-driven economies (less competitive countries).

Smart Factors: It includes the dimensions “business sophistication” and “innovation”. It covers the quality of economic and business networks, the quality of business operations and company strategies. It encompasses technological innovation, open innovation, knowledge management and industrial property. At this stage are the innovation-driven economies.

GDP per Capita: GDP per capita is gross domestic product divided by the number of inhabitants of a country. GDP is the sum of all goods of a country, and the higher the GDP, demonstrates when this country is developed, and can be classified between poor, rich or developing.

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