An Institutional Perspective of National Competitiveness

Abstract

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.

How Can National Competitiveness of Less Developed Countries be Enhanced? : A Case Study of Laos

“…It is worth noting that while the other three clusters have no apparent transparency issues, complaints were raised by the companies. Consistent with the findings in Chapter 3,it was revealed that improvement of government institutions is a key issue for the development of many countries (Easterly, 2001;Garelli, 2003;Ghemawat, 2001;Gugler & Brunner, 2007;Lee, 2008;Lee, 2010;Liu & Hsu, 2009;Moon, et al, 1998;North, 1990;Porter, 1980Porter, , 1990WEF, 2011).…”

“…The role of government has been found to be critical for competitiveness and productivity, particularly for the development of the industrial and private sectors because they are the main actors who contribute to economic growth (Gugler & Brunner, 2007;Lee, 2008;Lee, 2010;Liu & Hsu, 2009;Moon, et al, 1998;Porter, 1990). According to the analysis and discussion above, there is a significant link between government policies on education systems and an insufficient level of knowledge in the human capital in Laos, so the needs of industry, the private sector, and even the public sector, are not met.…”

“…Government institutions: Efficiency of government institutions and organisations are found to be a critical determinant of NC (Gugler & Brunner, 2007;Lee, 2008;Lee, 2010;Liu & Hsu, 2009;Moon, et al, 1998;Porter, 1990). It is necessary to differentiate between government institutions and organisations (North, 1990).…”

The causal impact of material productivity on macroeconomic competitiveness in the European Union

“…institutions are a determinant of competitiveness. As such, institutions are thought to support factor accumulation, innovation, the efficiency of resource allocation and thus affecting economic growth and development (de Soto 2003;Lee 2010). Furthermore, institutions can incentivise the spread of knowledge by influencing its content, direction, and dynamic (Vanberg and Kerber 1994) which is at the core of Schumpeterian competition (Budzinski 2007).…”

“…It comprises biomass, metals, minerals, and fossil fuels and is defined as the quantity Thompson (2003) criticises competitiveness indices (and thus the GCI) on four grounds: (1) content validity (methodologies and underlying indicators changes over time), (2) convergent validity (correlation across different indicators is high suggesting that they all measure similar aspects, but not necessarily competitiveness), (3) weighting and nature of variables (weights of indicators are arbitrary), and (4) methodology (the data are not transparently described). Lee (2010) argues that the problem is the lack of theoretical and empirical foundation for using individual sub-indicators. Pérez-Moreno et al (2015) points to the problem of total substitutability across and within the GCI's twelves pillars, as the index is aggregated using the arithmetic mean.…”