Competitiveness

CompetitivenessCompetitiveness is a term we use daily in economic, political and educational environments; How can we be more competitive?, the competitiveness of a country is the basis of our future ... the competitiveness of the company is essential to keep growing ... These and other phrases coined the term competitiveness as the center of any economic, political and social conversation.

There is no single definition of competitiveness, resulting in a diffuse concept and complex measurement, but which in turn we use very often as we have seen in the previous paragraphs. Below you will find various definitions of competitiveness exposed by recognized and expert economists and institutions in the field.

From the business point of view, competitiveness is defined as the ability of a company to compete, grow and be profitable within a free trade market.

Another definition of business competitiveness is the ability of companies or organizations to design, manufacture and distribute their products in a free and international market competing with companies present in the same market.

From a political point of view, national competitiveness is defined as the ability of a nation, country or state to produce, distribute and provide goods and services competing with them but offered by other countries, doing it in such a way that quality increase the life of citizens.

Jones and Trece qualify the concept of national competitiveness by defining it as the degree by which a country produces and distributes goods and services that satisfy the needs of an international and free market, expanding its GDP at least as rapidly as the countries present in the market.

Michael Porter expands and fuses the term of business and national competitiveness by defining competitiveness as the degree to which a country, state, region or company produces goods and services under free market conditions and faces competition from national and international markets, simultaneously improving the real income of its employees as well as the productivity of the companies.

Both Michael Porter and Paul Krugman (Nobel Prize for economics) share the idea that nations do not really compete, but the companies that make them up, so a country will be more competitive the more competitive the business companies that composes it.

Under the supervision of the World Economic Forum, the group of experts responsible for analyzing and defining the Global Competitiveness Index of countries defines competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country. The level of productivity of a country is intrinsically linked to the level of prosperity that an economy can reach, and the level of productivity determines the profitability ratios obtained through investments in an economy.

With all the above definitions, we can clearly see that the concept of competitiveness is intrinsically linked both with the policies carried out by a country and by the companies that comprise them, directly affecting their economic growth. Therefore, it is very important for governments to apply economic, social and legal policies that favor the competitiveness of companies, given that this will directly affect the country's competitiveness and, therefore, its growth and citizens' welfare.

All possible competitive policies have to be designed and defined according to the economic and social context in which a country is located as well as the rest of the international markets, given that we live in a time of globalization where companies can operate freely in may countries of the planet.

Given the importance that competitiveness has on the economy, the World Economic Forum has studied and measured since 1979 the various factors that affect it, factors known as the pillars of competitiveness, allowing to measure the degree of competitiveness of a country as well as establishing a series of recommendations to all countries to improve their competitiveness.

 

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