The concept of competitiveness has been a hot top, as well as a controversial topic for several years. Two organizations publish annual competitiveness reports. The World Economic Forum (WEF) has published the The Global Competitiveness Report since 1979. The International Institute For Management Development (IMD), has published a similar report referred to as the The World Competitiveness Yearbook since 1989. The Global Competitiveness Report was originally published jointly by the WEF and the IMD, but according to a note in the Economist¹ differences over how to define and measure competitiveness (originally titled the competitiveness index) caused these organizations to split and produce separate reports. The World Economic Forum defines competitiveness as "the ability of a country to achieve sustained high rates of growth in gross domestic product (GDP) per capita". On the other hand, the IMD defines competitiveness as "the ability of a country to create added value and thus increase national wealth by managing assets and processes, attractiveness and aggressiveness, globality and proximity, and by integrating these relationships into an economic and social model." Other differences include which factors to include in the competitiveness index and how to weight these factors.

The WEF's GLOBAL COMPETITIVENESS REPORT

    The company operations and strategy index and 
    The quality of the national business environment index.

The Microeconomic Competitiveness Index, as defined in the 2002 executive summary, uses microeconomic indicators to measure an economy's effective utilization of its current stock of resources, i.e., measures the current productive potential.

IMD'S WORLD ECONOMIC YEARBOOK

Information related to the IMD's current competitiveness rankings can be found on the IMD website or click on the links below for the information available on Amazon's website.

The World Competitiveness Yearbook 2002

The World Competitiveness Yearbook 2001

SOME THOUGHTS

Part of the controversy related to the competitiveness reports is the term "competitiveness". As many economists have pointed out, countries do not compete the way companies compete. Countries trade with each other, but it is not a zero-sum game. All trading parties benefit. However, countries do provide the foundation needed for business organizations to compete in the global economy. Without a well developed infrastructure (e.g., roads, education systems, communication systems etc.), as well as well developed financial markets, technology, government support, and judicial systems, an economic system cannot support the development of competitive business organizations. How much government involvement is needed? This is an ongoing political controversy.

The Largest Economies

One of the most interesting facts revealed in the data and discussion related to these reports is the size of the U.S. and Japan in relation to the world economy. In 1998 the U.S. economy (GDP) was $8,511 billion, while Japan, the second largest economy, was $3,784 billion.³ Based on this data, the Japanese economy is 44.5% as large as the U.S. economy, or the U.S. economy is 125% larger than the Japanese economy. According to a related discussion on the IMD website (August 2001), the U.S. and Japan  account for 46% of the world GDP. 

FOOTNOTES

¹1996.The C-word strikes back. Economist (June 1): 76.

² Porter, M. E., J. D. Sacks and J. W. McArthur. 2002 and 2003. Executive Summary: Competitiveness and Stages of Economic Development.

³ Sacks, J. D. and A. M. Warner. 1999. Year in review. WEF website.

The bibliography entries for these reports are as follows:

Garelli, S. 2001. The World Competitiveness Yearbook 2001. International Institute for Management Development.

Porter, M., J. Sacks, A. Warner and K. Schwab. 2000. The Global Competitiveness Report 2000. Oxford University Press.

Schwab, K., M. Porter and J. Sachs. 2002. The Global Competitiveness Report 2001. Oxford University Press.

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