International competitiveness: overview

Defining competitiveness

1. Competitiveness is a broad term and generally refers to a wide range of economic, social, and institutional factors reflecting the performance of the whole economy. There is no single measure of competitiveness, and a basket of measures is usually used to measure it. This is illustrated by the IMD World Competitiveness Centre which publishes a competitiveness index ranking 67 countries according to their ability to manage a wide set of competencies to drive “long-term value creation.”^[1] Furthermore, while competitiveness overlaps with productivity, the two are not synonymous.

2. According to the IMD, productivity is “crucial” for competitiveness, but the concept is multifaceted and is also about “quality of life: economic prosperity, happiness, social inclusion, fairness and environmental sustainability.”

3. The World Economic Forum (WEF) defined competitiveness as “the set of institutions, policies and factors that determine the level of productivity of a country”.^[2] However, they have ceased their annual ranking of countries on this basis and pivoted towards a focus on economic systems that “are not just productive but also lead to environmental sustainability and shared prosperity.”^[3] This aligns well with the Scottish Government’s aim of building a growing economy that is fair, green and prosperous, and that supports people’s wellbeing. The World Bank has also moved to a more holistic view of competitiveness in its work for “sustainable solutions that reduce poverty and build shared prosperity in developing countries.”^[4]