What is Global Competitiveness? Global Competitiveness is the ability of an economy to compete fairly and successfully in markets for internationally traded goods and services that allows for rising standards of living over time.
Cost competitiveness is mainly differences in relative unit costs between producers. Non-price competitiveness includes technical factors such as product quality, design, reliability and performance, choice, after-sales services, marketing, branding and the availability and cost of replacement parts, etc. In highly competitive markets price and non-price factors are equally crucial.World Economic Forum published annually Global Competitiveness Report. This report is an attempt to rank countries using following twelve indicators.
1. Institutions (property rights protection, trust, judicial independence, corruption),
2. Infrastructure (transport, telephone, and energy, ports),
3. Macroeconomic environment (including stability of key macro indicators).
4. Health and primary education (including many of the indicators used in the HDI calculation).
5. Higher education and training including the quality of degree courses and business training schemes.6. Goods market efficiency – efficiency in getting products to market at a competitive price.
7. Labour market efficiency – including improvements in labour productivity.
8. Financial markets (including stability of markets, strength of banks).
9. Technological readiness (readiness to exploit, adapt to new technologies).
10. Market size (linked to population size and per capita incomes).
11. Business sophistication (quality of supply chains, industrial clusters, quality of management)
Competitiveness in global markets considers knowledge as a public good. For many countries wishing to sustain improved competitiveness or perhaps make progress towards being a high-income developed country, investment in high-knowledge industries is regarded as crucial – but there are grounds for thinking that building these businesses is not an easy process.
Many businesses might prefer to let others discover successful and commercially viable new technologies and then copy them if the patent laws are not sufficiently strong. This may hamper levels of research and development spending leading to weaker innovation in highly competitive markets. One option is to strengthen patent laws to protect intellectual property. Another strategy is to increase public (state) funding of scientific research. If we look back in history many well known products had their origins in state sector funding – for example GPS, smoke detectors, water filters and cordless power drills!
Economic importance of education and health spending are regarded by economists as merit goods. An increase in funding of both can influence the macro-economy positively.
Productivity is economic output of per unit of input. The unit of input can be labour hours (labour productivity), or all production factors including labour, machines and total factors of productivity. Harvard’s Michael Porter states, “The only meaningful concept of competitiveness at the national level is productivity. The World Economic Forum’s Global Competitiveness Report defines competitiveness as, “The set of institutions, policies and factors that determine the level of productivity.”
Labour productivity and economic growth are key factors in any economy. It is related to the fact that labour productivity depends on the availability and quality of labour resources and applied technologies. As a result, labour productivity heavily influences the production process and production costs. And production costs affect the competiveness of nations in the global market. The impact of change in labour productivity influences country’s competitive position in global market. But strong and direct relation between productivity and economic growth is sometimes overestimated
Supply Chain Management is a vital factor in gobal busniess competition. Time and distance are no longer an important variable in international trade now. Connectivity has made the global village possible by working online, flexitime, tele-video conferencing, facebook, internet and many more to add in this line. These commanication tools connecting buyers, suppliers and customers more repidly by sharing information. Professional and social networks are playing vital role in modern day business. Traditional way of conductiong business has shifted from seller to a buyer’s market with emphasis on price and quality. Today’s customers are very much enlightened, guided and influeneed by mobile and media. Many buyer’s are youthful, energetic, ready to spend and has options to choose form various alternatives.
Supply Chain Management has matured as a discipline to manage upstream and downstream relationship with suppliers and customers in order to create enhanced value in the final marketplace at less cost.
Supply chain management system ensure the shop doors are open for 24 hours and seven days, globally. These advantage curtail the productivity advantage of a nation and region. The drivers of globalisation made the world trade more competitive and world economy is becoming borderless and integrated. Thus Global Supply Chain is playing vital role in making global business more competitive.
Policy makers, business leaders and academicians of the country should come forward collaboratively to overcome the challanges of global competitiveness.
The wirter is a retired Additionl Sceretary