What is your understanding of Competitiveness?
Michael Porter defines competitiveness as the level of productivity of human and natural resources of a country. Furthermore the Global Competitive Index defines competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country.
Therefore, one can interpret competitiveness as the extent to which a nation can efficiently operate in a free and fair economy through the production of goods and services that meets the standards of international markets and also ensures that the real income of its citizens is consistent and increasing in the long term. This can only be achieved under increased productivity. Accordingly, a competitive country is one that ranks highly in the international markets of trade; the purchasing power of the citizens does not decrease regardless of factors such as inflation.
Factors Affecting National Competitiveness as conveyed by Prokopenko
According to Prokopenko the factors that affect national competitiveness are domestic economy, internationalization, government, finance, infrastructure, management, science and technology and quality of people.
First, a highly competitive domestic economy results in high and quality productivity that allows a nation to seek for foreign markets successfully because they can produce high quality goods that meet the demands of consumers.
Second, a country that opens its doors for international commerce encourages economic development because trading partners also allows it to export their products to their countries. The country should have few barriers to entry of new business enterprises.
Third, the intervention of the government should be minimal and always favorable to traders. For example, policies should minimize economic risks by ensuring a high degree of macroeconomic and social certainty. Moreover, government policies should flexibly conform to changes in international policies.
Fourth, a dynamic financial sector spurs economic development by ensuring that traders have funds...