Question 1 The World Economic Forum sponsors a committee that conducts a global

Question

Question 1

The World Economic Forum sponsors a committee that conducts a global survey towards assessing and ranking participating economies in accordance with their level of competiveness. In the recent 2016-2017 global competitiveness report, the concept of competitiveness was defined and twelve pillars were identified as contributory elements that influenced the competitiveness of economies. The framework that was employed showed that the overall competitiveness index was made up of three sub-indices; basic requirements sub-index, efficiency enhancers sub-index and innovation & sophistication factors sub-index.

Required:

a. Carefully analyze the definition of ‘competitiveness’ of an economy with respect to the Global Competitiveness Report.

b. Examine the implications of the above described framework for a factor-driven economy like Ghana.

Carefully justify the principal requirements that should distinctly characterize strategic inputs,strategic actions and strategic outputs for short term, medium term and long term

developmental agenda of Ghana.

Explanation / Answer

A.  the set of institutions, policies and factors that determine the level of productivity of a country is the competitiveness.

First pillar: Institutions

The institutional environment is determined by the legal and administrative framework within which individuals, firms, and governments interact to generate wealth. The importance of a sound and fair institutional environment has become all the more apparent during the recent economic and financial crisis and is especially crucial for further solidifying the fragile recovery, given the increasing role played by the state at the international level and for the economies of many countries.
Second pillar: Infrastructure
9 A well-developed transport and communications infrastructure network is a prerequisite for the access of less-developed communities to core economic activities and services.

Third pillar: Macroeconomic environment

Although it is certainly true that macroeconomic stability alone cannot increase the productivity of a nation, it is also recognized that macroeconomic disarray harms the economy, as we have seen in recent years, conspicuously in the European context.

Fourth pillar: Health and primary education

A healthy workforce is vital to a country’s competitiveness and productivity. Workers who are ill cannot function to their potential and will be less productive. Poor health
leads to significant costs to business, as sick workers are often absent or operate at lower levels of efficiency.

Fifth pillar: Higher education and training

Quality higher education and training is crucial for economies that want to move up the value chain beyond simple production processes and products.12 In particular, today’s globalizing economy requires countries to nurture pools of well-educated workers who are able to perform complex tasks and adapt rapidly to their changing environment and the evolving needs of the production system.

Sixth pillar: Goods market efficiency

Countries with efficient goods markets are well positioned to produce the right mix of products and services given their particular supply-and-demand conditions, as well as to ensure that these goods can be most effectively traded in the economy.

Seventh pillar: Labor market efficiency

The efficiency and flexibility of the labor market are critical for ensuring that workers are allocated to their most effective use in the economy and provided with incentives to give their best effort in their jobs.

Eighth pillar: Financial market development

The financial and economic crisis has highlighted the central role of a sound and well-functioning financial sector for economic activities.

Ninth pillar: Technological readiness

In today’s globalized world, technology is increasingly essential for firms to compete and prosper. The technological readiness pillar measures the agility with which an economy adopts existing technologies to enhance the productivity of its industries, with specific emphasis on its capacity to fully leverage information and communication technologies (ICTs) in daily activities and production processes for increased efficiency and enabling innovation for competitiveness.

Tenth pillar: Market size

The size of the market affects productivity since large markets allow firms to exploit economies of scale. Traditionally, the markets available to firms have been constrained by national borders. In the era of globalization, international markets have become a substitute for domestic markets, especially for small countries.
Eleventh pillar: Business sophistication

There is no doubt that sophisticated business practices are conducive to higher efficiency in the production of goods and services.

Twelfth pillar: Innovation

Innovation can emerge from new technological and non-technological knowledge. Non-technological innovations are closely related to the know-how, skills, and working conditions that are embedded in organizations and are therefore largely covered by the eleventh pillar of the GCI.

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