Etapas de Un Plan de Comunicación Estratégica Competitiveness Between North and South Economies
Etapas de Un Plan de Comunicación Estratégica Competitiveness Between North and South Economies
Etapas de Un Plan de Comunicación Estratégica Competitiveness Between North and South Economies
Third Teaching
1 / Escenario
Unit /2Fifth Learning environment
Lectura Fundamental
Essential reading
Competitiveness
Etapas de un planbetween
de comunicación
north
estratégica
and south economies
Content
1 North-south competitiveness
3 Competitiveness indicators
4 Conclusions
Keywords: competitiveness indicators, doing business, innovation index, global competitiveness index, international
productivity.
1. North-south competitiveness
It is well known that the so-called North Countries are more competitive than the ones from the
South. This fact can be justified by the different policies that each country has applied. As you may
recall, the Global Competitiveness Report explains some aspects that make a country competitive.
Some of these have been applied by northern countries like France, Russia, Sweden, and Switzerland.
Sweden, for example, is a developed country with low poverty index and various opportunities for
every Swedish. Switzerland is another great example because it is well known that it doesn’t need to
have the Euro as its currency, and they are not totally part of the European Union. How did these
countries have become competitive?
“The north-south differences have generated a polarization in terms of wealth and educational
and social levels” (Martín, 2015). The biggest difference between northern and southern countries
is based on the poor use the latter have of their geographical location. Another factor is the
social conditions of their inhabitants, and the gap on the access to education. A country can
have an excellent geographical location, but this is not the only variable that will determine its
competitiveness, governments must have a strategy to take advantage of their country location.
It is important to consider the past: the economic consolidation of the north is related to historical
conditions, rather than recent strategies of productivity of the. That is why many countries depend
on others. This is what happens in Greece and Italy, that depend on Germany or France because they
didn’t establish strong competitive strategies.
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2. Productivity and international competitiveness
There is a direct relationship between the concepts of productivity and competitiveness. In fact,
Michael Porter explain that “the only meaningful concept of competitiveness at the national
level is productivity” (Porter, 2008). Therefore, it is important to understand what international
competitiveness means. According to Pettinger (2017), international competitiveness is the
measurement of the relative costs and value of a country’s exports.
Factors like inflation rate, exchange rate and macroeconomic environment, along with education and
levels of corruption are essential to determine the productivity and quality of a company.
Macroeconomic Laboral
environment conditions
But how is productivity connected to competitiveness? Well, when a country grows in productivity it
enables competitiveness, especially in the international trade sector. Since productivity lowers costs,
it can increase sales of a company at a global scale, thus becoming more competitive.
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Trade surplus
Competitive
economy
Governments play an important role in promoting productivity among companies and throughout
the country. For that reason, it is necessary that a nation has well-articulated policies that include
competitiveness, innovation and production strategies (Atkinson, 2013).
Russia, France, Sweden, Switzerland, and Canada are considered northern countries since their levels
of competitiveness is higher than other countries like Bolivia, Morocco or even Colombia. These
northern countries base their economies on international trade, high quality education, and training
for their employers.
3. Competitiveness indicators
A country’s competitiveness can be measured through different indicators like, business
encouragement , innovation, and Global Competitiveness index. Each of these factors will show
different dimensions that can explain why some countries took advantage of globalization to become
richer and more competitive.
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3.1. Global competitiveness index
The Global Competitiveness Index (GCI) is defined by the World Economic Forum (WEF) as a
set of institutions, policies and factors that determine the level of productivity of a country (World
Economic Forum, 2013). Also, the GCI measures the ability of a country to provide high levels of
prosperity. The best country in Latin America is Chile ranked 33 worldwide, followed by Costa Rica
(47), Panama (50) and Mexico (51). According to the latest report (2018A) the most competitive
countries are:
1. Switzerland
2. United States
3. Singapore
4. Netherlands
5. Germany
Country Position
Mauritania 133
Liberia 134
Chad 135
Mozambique 136
Yemen 137
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3.2. Doing business Index
Another important aspect that contributes to a country’s productivity and competitiveness is the
government’s policy related with foreign direct investment and the encouragements to do business.
The World Bank issues the Doing Business Index, that measures how regulations affect the business
activity and the intellectual property protection. Out of 190 economies, the best 10 countries are.
3 Singapore 84.57
2 Denmark 84.06
7 Norway 82.16
8 Georgia 82.04
10 Sweden 81.27
The worst countries for doing business are Somalia, Venezuela, Sudan, and Yemen.
But what does the Doing Business Index evaluates in a country? The answer is illustrated in the
following figure.
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Getting a
1 location
Accesing
finance
2
3 Dealing with
day-to-day operation
Operatin a secure
business environment 4
5 Starting a
business
In Latin America, the theory that northern countries are more competitive is evident, especially loo-
king at the ranking of the Doing Business Index.
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3.3. Global innovation index
The Global Innovation Index is used to measure the ability of a country to innovate in terms of
education, infrastructure, and political environment.
The idea of innovating is not easy to adapt in some cultures or economies. Innovation must include
the use of information technology in all business processes, as well as the creation of new products
and services that have a competitive advantage. According to this Index, the most innovative
countries in 2017 were:
1 Switzerland 67.69
2 Sweden 63.82
3 Netherlands 63.36
The worst countries are from Africa: Yemen, Guinea, Togo, Zambia and Niger.
But what does this index really measure? To find the answer is important to look at the following figure.
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Global innovation index
Innovation
efficiency ratio
Knowledge and
Institutions technology outputs
Infraestructure
Market
sophistication
Chile is the best Latin American country, followed by Costa Rica (53) and Mexico (58). Colombia
is ranked 65 out of 127 economies, basically because it needs to work on business sophistication and
innovation. Innovation most of the time includes intellectual property regulation, since the creation
can be considered a patent, copyright or a global brand. So, the country must have a stronger
regulation that enables companies to innovate and constantly create products and services. Colombia
is not a patent country. Asian countries, for example, are the best in this area. In fact, in 2016 the
countries that registered the most patents were:
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China
United States
Japan
Republic of Korea
Germany
Figure 5. Top 5 countries with registered patents 2016
Source: design by the author
Again, Asia and Europe are leading in innovation, thus their companies are more productive and,
therefore, more competitive.
4. Conclusions
The competitiveness between the north and the south is well stablished. The indexes support
this argument: in most cases, northern countries are developing strategies that make them more
productive and, therefore, more competitive. But, the main conclusion is that northern countries
base their economies in two principals: innovation and technology.
In Latin America, for example, the only country that is having an outstanding development in
productivity and competitiveness is Chile. Others, like Colombia, Costa Rica, Mexico, and Panama
are still working hard to be in the top 50 of the competitive countries worldwide. On the other hand,
the African countries are still behind in productivity and competitiveness.
Every government plays an important role in the economic growth and productivity of a country,
since they are the ones who establish the policies and legal framework for business.
To summarize…
The gap between north and south countries will exist if governments don’t
invest in education, innovation and business sophistication!
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References
Atkinson, R. D. (2013). Competitiveness, Innovation and Productivity: Clearing up the Confusion.
Washington: Information Technology and Innovation Foundation.
Dutta, S., Reynoso, R. E., Litnier, J., Lanvin, B., Wunsch-Vincent, S., & Guadagno, F. (2017).
The Global Innovation Index 2017: Innovation Feeding the World. WIPO. Retrieved from
http://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2017-chapter1.pdf
Martín, A. (May 28 2015). ¿Por qué siempre, en cualquier lugar, hay tanta diferencia entre norte y sur?
Hipertextual. Retrieved from https://hipertextual.com/2015/05/diferencia-entre-norte-y-sur
Pettinger, T. (June 13 2017). International Competitiveness. Economics Help. Retrieved from
https://www.economicshelp.org/trade2/international_competitiveness/
World Economic Forum. (2013). The Global Competitiveness Report 2012-2013. Retrieved from
http://www.economy.ge/uploads/ek_ciprebshi/reitingebi/reitingebi_eng/gci.pdf
World Economic Forum. (2018A). Global Competitiveness Index. Retrieved from http://reports.
weforum.org/pdf/gci-2017-2018-scorecard/WEF_GCI_2017_2018_Scorecard_GCI.pdf
The World Bank. (2018). Doing Business. The World Bank. Retrieved from
http://www.doingbusiness.org/en/rankings
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TECHNICAL INFORMATION
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