How to correctly compile the competitiveness rating of countries is usually told in the course of the world economy at the university if the student is studying in the corresponding specialty. However, anyone who deals with this issue can understand what constitutes the ability to compete on such a scale. After all, everyone imagines what GDP growth is? So with competitiveness: you need to delve into the terminology, and then it becomes clear what is at stake. This is especially interesting against the backdrop of the latest news. The growth of GDP provoked an increase in the rating of Russia in the world community, and all the major media outlets wrote not only in our country, but also abroad about increasing the ability to compete.
What is this about?
The concept of competitiveness is one of the basic concepts in the economy. It is most important for determining the specifics of market relations. If we are talking about capitalism, then the fact of the presence of competition is characteristic of all levels of such a system - from micro (when it comes to a specific enterprise) to macro (world).
Often, not only success, but the very fact of being able to survive in difficult external conditions is determined for the subject by the economic level, reflected through the ability to compete with others. For successful operations, you need to know what the laws of the economy govern the world, in general, and the market in particular.
The concept of competitiveness presupposes the availability of information on the possible forms of such activities, methods, manifestations. Only he will be successful who has the necessary resources, including including a fairly high level of the economy, allowing vigorous activity in order to dominate the market and fight the rival.
Economics and globalization
The processes of unification and interaction, encompassing the human community both at low levels and on a planetary scale, dictate their own conditions for the development of the economy. It is they that determine the levels of competitiveness of powers, which have recently become a particularly acute problem for the economic and political sciences. When it comes to the national economy, it’s difficult to figure out all its aspects. At the same time, the features of social development force politicians and researchers to pay more attention to the idea of competitiveness of the country's economy.
The growth of this factor for any modern power is a task of paramount importance, as the last two decades have shown. In addition, this topic is one of the most discussed on forums of various sizes. It is not surprising that the competitiveness index of countries is regularly updated, and the data published in it literally turn the world upside down.
Competitive activity is characteristic of all market participants, that is, it is an integral feature of the appropriate way of doing business. Thanks to this feature, a person gains the freedom to create, the conditions for its development, implementation in the economic sphere are formed.
The main idea is to create services and goods that enhance this ability. The formation of a fundamentally new product is the main advantage of such working conditions. At present, Russia's national competitiveness is attracting special attention of political scientists, politicians, and economists, since increasing indicators is one of the most important tasks, and it needs to be solved in the near future.
Scientific approach: structuredness as the key to success
A qualitative analysis of competitiveness is possible only if there is a clearly formed theoretical base that gives a complete understanding of the object with which to work. In order to create one, it is necessary to turn to specific scientific literature. The disclosure of the concept under consideration, its characteristics, analysis of the levels of the structure and the factors on which it depends, allows us to understand what rules the competitiveness analysis obeys and what useful information it allows to generate.
In addition to understanding the terminology used, the scientific approach obliges you to be able to work with structural levels, including in relation to different countries. For Russia in our time, increasing competitiveness is one of the first economic tasks, and all progressive work in this area should be directed towards its solution. Knowing the main problems, we can offer their solutions, using the theoretical scientific base.
Competitiveness: concept structure
If we analyze the current state of the economies of countries (developed and developing), it becomes clear that competition is regulated by the legislative framework. Most powers also have special authorities, bodies responsible for increasing the competitiveness of the state.
In general, this concept is quite complex. It can be considered at the level of individual commodity units, firms producing goods, industries or powers. The existence of one level without the other is unthinkable - there are close relationships between them, accounting for which allows achieving economic growth at each stage.
Allocate internal and external relationships, on the basis of which the competitiveness assessment is formed. At the same time, at the level of an individual industry or the whole state, it is directly determined by how much individual producers, based in a certain country, can create goods that compete with products of other firms.
And if in detail?
Modern methods for assessing competitiveness involve an analysis of the situation, proceeding from the fact that this concept is complex. It includes a number of indicators specific to a particular product (price, consumer features, quality). Due to this complex, we can talk about the success of the product in the foreign and domestic market. Methods of assessing competitiveness compel a comparative analysis to be carried out with other products that are essentially similar to the one under consideration or are its complete analogue.
Competition at the product level depends on a number of factors. Production costs, the intensity of the work process, labor productivity are key. Both quality of execution and the price of the product depend on them.
Competition Factors
Production costs are calculated in the currency of the state where the company is located that produces a product important for the country's competitiveness. The amount of costs - these are the costs that the company incurs due to production factors, as well as in connection with the use of resources.
Labor productivity is one of the key indicators by which one can understand the ability of a product to compete with a similar product on a global scale. The production process, in fact, is the material basis of competition. To derive this indicator in the form of a mathematical quantity, you need to evaluate the price level and profit.
Finally, labor intensity is a parameter that is given an estimate by determining the index of the intensity of the production process. This applies equally to agriculture and industry. Index is a generalized indicator reflecting the average daily output of a product. For the calculation, take the monthly time period and calculate the weighted average value.To do this, it is necessary to aggregate indices, first identifying which types of products are most important for determining the competitiveness of the country whose economy is being analyzed.
Non-price factors
A modern approach to assessing competitiveness at the global level requires special attention to be paid to non-price factors. Quality comes first, but novelty indicators, as well as relationships with intellectual resources and technologies invested in goods, will be no less significant. Mostly, countries interested in increasing competitiveness strive to offer the international community products that are created using the most effective innovations, products developed using the most modern, sophisticated, sophisticated technology. It is impossible to create such products without great technical, scientific potential, which determines the demand for a position. And this leads to an increase in the country's competitiveness.
In order to evaluate the parameters of the ability to compete with an innovative product, it is necessary to analyze how big the investments in the latest technologies were during its creation. The indicator makes it possible to understand how actively a power can conduct activities in the field of new development. It is not only about R&D expenses, but also about investments in marketing strategies, design moves.
An important parameter will be the number of personnel involved in the scientific and technological work process, the number of registered patents (abroad, within the state). When determining the competitiveness of a country, they necessarily analyze how much education is developed here, what measures are taken to protect it under the law of intellectual property.
Business Culture as a Sign of Competitiveness
Innovations are directly related to the entrepreneurial culture regulated in the country both behind the scenes and at the level of legislation. The liberation of culture, as well as initiative activity on a private level, is of considerable importance. When assessing competitiveness at the state level, they pay attention to how much a large percentage of the population is willing to take risks in the field of entrepreneurship, in general, and innovative technologies, in particular.
Of course, it is difficult to quantify this factor, but the general picture of the analysis usually provides specialists in the field of economics and politics with sufficient information for correct conclusions.
Ecology and Economics
Surprisingly, it is a fact: in assessing the country's ability to compete with other powers, in the past few years, environmental has become one of the leading factors. This is due to the introduction of more stringent standards that limit industrial capacity.
On the one hand, it is necessary to increase the quality of the product, but at the same time, competition is growing with an increase in the number of manufacturers, and new companies, seeking to attract attention to their product, draw the attention of a potential client to additional advantages. This is where ecology came to the rescue. In order to ensure the product’s popularity, it is necessary to clearly explain to both the general public and representatives of other countries potentially interested in the transaction that during the manufacturing process the organization responsibly controls the environmental situation and takes measures to prevent harmful emissions.
Since the market is distinguished by a sensitive response to all the latest trends, such an innovation could not be ignored. As professionals say, at present, market mechanisms need to be transformed, improved in such a way that the costs associated with the preservation of the environment are included in the cost.
The final price of services or goods is ideally formed not only taking into account the production process (including the environmental factor), but also measures to protect the environment associated with the operation, disposal, recycling of products.
Trends and economic growth
The division of labor at the interstate level has led to the fact that at present most countries have a certain (rather narrow) area of specialization. Thanks to this, the country occupies an important place on the world stage. The level of competitiveness is largely determined by the industry in which the country operates. So, the American sphere - space, aviation, the creation of unique mechanisms, including cars, heavy duty computers. America also specializes in software development. Leading in these sectors allows her to maintain her rating at a high level, which, in turn, is the key to the stability of the economic situation even in crisis and difficult years.
The picture of the Japanese economy is quite indicative, since this country specializes in cars, ships, electronics, electrical engineering and machine tools, including robots. Leadership in these areas makes the country capable of competing internationally, and investments in innovative ideas provide growth and development that a potential rival cannot keep up with.
Shaping the big picture
In order to bring together the ability to compete in product lines, manufacturers, sectors and states, a special synthetic indicator was chosen. Through it, one can describe the state’s position in the global market. At the same time, they say that such a parameter is the ability to produce services, goods that meet the expectations of the world market. Their sale should increase the welfare both at the private level of individuals and the state as a whole.
The question of why countries are characterized by different competitiveness was considered in the scientific works of a rather famous scientist David Ricardo. It was he, focusing on the absolute theory of Smith, who formed the concept of comparing advantages. The idea is that a strictly defined industrial sphere brings success to the state if maximum effort, money, and other production factors are invested in it. In this area, the country will have a comparative advantage, and products can be exported. At the same time, it is necessary to establish the import of those services, goods in which there is a shortage.
Globalization, which has been characteristic of the world community in recent years, has somewhat violated the rather harmonious logic of export and import, established decades ago, which necessitated the formation of a new scientific approach. One was proposed by Michael Porter.
Country Competitiveness: A New Look at the Problem
A wide circle of scientists is convinced that the assessment option proposed by Porter is the most relevant for our time. The idea is based on a new formulation of basic concepts. Particular attention is paid to competitiveness at the national level. According to Porter, this indicator determines the success of the manufacturing industry and the place inherent in the country in the global economy.
It follows from the specifics of industry: it is the higher, the more innovations are introduced, the more actively and more stably the production area develops. At the same time, the achievement of stability begins with gaining competitive advantages by adjusting the base itself for comparison. In order to keep the superiority gained, not to let the opponent catch up and overtake himself, it is necessary to improve the product, production method and other significant factors.
Do not stand still
Competition implies variability; it simply cannot exist where the process freezes in a stable equilibrium position.Branches should be improved, updated, developed, and there can be no pause, it is simply unacceptable. Porter urges to consider the factor of stimulation and development as applied to innovations as a basic one.
Both the creation of competitiveness and the support of such a state are local processes. The economic characteristics of the powers vary widely, historical, national aspects, the management system, cultural prerequisites and features of the infrastructure leave their mark on the capabilities of the national firm, and through it the powers as a whole.
According to Porter, globalization is becoming more and more important from year to year, and yet national competitiveness so far depends on local factors and quite clearly specified conditions.
Summarizing
At present, it is customary to evaluate the country's competitiveness as a national diamond. This term implies a comprehensive attention to four aspects:
- factors that increase the ability to compete;
- domestic demand;
- the presence of related industries and those that provide support;
- strategic features of development, the presence of competitors within the state.