Conceptual Framework for Assessing National Competitiveness in Post Conflict Countries

A conceptual model for assessment national competitiveness in the post conflict countries “The case of Afghanistan”
Mohammad Rezaei “[e-mail]”

Abstract
A country 's economic development level depends on National competitiveness; therefore improving the competitiveness of post conflict nations is essential for economic recovery. National diamond model of Porter and its approaches has been used in most type of countries with several studies and Model has been repeatedly confirmed; but any theory according to concrete conditions and time limits to be raised. And the emergence of new functions and can be modified according to different environments.
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This research with the advent of numerous international stakeholders as donors for the reconstruction of the post conflict countries is trying based on national diamond model of Porter, with using evidences for the indicators and determinants of national competitiveness in Afghanistan as a post conflict country by published data and surveys, to provide National Diamond model to determine the state of competitiveness in the post conflict environments.
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Keywords: National Competitiveness, Post Conflict Countries, International Donors

The global village is shrinking and those who remain that have greater ability; in this challenge -due to the importance competition, export and survival of the industries- governments are required to compete too; thus there is no choice unless compete.
Afghanistan which is among the post conflict countries to achieve the goals of development programs should be put the competitiveness development- that help to continuous improvement of these indexes- in that their priority.
In all studies, reports and the investigations carried out on competitiveness, post conflict countries have been neglected.
In this paper after explaining the competitiveness, investigating Porter’s model and subsequent amendments to the diamond model, we review the condition of national competitiveness determinants in Afghanistan as a post conflict country. Then with a precise assessment the role of international supporters in these countries, we reform the Porter 's model in according to post conflict environments as a conceptual model. 1. Competitiveness
Competitiveness is one of the key concepts in modern economic notion. One of the most important its contributions to the classical economic theories is that, competitiveness includes economic outcomes that relating to matters such as education, science, political stability, and value systems. For this reason, the concept of competitiveness is multidimensional and it could be perceived in different meanings. Competitiveness is a comparative concept that indicates the ability or performance of a company, financial firm, an economic sector or a country in the offer its goods and services to a market. Nowadays competitiveness has a broad territory and in its determining many factor are involved. Competitiveness in the three levels can be studied: at the firm level; at the national level; and at the international level.
Every country is trying to use all its capabilities including natural resources, skilled labor, intellectual capitals, geopolitical situation, and cultural features for the development of trade and overcome competitors; and spread its competitiveness to outsides of geographical boarders and standing in the great economics in the region and international level.
In the simplest analysis, the competitiveness depends on productivity that shows how far a nation can use its manpower, capital and natural resources for economic development. Parallel to the development of productivity, wages increases, markets will expand; national income rises and eventually citizens of the country will have more welfare.
Therefore economic development of a country depends entirely on the level of national competitiveness. Strong national competitiveness helps a country to grow fast and makes further progress in economic development.

Different definitions of national competitiveness
Despite general agreement on the importance of competitiveness of the national economy, in many cases, there is no accurate understanding of the concept of competitiveness. There are a lot of theories and viewpoints about competitiveness and thus with environmental changes over time, there has been significant changes in measures of competitiveness.
From the viewpoint of OECD, the competitiveness is country 's ability to produce goods and services to offer in international markets and simultaneously maintain or improve income citizens in long term. UNCTAD says the concept of competitiveness is ability of countries in selling their products in the world markets. IMD believes national competitiveness doesn’t means a simple consensus of individual firms, but it is the result of several factors, such as mode of guide the economy by government, social policies and the value making mechanism. WEF with more than 30 years of experience in competitiveness report annually sees to competitiveness level of countries as a mirror of their ability in provide and enhance wellbeing of citizens. In the WEF’s view, competitive power is a set of institutions, policies and factors that determine the productivity level; the level of competitiveness is determinant for sustainable prosperity; in other words, competitiveness will increase incomes. 2. Competitiveness models The most important feature of models is their simplicity and understandability while comprehensiveness. The most important model which presented in relating to national competitiveness is national diamond of Porter.
National diamond of Porter
“National prosperity is acquired, not hereditary” Michael Porter by putting this sentence at the top of his famous paper- Competitive Advantage of Nations- reveals the philosophy and final goal of Diamond model. He believes today, elements of classical economics, including labor, return rates, and monetary value alone will not lead to national growth; but a nation 's competitiveness depends on its industrial capacity for innovation and balance; elements that need to create and integrate knowledge as the basis for competition in the present. On the other hand, Porter pointed to the fact that the different between nations in national values, culture, economic structure, institutions, and the history, is a significant contribution in the competitive success. In other words, there are prominent differences in the competitiveness patterns of countries, no nation can compete in all domains and industries.
Porter presented a holistic model for measuring national competitiveness. He has created a diamond model that four local determinant factors and two external variables determine a country 's competitive advantage. However Porter 's model has remained in the conceptual phase.

J.H. Dunning’s modification on diamond model
Porter 's model has been assembled important variables which determining a country 's competitiveness in a model. Most other models designed for this purpose is consider as a subset of the Porter’s comprehensive model. However, considerable uncertainties regarding the relations and prediction power of model has remained. This is mainly because that Porter can not to incorporate the effects of multinational activities in the model. To solve this problem J.H. Dunning, considers transnational activities as the third external variable that should be added to the Porter model.

Rugman’s Approach “Generalized Double Diamond”
In the competitiveness issue, one of the most known extensions of Diamond model is the Rugman’s generalized double diamond model. He and his colleagues at this Research with stating that because National Diamond Model Porter doesn’t have transnational corporations activities so that is not complete- provide a new approach with study of domestic and international variables in Singapore and South Korea.
In the Rugman model the competitiveness of countries doesn’t affected only by the internal environment and the activities transnational corporations, But other countries, including neighbors and major trading partners has an important role in creating, acquiring and maintaining competitive advantage. Accordingly, environment extension expanded to the outside of country 's borders; and national diamond model become double diamond that one is internal and other was external; and transnational corporations and interactions between elements of model indicating the level of competitiveness among countries.
Competitiveness of a country somewhat depends on domestic diamond and in addition to it is be determined by international diamond which relating to its corporations. The size of the global diamond in a predictable time period is fixed but domestic diamond changes according to size of country and its competitiveness. Between these two diamonds the slash lined diamond is an international diamond that represents the competitiveness of country which is determined by domestic and international parameters. The difference between domestic and international diamonds shows indicates the transnational corporations or multinational activities. Multinational operations include both two kinds of foreign direct investment- Outbound and Inbound foreign direct investment.

9-Factor model of Dong-Sung Cho; MASI Approach
Cho believes national diamond model doesn’t distinct human indexes from physical indicators. He with effects of human groups on Porter’s model, human resources issues considered important in gaining competitive advantage. Cho in his 9-factor model in addition to 4 factor of diamond model, added 4 other human resource factor, these factors are workers, politicians and government officials, entrepreneurs and scientists. Cho with Moon and Kim with a new approach introduced the dual double diamond model which aim to perception and enhancing national competitiveness. This model has been studied the human resources factors in international level. Dual Double Diamond model with keeping the structure of diamond model, expand the competitiveness environment to overseas and adds the human resources to model and each of them is divided into two diamonds of human and physical. 3. Empirical studies of Porter 's National Diamond Model in developing countries
Competitiveness of Turkey
One of the most important applied researches of national competitiveness based on national diamond model in the least developed countries was done by Ozlem Oz in the Turkey at 2000. In this study, the Porter model which determines the sources of international competitive advantage has been applied in Turkey- a middle-income developing country- which somewhat clear the competitive structure of Turkey’s industry and the main resources of competitive advantage of some key sectors of Turkey’s economy.
After determining the industries and competitive international industrial clusters through applying Porter’s methodology a profound case study is done in five industries of Turkey include glass, construction, garments, and leather, automobile and steel industries.
The important point of Turkey’s study is that the indirect role of government and importance of internal competition- as discussed by researchers in the literature- is questioned. Also evidence for inadequacy of Porter model’s instructions for foreign direct investment is proposed. In addition Turkey’s study help to this discussion which industries that get you closer to perfect competition can be explained by the model. This study also confirms the possibility to use the Porter Diamond Model in noncompetitive industries and developing countries.
One of the results of this study is the detection of which diamond model can be used for analyzing the sources of competitive advantage or disadvantage in a non-competitive industry. Results of this study generally confirm the Porter model; it means that the diamond model is practical in developing countries.
National Diamond of Armenia
Another applied research in less developed countries in national competitiveness issues based on Porter’s diamond model Armen Chobanyan & Leigh Laurence’s research in the Armenia. They apply Porter’s diamond model in a small and land lock economy of Armenia to illustrate the current status and future prospects, and appropriate policy development.
In relation to the development of competitiveness, successful export development through policies aimed to achieving sustainable growth in national productivity and the global competitiveness improvement of Armenian industry is obtained. Therefore, the competitive advantage of nations model provides a useful framework. Because the competitiveness should with productivity and enhancement quality, support and productivity increase by of firms, industries and countries on a sustainable basis is assumed to be equal; that it depends to continuous improvement of human resources, capital and natural resources as well as technological change and innovation. Finally, the competitiveness is used for change the organizational structure and behavior of firms, industries and governments. Considering that the Armenia like most of in-transition countries still is in the stage of based-on-factors of economic development stages, government 's role must be considered to ensure that the economic environment enables Armenian competitive industries to move forward toward the capital based and innovation based stages.
The current situation of Armenia 's diamond shows that the industry of this country using the advantages of key public factors. Future development need to development and utilization of more advanced and specialized factors with essential and support industries. An increased appropriate and competitive demand condition among Armenian companies is also required to enhancement. Description of recent economic growth in Armenia also leads to a conclusion that import substitution policies have been reduced; the country must be looking for alternative development strategies for export growth and innovative development. These strategies will be realized through guided mechanisms for achieving a sustainable increase in national productivity and improve the international competitiveness of industries of country. Therefore Porter’s model- competitive advantages of nations- has been used as a useful framework for improving competitive advantages of Armenian industries by defining the Armenia’s diamond and implementing the sustainable mechanisms for development.
Competitiveness Triangle; assessment competitiveness in post conflict countries- case study Central African Republic
International Monetary Fund 's Researchers has surveyed competitive position in the Central African Republic as a post-conflict country. In this study, competitiveness has been assessed by methods such as real exchange rate and recent trade performance. Other criteria, such as transportation costs and governance criteria that maybe have important impacts on removing competitiveness barriers caused by lack of environment security and weak institutions- that is normally in the most of post conflict situations- also is considered. This research in Central African Republic from different perspectives with the aim of providing a comprehensive competitiveness in a post conflict context is assessed. 4. Post conflict situations
In these environments usually lack of security, severe unemployment, need to renewal and replacement of physical infrastructure, weak administrative capacity of the government, emergence of numerous charities and supporter organizations can be seen.
Various participants affect reconstruction program in the post conflict environments and various stakeholders related to specific areas must be identified. A process for information sharing and coordination among donors to agree on issues and to avoid duplication should be designed. The main stakeholders are based on classified as follows:

Various stakeholders in post conflict situations | Institutional | Nongovernmental and civil society | Financing agencies | Security forces | Providers | National government | Local government | International Committee of the Red Cross | International organizations like the UN | Civil Society Organizations include user groups | Local NGOs | International NGOs | Sponsoring organizations | Multiple sponsors & international finance institutions like world bank | Military units include former rebel forces | International military sources | Local public | Private companies such as multinational organizations and local contractors |

Afghanistan
Afghanistan is one of the poorest countries in the world. GDP in the initial period after the war, two years later of strong economic growth has been about 7 billion dollars- including 2.3 billion U.S. dollars drug trafficking. With an estimated population of about 30 million, GDP per capita is $ 310 (including drug economy), one of the lowest in the world. Afghanistan 's economy for more than two decades of continuous war and allocating most of the resources for conflict has destroyed. The most important damage of protracted conflict has been Afghanistan deprivation from 25-years opportunity presence in global development with other countries. Promising economic potential before war- for example, in the horticultural products export, Afghanistan had 60 percent of international trade raisin- and tourism has been weakened. In fact more than wealth, economic development of a generation because of war is lost. Leading feature of Afghanistan economy is informal factor dominance not only in the agriculture and drug industry (completely illegal) but in most sectors. While informal economy has been dynamic, cannot be driver for sustained long-term growth. International experience stating that development is beyond of specific point associated with a reduction in the share of the informal sector.
End of the war along with economic recovery and end of the drought in many parts of the country has brought a rapid increase in agricultural. These two divers of economic recovery are obvious. Appropriate government policies and structural reforms in the special sectors is supported the reconstruction.
Started serious economic reconstruction after the war and famine has reinforced with appropriate and conservative macroeconomic policies of government, a very successful currency reform, and significant structural reforms in the financial and commercial sector. Afghanistan has broad areas from production and processing of agricultural products to the mining, construction, trade, and other services, with the potential for long-term sustainable economic growth. There is no any certainty regarding that which sectors that Afghanistan can grow on them; but with appropriate economic institutions and policies will explore areas with growth potential spontaneously. However, two wide parts- construction and business- because of their growth potential are highlighted. 5. Methodology and data analysis
Questionnaire was used to collect opinions of managers. The questionnaire, based on 14 effective variables on national competitiveness that each of variables is assessed by a few question; and to measure the attitudes of respondents 7 rats in each spectrum likert rating scale was used; which means that 4 is abstained comment. In order to test the reliability, the method of Cronbach Alpha has been used; for this purpose an initial sample consisted of 30 questionnaires were pre-tested and then by using the obtained data from the questionnaires and with SPSS software, reliability coefficient was calculated by method of Cronbach Alpha that for total questions of questionnaires the answer was 0.835; this digit indicates that the questionnaire has adequate reliability or in the other words validity. The following table shows the results of the final test questionnaire: Total questions | Questionnaire’s Cronbach Alpha | 76 | 0.835 |

Variables of study
Based on Porter 's diamond model, the components of the model as independent variables, determines dependent variable, the national competitiveness. * Demand conditions * Factor conditions * Financial market variables * Labor market * Security * Infrastructures * Professional education * Health care * Property rights * Firm strategy structure and rivalry * Domestic competition * External competition * Related and supporting industries * Technological readiness * Business modernity * Government * Government efficiency * Corruption * International donors
All of above factors are studied as effective independent variables on national competitiveness in the case study- Afghanistan. Statistical population of present research is middle and senior managers of small and medium companies in the field of manufacturing, industrial and service; to determine the sample by using simple random sampling, 48 of senior and middle managers of small and medium-sized companies has been selected. For analyzing the data obtained from sample, for ranking indexes of the proposed model, we used Friedman ANOVA test.
Friedman ANOVA test
This test is used when the data are at least sequential and they can be arranged in a two-way classification with the concept of sequence. This test can be used to rank the variables in the study. Friedman test statistic is defined as follows:

N= numbers of respondents
K= numbers of variables that be ranked
R= the sum of ratings assigned to the variables by respondents
In order to ranking each of the effective factors on national competitiveness Afghanistan Friedman test was used.
Hypothesis testing
There are significant differences among the effective factors on national competitiveness in Afghanistan. Therefore, the following statistical hypotheses can be formulated:
H0: There is no significant difference among existing effective factors on of national competitiveness in Afghanistan.
H1: There is significant difference among existing effective factors on of national competitiveness in Afghanistan.
Output of SPSS consists two tables; in the first table mean scores of each variable are presented and in the second table, statistical information and test static have been provided. According to output of SPSS, significant value was zero that is lower than standard significant level, therefore H0 hypothesis in the 0.99 confidence level be rejected. Thus can be said effective factors on national competitiveness of Afghanistan have not equal ranking. The tables on the following:
Rating average in the Friedman test to investigate the effective factors on national competitiveness of Afghanistan Effective factors on national competitiveness of Afghanistan | Rating average | 1. Security | 4.74 | 2. Domestic competition | 9.54 | 3. External competition | 10.40 | 4. Demand conditions | 10.60 | 5. Labor market | 10.13 | 6. Financial market | 7.81 | 7. Technological readiness | 13.19 | 8. Business modernity | 6.64 | 9. Infrastructures | 6.56 | 10. Innovation | 3.89 | 11. Professional education | 5.47 | 12. Government efficiency | 5.45 | 13. Health care | 11.84 | 14. Property rights | 5.55 | 15. International supports | 12.01 | 16. Corruption | 12.17 |

Friedman test significance Statistical indexes | Calculated values | Numbers | 47 | X² | 249.128 | Degree of freedom | 15 | Significant value | 0.000 |

6. Conclusion
According to analysis international supports- donors- among effective and related factors on competitiveness between 14 investigated variables is among the three most effective higher than main competitiveness determinant variables. According to these donors variable as an effective factor enters to diamond model. On this basis Porter’s national diamond model for post conflict situations is modified as following: Determinants of national competitiveness in post conflict countries
Determinants of national competitiveness in post conflict countries

Donors
Donors
Government
Government

-Help to policy making
-Capacity building and expand that
-Financing productive project
-Attract and develop the private sector

-Help to policy making
-Capacity building and expand that
-Financing productive project
-Attract and develop the private sector

Demand conditions
Demand conditions
Factor conditions
Factor conditions

Related and supporting industries
Related and supporting industries
Firm strategy structure and rivalry
Firm strategy structure and rivalry

7. Suggestions
Because the determinants national competitiveness was performed in a sample, to confirm the model and achieving to a theoretical model needs to test in a few another post conflict samples.
Due to the large numbers of factors influencing public issues like national competitiveness must be develop the samples for increasing the reliability and accuracy of research.
Considering to the determinants of national competitiveness have interactive effects on each other, especially donors that on many listed factors is not effectless, assessing this effect will adds to accuracy of national competitiveness study.

References 1- Porter, Michael E. 1990. The Competitive Advantage of Nations. Harvard Business
Review. (March- April). 2- Chobanyan Armen & Leigh Laurence. 2006. The competitive advantages of nations applying the "Diamond" model to Armenia. International Journal of Emerging Markets. Vol.1 No: 2. pp. 147-164

3. Oz Ozlem. 2002. Assessing Porter 's framework for national advantage: the case of Turkey. Journal of Business Research (55). pp. 509-515.

4. Rugman, Alan M & others. 1998. A generalized double diamond approach to the global competitiveness of Korea and Singapore. International Business Review (7). pp. 135-150

5. Cho Dong-Sung & others. 2008. Characterizing international competitiveness in international business research: A MASI approach to national competitiveness. Research in International Business and Finance (22). pp. 175-192

6. J.H. Dunning, 1992. The competitive advantage of countries and the activities of transnational corporations, Transnatl. Corp. (1), pp. 135-168.

7. Bakhache Said & others. 2006. Assessing Competitiveness after Conflict: The Case of the Central African Republic. International Monetary Fund.

8. Yahya Rahim A. 2009. Afghanistan‘s Marble Cluster Competitiveness; MBA dissertation; Robert Kennedy College/ University of Wales

9. USAID. 2007. A Guide to Economic Growth in Post-Conflict Countries.

10. Afghanistan State Building, Sustaining Growth, and Reducing Poverty; A World Bank Country Study; Feb 2005; Washington D.C; USA

11. Schwab, K. (2010). The Global Competitiveness Report 2010-2011. Geneva: World Economic Forum.

12. Stephane Garelli; Competitiveness of Nations: The Fundamentals; IMD World Competitiveness Yearbook 2004

References: 1- Porter, Michael E. 1990. The Competitive Advantage of Nations. Harvard Business Review 2- Chobanyan Armen & Leigh Laurence. 2006. The competitive advantages of nations applying the "Diamond" model to Armenia. International Journal of Emerging Markets. Vol.1 No: 2. pp. 147-164 3 4. Rugman, Alan M & others. 1998. A generalized double diamond approach to the global competitiveness of Korea and Singapore. International Business Review (7). 6. J.H. Dunning, 1992. The competitive advantage of countries and the activities of transnational corporations, Transnatl. Corp. (1), pp. 135-168. 7. Bakhache Said & others. 2006. Assessing Competitiveness after Conflict: The Case of the Central African Republic. International Monetary Fund. 8. Yahya Rahim A. 2009. Afghanistan‘s Marble Cluster Competitiveness; MBA dissertation; Robert Kennedy College/ University of Wales 9