Discussion Question on country competitiveness
Country competitiveness is determined by a multitude of factors that ‘measures and compares the effectiveness of countries in providing firms with an environment that sustains the domestic and international competitiveness of those firms’ (Shenkar & Luo: Ch. 5, p. 130). How a countries excel in bringing firms to contribute to the country’ competitiveness is the result of many factor that are evaluated yearly by the Forum in order to rank almost every country. The report is called Global Competitiveness Index, although it offers over 500 pages; the content is laid out in an orderly fashion and easy to follow. Let’s have a look at how these factors/determinants influence over FDI strategy.
Country-Level, Industry-Level, Firm-Level, Individual-Level
Factor-driven economies (Institutions, Infrastructure, Macroeconomic environment, Health and primary education)
The level of competitiveness contributing to the country’s success can be well due to its institutional competitiveness; the competitive advantages that firms create in result of their operation within a specific circle of institutions is the driving capability to succeed in a socioeconomic context. Foreign firms will likely invest more where they know there is a good management of legal, political and economic institutions to protect their rights and property.
Mature infrastructures facilitate connectivity, thus lessening the distance between territories. Strong network infrastructures interconnected with national market encourage economic development. Transport, communication and telecommunication infrastructure system is what allow entrepreneurs to do their business, quick stream of information increases global economic productivity by allowing businesses to interact and make decisions.
Macroeconomic factor alone, even though stable does not increase the country’s competitiveness but a macroeconomic disorder can negatively affect the economy. Workers need to be able to rely on good health
Country-Level, Industry-Level, Firm-Level, Individual-Level
Factor-driven economies (Institutions, Infrastructure, Macroeconomic environment, Health and primary education)
The level of competitiveness contributing to the country’s success can be well due to its institutional competitiveness; the competitive advantages that firms create in result of their operation within a specific circle of institutions is the driving capability to succeed in a socioeconomic context. Foreign firms will likely invest more where they know there is a good management of legal, political and economic institutions to protect their rights and property.
Mature infrastructures facilitate connectivity, thus lessening the distance between territories. Strong network infrastructures interconnected with national market encourage economic development. Transport, communication and telecommunication infrastructure system is what allow entrepreneurs to do their business, quick stream of information increases global economic productivity by allowing businesses to interact and make decisions.
Macroeconomic factor alone, even though stable does not increase the country’s competitiveness but a macroeconomic disorder can negatively affect the economy. Workers need to be able to rely on good health
References: Jackson, J.K. (2013) Foreign Direct Investment in the United States: An Economic Analysis. p. 1-9 http://www.fas.org/sgp/crs/misc/RS21857.pdf Shenkar, O. & Luo, Y. (2007) International business. 2nd ed. Thousand Oaks, CA: Sage Publications. World Economic Forum (2013-2014) Global Competitiveness Report, Available at : http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf