My interest in competitiveness appeared when I discovered the World Economic Forum (WEF) annual report 2014 about the competitiveness of the countries around the world. The 2019 report is here:
http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf
I had always thought that to be competitive, a company had to sell cheap.
I had always heard that when countries want to be more competitive, they devaluate their national currency and that increases in labour costs were against competitiveness gains.
I used to believe that the most competitive countries in the world were in Asia, China, Vietnam, India, and also in Eastern Europe. Counties were labour cost was very cheap and that they could export at incredibly low prices.
But in 2015 I discovered the Global Competitiveness report for 2014, and looking at the global ranking for around 140 countries I realized that I was wrong.
This pictures correspond to the 2014-15 and 2019 reports respectively, and show the ranking of the 15 most competitive countries:
None of these countries is what I might have considered a “competitive economy”. How could they be? Some of them have the highest income per capita in the world and very equalitarian societies. So, what was going on?
It took me a while to understand that I was also making a widespread mistake, which is reducing competitiveness to the idea of price and considering that a company or a country was competitive if they are selling low prices.
This idea is entirely wrong. Competitiveness is much more than that. I have created my definition of Competitiveness:
Competitiveness is the quality of being wanted despite the cost.
I was fascinated by this discovery and by the enormous implications that the concept of competitiveness has. When companies and countries understand what competitiveness means, they possess a potent tool for healthy growth, which will benefit all stakeholders.
This blog deals about competitiveness in general: its theory, practical applications, competitiveness in countries and companies, and of course misconceptions and other examples of deficient use, which so often appear in the media.
I intend to have an impact on the reader. If we continue equaling competitiveness with the price, we will have dysfunctional companies and countries.
May 26th, 2020
