Structural competitiveness

Abstract

This report introduces a new framework and index for structural competitiveness that can be used to analyze the preconditions for long-term economic growth. The analysis builds on a competitiveness pyramid Pajarinen, Rouvinen & Ylhäinen, 2017), in which competitiveness is broken down into its subcomponents; essential long-term foundations and shorter-term drivers.

In the 2019 comparison, Finland ranks fourth among 38 countries; behind Switzerland, Denmark, the Netherlands, and ahead of Sweden, the United States, and Norway. Finland ranks better in the foundations (4th) than in the drivers (9th) of competitiveness. Furthermore, Finland is among the top five ranked countries in all sectors of competitiveness, except labor markets and creative renewal, in which Finland ranks 23rd and 14th, respectively. The overall competitiveness of Finland has developed positively since 2016. In 2019, our new competitiveness index ranked Finland higher in terms of competitiveness than the rankings of IMD and WEF do, while some larger countries (e.g., Germany) rank lower.

We studied the relation between our competitiveness index and the development of GDP per capita (our measure of economic welfare). According to our analysis, the new index provides a good indicator of the current economic welfare. However, the level or change of the index does not appear to predict the future developments of GDP per capita. The main application for such indices of structural competitiveness, therefore, lies in providing a snapshot of the current developments and in helping to distinguish the key national strengths and weaknesses.

Publications of the Government’s analysis, assessment and research activities 2020:11.

Publication info

Research group
Business renewal
Date
30.03.2020
Keywords
Competitiveness, IMD, WEF
Pages
88
Language
Finnish
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