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For the last thirty years, the phenomenon of improving competitiveness and innovativeness has been at the top of the list of economic policy goals in most economically prosperous countries. The paper makes an attempt to identify the character of the relations between a country’s competitiveness and innovativeness trends and economic inequality.
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Belgrade, 26-27 November, 2015. Institute of Economic Sciences,
Belgrade
COMPETITIVENESS AND INEQUALITY IN CEFTA AND SELECTED EU COUNTRIES
Despotović DanijelaNedić Vladimir
Cvetanović Dušan
International Conference DEVELOPMENT, COMPETITIVENESS AND INEQUALITY IN EU AND
WESTERN BALKANS
Belgrade, 26-27 November, 2015. Institute of Economic Sciences,
Belgrade
For the last thirty years, the phenomenon of improving competitiveness and innovativeness has been at the top of the list of economic policy goals in most economically prosperous countries.
The paper makes an attempt to identify the character of the relations between a country’s competitiveness and innovativeness trends and economic inequality.
Introductory considerations
Porter's concept of competitiveness
GCI (WEF) framework
Sustain competitiveness
Socially sustainable competitiveness and environmentally sustainable competitiveness
GINI
The research is focused on two population groups:1. group of countries that have been
or are current members of CEFTA and
2. EU-15 group of countries.
Research
Scope of reserch2006 - 2013
The basis for defining competitiveness and innovativeness is WEF’s GCI framework with 3 sub-indices, while the level of economic inequality is quantified by the GINI index, according to the World Bank and Eurostat data.
Model
Subindex weights and income thresholds for stages of development
10*).().(1XSISI
SISI BGCIAGCI
α – weight for basic requirements GCI.Aβ – weight for efficiency enhancers GCI.B
SI – stages of development of observation economywhere I goes from 1 to 5
H0: Increasing levels of national competitiveness (X1) and the increasing levels of national innovativeness (X2) has a desirable negative synergic influence on the exogenous variable – economic inequality (Y).
Y = a0 + a1*X1 + a2*X2
Y (the dependent variable) – GINI index; X1 (independent variable 1) – GCI Basic & Efficiency
competitiveness; X2 (independent variable 2) – GCI Innovativeness &
Sophistications; ai (i = 0 - 2) – are constants acquired from multiple
regression process.
The main hypothesis
Research results
Descriptive statistics for X1 - Basic & Efficiency competitiveness
scale from 1 to 7 (best)
Descriptive statistics for X2 - Innovativeness & Sophistications
scale from 1 to 7 (best)
Descriptive statistics for Y – GINI
scale from 0 (best) to 100
Single regression X1 (independent variable 1) –
GCI Basic & Efficiency competitiveness;
X2 (independent variable 2) – GCI Innovation and sofistication;
Y (t
he d
epen
dent
var
iabl
e) –
GIN
I in
dex;
CEFTA countries
Single regression
indicate
GINI index
decreseBasic & Efficiency
competitiveness increase
EU 15 countries
GINI index
Basic & Efficiencycompetitiveness
CEFTA countries
GINI indexInnovation & sofistication EU 15
countries
GINI index
Innovation & sofistication
stronger
less strong
CEFTAGCI Basic requirements & Efficiency enhancers adjusted (Variable X1) as a representative of the basic competitiveness of the economy exerts statistically significant influence on the GINI index: in the group of CEFTA countries influence coefficient is about -3.7 (increase in variable X1 reduces the GINI coefficient), while in the group EU-15 influence coefficient (about 2.3) has the positive sign (increase in variable X1 causes an increase in GINI coefficient).
Multi-linear regression analysis
Y = 77-3.8*X1 -8.4 *X2 + eR2 = 0.48; adjusted R2 =
0.47; e = 4.1
EU 15GCI Innovation and sophistication factors (variable X2) as a representative of the economy’s innovativeness exerts statistically significant influence on reducing the GINI index in both groups of countries observed: in the group of CEFTA countries influence coefficient is about -8.5 (increase in variable X2 reduces the GINI coefficient by 8.5 times), while in the group EU-15 influence coefficient is somewhat lower (-5.8) (increase in variable X2 causes a decrease in GINI coefficient by 5.8 times).
Multi-linear regression analysis
Y = 45 + 2.4*X1 – 5.8*X2 + eR2 = 0.64; adjusted R2 =
0.64; e = 2
CEFTA countries
GINI index
decreseBasic & Efficiencycompetitiveness
increase
EU 15 countries
GINI index
Basic & Efficiencycompetitiveness
CEFTA countries
GINI indexInnovation & sofistication EU 15
countries
GINI index
increase
Innovation & sofistication
Multiple regression
indicate
stronger
less strong
The conclusion is that by implementing the strategic innovation policies, CEFTA countries (current CEFTA members could also take a regional approach to innovation strategies) could strongly reduce economic inequalities represented by the GINI index which is on average slightly higher in these countries than in the EU15 countries.
This would further increase their social component of sustainable competitiveness and thereby the overall sustainable competitiveness of the entire region.
The policy makers must, strategic and through fine tuning, adjusted agenda of national and regional innovation policies.
Conclusion
A rising tide lifts all boats.
A truly good outcomebenefits all.
Ted Sorensen
