KEY FACTORS FOR COLOMBIA’S IMPROVEMENT (NAME SOURCES)The 12 pillars of competitiveness
There are many and are complex. Economists have long tried to understandwhat determines the wealth of nations, it has ranged from specialization anddivision of labor, to emphasis on investment in physical capital andinfrastructure and, more recently, to education and training, technologicalprogress (whether created n the country or adopted), macroeconomic stability,good governance, the rule of law, transparent and well functioning institutions,firm sophistication, demand conditions, market size, and others. The centralpoint, is that they are not mutually exclusive—two or more of them could be trueat the same time. This also can partly explain why, despite the present globaleconomic crisis, we do not necessarily see large swings in competitivenessrankings, particularly among countries that have already put into place many of the elements driving productivity.
First pillar: Institutions (Public and private)
It is determined by the legal and administrative framework within whichindividuals, firms and governments interact to generate income and wealth inthe economy. The importance of a solid institutional environment has becomeeven more apparent during the current crisis, given the increasingly direct roleplayed by the state in the economy of many countries.The quality of institutions has a strong bearing on competitiveness and growth.It influences investment decisions and the organization of production and playsa central role in the ways in which societies distribute the benefits and bear thecosts of development strategies and policies.It goes beyond the legal framework. Government attitudes toward markets andfreedoms, and the efficiency of its operations, are also very important:excessive bureaucracy, overregulation, corruption, dishonesty in publiccontracts, lack of transparency and trustworthiness. Proper management of thepublic finances is also critical to ensuring trust in the national businessenvironment.An economy is well served by businesses that are run honestly, wheremanagers have strong ethical practices in their dealings with the government,other firms and the public. Private sector transparency is indispensable tobusiness, and can be achieved through the use of standards as well as auditingand accounting practices that ensure access to information in a timely manner.
Second pillar: Infrastructure
Extensive and efficient infrastructure is an essential driver of competitiveness. Itis a key to ensuring effective functioning of the economy, as it determines thelocation of economic activity and the kinds of activities or sectors that candevelop in a particular economy. Well-developed infrastructure reduces the