Africa.The next section includes a more detailed analy-sis of the best performers in the region across the vari-ous “pillars”of national competitiveness.This analysisshows that there are strong individual country perform-ances in a number of areas and highlights the existenceof best practices within the region.The final sectionprovides details on the competitive performances of individual African countries,discussing both the com-petitive strengths and weaknesses in each,and pointingtoward those areas most requiring policy attention.
In order to assess national competitiveness,the WorldEconomic Forum has developed the GlobalCompetitiveness Index (GCI).
is definedas the set of institutions,policies,and factors that driveproductivity and therefore set the sustainable currentand medium-term levels of economic prosperity.
In thissense competitiveness is not viewed as a zero-sum game,such as competition among companies vying for a larger portion of a given market share.Instead,by placing thefocus on the drivers and the facilitators of productivity,improvements in one country’s competitiveness do notexclude similar improvements in other countries.We have learned from our years of research thatthe measurement of competitiveness is a complexundertaking.The GCI,albeit simple in structure,providesa holistic overview of factors that are critical to drivingproductivity and competitiveness,and groups them intoninepillars:
(public and private),
health and primary education
higher education and training
.Each of these pillars plays a critical role indriving national competitiveness.The GCI is the mostcomprehensive competitiveness index to date,measuringthe macro- and microeconomic drivers of competitive-ness across a large number of countries.The selection of these pillars,as well as the factorsthat enter each of them,is based on the latest theoreticaland empirical research.It is important to note that noneof these factors alone can ensure competitiveness.Thevalue of increased spending in education will be under-mined if rigidities in the labor market and other institu-tional weaknesses make it difficult for new graduates togain access to suitable employment opportunities.Attempts to improve the macroeconomic environment —for example,bringing public finances under control— are more likely to be successful and receive public sup-port in countries where there is reasonable transparencyin the management of public resources,as opposed towidespread corruption and abuse.Innovation or theadoption of new technologies or upgrading managementpractices will most likely not receive broad-based supportin the business community if protection of the domesticmarket ensures that the returns to seeking rents arehigher than those for new investments.The most competitive economies in the world willtherefore typically be those where concerted efforts havebeen made to frame policies in a comprehensive way— that is,those that recognize the importance of a broadarray of factors,their interconnection,and the need toaddress the underlying weaknesses they reveal in aproactive way.The nine pillars are measured using both “hard”data (such as inflation,Internet penetration,lifeexpectancy,and school enrollment rates) from publicsources and data from the World Economic Forum’sExecutive Opinion Survey,conducted annually amongtop executives in all of the countries assessed.TheSurvey provides crucial data on a number of qualitativeissues (for example,corruption,confidence in the publicsector,quality of schools) for which no hard data exist.
Our sample covers 128 economies at differentstages of economic development,with GDP per capitain the wealthiest country surpassing that of the poorestcountry by a factor of 117,based on purchasing power parity.Clearly policy priorities must evolve as countriesadvance on the development path,since what it takes toachieve productivity improvements in a less-advancedeconomy—such as improving health,fighting illiteracyand corruption,or constructing basic infrastructurefacilities such as roads and ports—will no longer be suf-ficient to increase productivity in a more sophisticatedeconomic framework,where productivity gains fromthese policies have often already been exploited.To take this process into account,the concept of stages of development has been introduced into the cal-culation of the Index.Specifically,countries are separat-ed into three stages,based on the idea that as countriesmove along the development path,wages tend toincrease,and that in order to sustain this higher income,productivity must improve.This concept is integratedinto the Index by attributing higher relative weights tothose pillars that are relatively more relevant for a coun-try given its particular stage of development.In the
stage countries compete based ontheir factor endowments,primarily unskilled labor andnatural resources.Companies compete on the basis of prices and sell basic products or commodities,with their low productivity reflected in low wages.To maintaincompetitiveness at this stage of development,competi-tiveness hinges mainly on a stable macroeconomicframework (pillar 1),well-functioning public and privateinstitutions (pillar 2),appropriate infrastructure (pillar 3),and a healthy,literate workforce (pillar 4).As wages rise with advancing development,countriesmove into the
stage of development,whenthey must begin to develop more efficient productionprocesses and increase product quality.At this point,competitiveness becomes increasingly driven by higher education and training (pillar 5),efficient markets (pillar
1 . 1 : A s s e s s i n g A f r i c a ’ s C o m p e t i t i v e n e s s i n a G l o b a l C o n t e x t