Belgrade, 26-27 November, 2015.

Institute
of Economic Sciences, Belgrade

International Conference DEVELOPMENT,

COMPETITIVENESS AND INEQUALITY IN EU AND
WESTERN BALKANS

COMPETITIVENESS AND
INEQUALITY IN CEFTA AND
SELECTED EU COUNTRIES
Despotovi Danijela
Nedi Vladimir
Cvetanovi Duan
Belgrade, 26-27 November, 2015. Institute
of Economic Sciences, Belgrade

Introductory considerations

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 countrys competitiveness
and innovativeness trends and economic inequality.

Porter's concept of competitiveness

GCI (WEF)
framework

Sustain competitiveness
Socially sustainable competitiveness and environmentally
sustainable competitiveness

GINI

Research

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.

Scope
of reserch
2006 - 2013

Model

The basis for defining

competitiveness and
innovativeness is WEFs 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.

Subindex weights and income thresholds for stages

of development

(GCI . A SI ) (GCI .B SI )
X1
*10
SI SI
weight for basic requirements GCI.A
weight for efficiency enhancers GCI.B
SI stages of development of observation economy
where I goes from 1 to 5

The main hypothesis

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.

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
Y (the dependent variable) GINI index;

X1 (independent variable 1)
GCI Basic & Efficiency competitiveness;

X2 (independent variable 2)
GCI Innovation and sofistication;

Single regression
CEFTA countries

Basic & Efficiency

GINI index
competitiveness
decrese
stronger
indicate
increase

CEFTA countries

Innovation &
sofistication

GINI index

less strong

EU 15 countries
Basic & Efficiency
competitiveness

GINI index

EU 15 countries

Innovation &
sofistication

GINI index

CEFTA
Multi-linear regression analysis

Y = 77-3.8*X1 -8.4 *X2 + e

R2 = 0.48; adjusted R2 = 0.47; e =
4.1

GCI 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).

EU
15
Multi-linear regression analysis

Y = 45 + 2.4*X1 5.8*X2 + e
R2 = 0.64; adjusted R2 = 0.64; e = 2

GCI Innovation and sophistication

factors (variable X2) as a
representative of the economys
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).

Multiple regression
CEFTA countries

Basic & Efficiency

GINI index
competitiveness
decrese
indicate
less
strong
increase

CEFTA countries

GINI index
stronger

EU 15 countries
Basic & Efficiency
competitiveness

Innovation &
sofistication

GINI index
increase

EU 15 countries

Innovation &
sofistication

GINI index

Conclusion

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.

Arisingtideliftsallboats.
Ted Sorensen

A truly good outcome

benefits all.

Thank you for your attention

Contact and informations: ddespotovic@kg.ac.rs