International Journal of Emerging Markets

Strategies and competitiveness for emerging countries: A comparative study
among three South-American countries
Segundo J. Castro-Gonzales Maritza I. Espina Raquel M. Tinoco-Egas
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To cite this document:
Segundo J. Castro-Gonzales Maritza I. Espina Raquel M. Tinoco-Egas , (2017)," Strategies and
competitiveness for emerging countries A comparative study among three South-American countries
", International Journal of Emerging Markets, Vol. 12 Iss 1 pp. 125 - 139
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Emerging economies. the final selection and the weight of each determinant was calculated using PLS-SEM. and Revised 8 February 2016 Accepted 17 March 2016 Raquel M. Ecuador Downloaded by University of Newcastle At 21:34 14 January 2017 (PT) Abstract Purpose – The purpose of this paper is to assess the strategies for improving the competitiveness of Ecuador (ECU). it provides researchers and practitioners an analysis tool for comparing competitive factors of emerging countries from the DD approach without any weaknesses. Findings – From a national perspective. ECU should improve four factors. To reach international competitiveness.1108/IJoEM-12-2014-0222 . Practical implications – This research is the first one on its field. The current issue and full text archive of this journal is available on Emerald Insight at: www. and COL three. It fulfills the lack of knowledge at the scientific work and its practical objective by identifying the factors that public policy may take into consideration urgently to improve the global competitiveness level of the countries for a sustainable development and considerations for a long-term integration. Research limitations/implications – This study has found that in order to improve the level of national competitiveness. © Emerald Publishing Limited 1746-8809 Science and Technology (SENESCYT) – Ecuador. PLS-SEM. 1. ECU has to concentrate on improving and strengthening formal and non-formal institutions. The United Nations.com/1746-8809. The calculation of the national and international competitiveness indexes used the double diamond for competitiveness theoretical frame.htm Competitiveness Strategies and competitiveness for emerging for emerging countries countries A comparative study among three South-American countries 125 Segundo J. it was found that COL is the most competitive country followed by PER in the second place and ECU is in third. PER four. Castro-Gonzales and Maritza I. 2017 pp. The calculation of the national and international competitiveness indexes used the DD for competitiveness theoretical framework applied for the first time in a research for South America with 36 determinants. This work may be taken into consideration for an immediate and sustainable improvement in order to win competitiveness than its neighbors. Colombia (COL) and Peru (PER). It is one of the first studies using 36 indicators within the context of three South-American countries. the final selection and the weight of each determinant was calculated using partial least squares-structural equation modeling. which are reflected in: four factors. among others. Design/methodology/approach – It analyzes data of four-year average of international sources such as: The International Monetary Fund. the authors have found also that COL is the most competitive economy. Espina Received 24 December 2014 IEN Business School. Internationally. Originality/value – This study is unique because the factors were selected after a careful literature review. and COL five formal and non-formal institutions. Keywords Latin America. the academic implications of these results appear when calculating the weight-load competitiveness indexes using inferential multivariate analysis. 125-139 This research was sponsored by “Prometeo” Program of the National Secretary of Higher Education. PER in second place and ECU is in third. International strategy Paper type Research paper International Journal of Emerging Markets Vol. Universidad Tecnica de Machala. this research uses PLS-SEM to correlate its factors as the statistical methodology and the DD as the tool for the identification of theoretical indicators. DOI 10. Puerto Rico. On the other hand. PER five. The factors were selected after a careful literature review.emeraldinsight. 12 No. Competitiveness. Machala. as a framework to assist in formulating economic policy at the national and regional level. Universidad del Este. Carolina. Tinoco-Egas Facultad de Ciencias Empresariales Machala. The result of this analysis compares the weak and strong determinants of these three member countries of UNASUR for the development of their complementarities and therefore the recommendations of public policy. Social implications – Due to the difficulty of competitiveness operationalization. it uses 36 competitiveness indexes and the PLS-SEM statistic methodology to assign the weight of competitive indicators and the DD theoretical frame to determine the relevance of its factors and it is oriented to advise decision-makers and provides the appropriate police guidelines for the national competitiveness strategy and improve their quality of life of its residents from: ECU-COL-PER. The World Bank.

2014. Moon.. amounts of natural resources and labor costs and concludes that productivity is the most important determinant even in the globalization age. IJOEM 1. with a population of more than 600 million – the great majority speaking the same language and according to the World Bank. it solves the deficiencies of the model proposed by Porter (1990) for competitiveness analysis. The last objective is to turn this tool into a helpful one when designing public policy and when assigning resources to strategic sectors to their governments. 2006. to study what main strategic factors each country should consider to achieve improved competitiveness. education. knowledge management. infrastructure. Therefore. among others. 2012). Mihaela et al. Delgado et al. there are huge natural and energy resources. 2. Literature review When talking about competitiveness. 2000. 1998). WEForum. Introduction 12. this paper may capture the current situation of the countries and the results could be used for comparison studies Downloaded by University of Newcastle At 21:34 14 January 2017 (PT) related to public policy changes or considerations for long-term integration. besides they share similar cultural and historical characteristics. The lack of scientific literature on competitiveness for ECU-PER-COL is one of the main reasons of this research. The factors were selected after a careful literature review. the first objective of this research is to compare the determinants of competitiveness of ECU-PER-COL. and almost no published studies on Ecuador (ECU). Berger (2013) includes government policies. (2014). We chose the comparison among ECU. Castro-Gonzáles et al. (1995) since it is recommended when analyzing competitiveness of small economies with intensive exporting activity (Cho and Moon.1 Latin America (LATAM) is a region with high growth and development potential in the near future (Castro-Gonzáles et al. macroeconomic stability. (1998). 2009). The DD model was also validated by Moon et al. 2009). communication. 126 Castro-Gonzáles et al. (2013) highlighted three broad and interrelated drivers of foundational competitiveness for nations: social infrastructure and political institutions. (2015) argue that there is few scientific research related to the competitiveness of the countries in LATAM. The results compare weaknesses and strengths of determinants for recommendation of public policies. technological progress. We used the double diamond (DD) model proposed by Moon et al.. there is a consensus for increasing the number of determinants. industries. even less for South-American countries. COL and PER for this emerging countries study. measuring competitiveness takes into account important determinants such as capital investment. the final selection and the weight of each determinant was calculated using PLS-SEM. bank service development. From Mexico to Argentina. it will jointly become the third most powerful economic group in the world (Bonari et al. as the considered indicators for measuring national competitiveness (Liu and Hsu. Peru (PER) and Colombia (COL). since the three of them belong to the Andean Community Trade Group with all trade infrastructures (including maritime port). good governance. Since some researchers hold that South-American countries compete only to attract foreign direct investment (FDI). The second objective is to value these determinants with partial least squares-structural equation modeling (PLS-SEM). efficiency of enterprises and sophistication level. There is existing data which have been analyzed and their results and indicators commented and published by the World Economic Forum (WEF) and the International Institute for Management Development (IMD). financial ratios. monetary and fiscal policy and the microeconomic environment. (2011) study cultural dimensions as a determinant of national competitiveness. Cho and Moon (2000) proposed that in a globalized world a simple theory for trade is able to explain the prosperity of nations.. However. management styles. among others . Moon et al. Peña-Vinces (2010). The calculation of the national and international competitiveness indexes used the DD for competitiveness theoretical frame applied for the first time in a research of South America with 36 determinants.

and they are directly related to the strength of the domestic firms that do internationalize first in the regional phase. In our review of the literature. The countries studied in this paper have little presence of local multinational (MN) firms. For Krugman (1994). The stronger the four determinants are better the position the country has to compete internationally. On the other hand. (Luo and Tung. ( Jin and Moon. 127 Diaz and Vassolo (2012) argue that for some Latin American emerging countries.. Moon et al. growth and sustainability (Castro-Gonzáles et al. (2014) manifest some inconsistencies in the reports of these institutions because there is the need to give greater participation to quantitative variables instead of surveys. 1993). therefore. which includes the activities of MNs. firm-specific advantages (FSAs) are rather more important than country-specific advantages (CSAs). 2003). Porter (1990) proposed that prosperity of a country is not only related to the endogenous factors of each country. could not get modeled appropriately. small countries with great export activity. (1995) proposed the DD model. Lora (2005) and Cho and Moon (2000) hold that these rankings for competitiveness are oriented to benefit the wealthy and industrialized countries. but depends mostly on the capability of its industries to innovate. good local suppliers with strategy and structure focused on entrepreneurial aggressiveness and an exigent demand (Castro-Gonzáles et al. using the DD as an inclusive model that provides poor objectivity. . However. Porter established that competitiveness depended of these four determinants. On the other hand. However. 2000. Also questionable is the arbitrary assignment of weights to factors when calculating the rankings (Squalli et al. Domestic enterprises are not strong in FSAs. competitiveness should not be related only to a greater market share of corporations in developed countries. economic growth and development of countries. Within a similar context. it must also consider MN companies from emerging countries addressing their weaknesses into a global competitiveness by developing different strategies for internationalization. These industries are benefited when they have better production factors. and the role that national governments play in competitiveness.. competitiveness of countries is based mainly on getting higher capability to produce goods and services. there are new approaches about the competitiveness of nations dealing with regional competitiveness. National industries win competitive advantages related to world competitors when they operate under pressure and face other challenges. an economic countries stability and a liberalized market to really benefit from long-term capital flows (Bengoa and Sanchez-Robles. we used the published research related to global competitiveness. depending on the nature of the countries and the strength of their Downloaded by University of Newcastle At 21:34 14 January 2017 (PT) firms.. creating the diamond model for the competitiveness of nations. Castro-Gonzales et al. 2015). no similar work in Latin America was identified. strong domestic rivalry and related industries. some researchers have objected the WEF-IMD reports. 2003). 2015). Das and Kapil (2015) claim that some specific factors influence the decision of “merges and acquisition” of technology companies as a growth strategy of Indian technology companies. 2014). Kaplan. 2006. The Porter (1990) diamond for the competitiveness of nations is criticized by different model proposals such as Rugman and D’Cruz (1991) who objected that its greatest limitation. To define the indicators of competitiveness. ECU-PER-COL do have as an alternative to compete under CSAs strategy. Castro-Gonzáles et al. 2007). (1995) and Rugman and D’Cruz (1991) pointed to the exclusion of international activities on Porter’s diamond since it was only oriented to the country of origin and to the strength of its local companies. Both approaches to the competitiveness of countries are new events that globalization is experiencing and the relevance of one or the other criteria is measured according to different levels. When talking about national Competitiveness competitiveness even the indicator of FDI is correlated positively with the economic for emerging growth within the host countries since the host country relies on human capital. To cover these limitations Moon et al. which compete globally and allow its population to enjoy life standardization. among them the low participation rate on surveys which is 15-35 percent (Cho and Moon.. through FDI (Dunning. 2008).

The traditional competitiveness methodology used by WEF-IMD lacks representativeness (Cho and Moon. in this study we elaborated two constructs. 2014). so does the creation of R&D centers in multinationals and local companies (Yip and Mckern. Competitiveness indicators of the model 12.) ICF Telephone lines (per 100 people) TLI Patents applied to residents (No. The DD is used because of three reasons: it remedies deficiencies from Porter (1990) when considering two 128 scenarios. food production index. Finally. 2000. 2014).. value added (% GDP) IVA Researchers in R&D × (c/M people) RRD Time for export (days)* TFE Corruption perceptions index (points) CPI Agriculture. such as China and India. national and international (DD). but with a local and an international focus. The selected specific indicators for each category are shown in Table I. IJOEM 3.1 The DD model considered the same constructs proposed initially by Porter (1990). value added (% GDP) SVA Annual growth of population (%) AGP Related and support industries locals Related and support industries internationals Subscriptions phones (per 100) SPH Air transport. 2000. is considered an indication of food production diversity. after a careful selection of indicators grouped into four categories of each construct: factor conditions. Flight world (thousands) ATFW Container loading through ports (m 20') CLD Structure and rivalry enterprises locals Structure and rivalry enterprises internationals Table I. since it minimizes the usage of indicators from surveys (Cho and Moon. when representing it as an area difference (Cho and Moon. and it operationalizes in a simple way the competitiveness of these countries. it is useful when analyzing competitiveness of small countries with intensive exports activities. Moon et al. Some of these Downloaded by University of Newcastle At 21:34 14 January 2017 (PT) indicators present the characterization (*) to specify the use of inverse values to have a consistency with economic theory (Castro-Gonzáles et al. and the number of scientific publications and patent applications in emerging countries. it is the main source of competitiveness in emerging countries due to the large amount of technical talent and cheap labor (Contractor. (previously measured by the level of population able to work and the enterprises access to labor).. Lora. freight (m-ton-kilometers) ATF Infrastructure quality ports (1-7) IQP ISO certification firms (No. international and national. the Local factors Factor International factors Factor Factor conditions locals Factor conditions niternationals Labor force participation (% population) LFP Export of goods and services (% GDP) EGS Food production index (2004-2006 ¼ 100) FPI Foreign direct inversion (inflow – % GDP) FDII Journal articles (No. Currently. Therefore. value added (% of GDP) AVA Demand factors locals Demand conditions internationals Expenditure on R&D (% GDP) ERD Fuel exports (% merchandise export) FEX Public education expenditure total (% GDP) PEET Gini index (%)* GIN Time to import (days)* TPE Cumulative foreign debt (% GDP)* CFD Import goods and services (% GDP) IGS Services. The factor conditions category at the national level consists of the following constructs: labor participation. demand conditions.) PAR Electricity consumption (mKwh p/c) ECO Delivery time import (days)* DTI Aerian Transport.) JAR Industry. Kaplan. Cost to establish business (% of GNI p/c)* CTB Cost of exports (mUS$/container)* COE Determinants of Time to start a business (days)* TSB Technology index (1 @ 7) TIN competitiveness Trade in services (% of GDP) TIS Average tariff rate manufactured products (%)* ATR used in PLS-SEM Manufactured products export (% export) MPE . 1998). 2003). related and support industries and structure and rivalry. 2005). 2000. increases. including groceries with a nutritive value. 2013).

2011). 1990). 2014). measures the level of sophistication of the market related to the education level of national consumers (Liu and Hsu. 2013). patent applications (Peña-Vinces. and time to export. 2004.. and time to import. as an included recommendation (see Table I). 2010). 2010) with a direct effect within costs of company’s products. management and national competitor’s conditions are relevant for competitiveness of the country (Porter. 1995. The creation. 1998). 2010). The indicators for related and support industries category at the international level are: aerial and maritime infrastructure to internationalize efficiently (Peña-Vinces. The factor conditions category at countries international level include the following FDI as it is important to obtain enhanced competitiveness level and sustained economic growth in a country (Contractor. number of ISO-certified firms and delivery time of imports (see Table I). It leads the firms to adopt new technologies rapidly (Moon et al.. Since service businesses represent 70 percent of the transactions. as they are related to efficiency in commercial communications as Sardy and Fetscherin (2009) have proposed infrastructure quality ports are considered since good conditions for transport are relevant for industry growth (Moon. Additionally we consider the usage of aerial transportation expressed in thousands of flights. we use the added value of services and the added value within industrialization. since the economies studied are small and local business strategies should achieve economies of scale by exporting to international markets and cumulative foreign debt. Dögl et al. and electric consumption is used as an approximation for a country’s industrialization level (Dogl et al. Also. Sardy and Fetscherin (2009) have proposed that product prices for exports are influenced by the exports costs and average tariffs for exports. the total expenses in public education are used as proxies (Yip and Mckern. Laffaye (2007) considered that if a nation has better life quality level. 129 (2012) proposed to use the value added for industries as an approximation of real productivity of nations and the value added for agriculture because it contributes to productivity to its agricultural sectors (see Table I). 2007). and the value added for services (see Table I). since there is evidence of the improvement in competitiveness levels of the export sector due to the relevant increase of high technology products and added value industries (Castro. Chiu and Lin (2012) proposed the use of commerce within services as a factor in this construct. a measure of the capability of industries to convert commodities in products with higher value (Postelnicu and Ban. (Castro-Gonzáles et al. and a prudential management of the fiscal debt is a key factor for stability to the country and a sustainable growth in the medium term (Ginhoven et al. since it is more important for competitiveness than the size of the nation itself. organization. 2009). Laffaye.. The indicators for structure and rivalry enterprise category at the international level are: The technology index and exporting activity. corruption perception index and the inflation level to consumer prices of the countries are Competitiveness important conditions since corruption and bad governance affect the growth of countries for emerging and its competitiveness (Alcaide. and the quantity of aerial and maritime tons commercialized with other countries. The demand conditions category at international-level indicators are: fuel exports. 2012). 2001). The indicators for structure and rivalry enterprise category at the national level are: time to start a business and the costs to establish a business (Peña-Vinces. 2006). The indicators for the related and support industries category at national level are the usage of the denominated information and communication technology: phone subscriptions and telephone lines per 100 inhabitants. 2010). 2014). for this reason we used the GINI index to measure the inequality of people’s income within a nation. exports of goods and services. . a higher indebtedness makes countries vulnerable to exogenous shocks that damage the competitiveness of the nations. The demand conditions category at the national-level constructs are: the expenditure on R&D.. It also includes the import of goods and Downloaded by University of Newcastle At 21:34 14 January 2017 (PT) services as a percentage of the GDP and the annual growth of population. it has better competitiveness levels.

1998). we used first PLS-SEM for assigning the weight of the indicators used. to determine the discriminant validity. Following the analysis. For example. the reliability attributes in a PLS-SEM seek to analyze whether the theoretical concepts correctly measure the construct via the observable variables (Hair et al.. Hair et al.. These countries were chosen because of their tight historical and economical linkage. in order to ensure the central trend of the data and to minimize the effect of an extraordinary data that can happen in any country fortuitously. Then. factors that are not significant were removed. Bonari et al. the constructs were evaluated to assess their reliability and validity.1 PLS-SEM procedure Downloaded by University of Newcastle At 21:34 14 January 2017 (PT) The PLS-SEM procedure has been gaining interest and use among researchers in management and economics because of its ability to model latent constructs under conditions of non-normality and small to medium sample sizes (Chin. Sampling and methodology 12.898. 4. All the competitiveness constructs in our study exceed the threshold limit.40. 2013. a path analysis was calculated using SmartPLS® (see Table II). whether the domain of content for the construct is adequately represented by the items (Chin. IJOEM 4. On the other hand. VC concerns the degree to which a scale has an appropriate sample of items to represent the construct of interest – that is. in our case to Latin America then by PLS-SEM. Validity of construct (VC) measures high-quality measurements or indicators. IMF. 2011). It indicates that 89 percent of the variance of the indicator is related to its construct (refer to the third column of Table II). 2009). The second column shows the factorial weight (λ) for each of the factors used. it must exceed a threshold of 0. . the next step in this second stage is the evaluation of the construct reliability (CR). Subsequently. and considered as the fifth world economy (Mercosur.. 2011).70 is required in the early stages of research. we employed the PLS-SEM technique using SmartPLS® developed by Ringle et al. 64 factors were used.. The use of this technique involves two stages or approaches: evaluation of the measurement model and and the assessing of the structural model. a communality value of (λ2) 0. and the relevant variables are unknown. and they represent 82. 1998).948 squared would give us a value of 0. When the measurement scales are applied across different contexts.. (2014).70 (refer to the fourth column of Table II). PER and COL. They are associated to Mercosur (regional and economical agreement of great relevance). We included 36 factors as listed in Table I. (2011) recommend using PLS-SEM when the phenomena studied stems from a theory examined at a macro level.1 The countries included in this study were ECU. 1998). All constructs for our research recorded values above the set limit of 0.641 billion. We chose this particular statistical technique. In the first stage of PLS-SEM procedure. As we do not know the weight of the factor items and their relevance in the construct of competitiveness. This evaluation indicates the quantitative value added to the construct. we examined the correlations between the constructs themselves and the other constructs (Henseler et al. Henseler et al. The communality of the indicators was also estimated. 2009). IDB and WEF. The data have been collected from various sources including the WB. (2009) and Roberts and Thatcher (2009) established that a CR or a value greater than 0. For the acceptance of an item in the construct.3 percent of the total South-American GDP. Individual item reliability was assessed by analyzing the standardized loadings (Hair et al. The indicators used in this research were based on two models: Porter (1990) and DD model (Moon et al. The factorial weight indicates what the factor contributes to each of the latent variables (determinants of the DD). For all indicators we utilized the four-year average of the selected factors (2010-2013). Initially. The Mercosur is considered as the fourth most important economic block due to its relevance 130 and volume of businesses. In order to calculate the competitiveness index. their combined GDP is $3.

00 1 (2) Demand conditions 0.800 Downloaded by University of Newcastle At 21:34 14 January 2017 (PT) RRD 0.801 National factor conditions 0.881 0. all of which exceeded the 0.958 0.966 Table II.. (3) Related and supporting 0.995 0.70 threshold for the ICR.806 MPE 0.949 0.948 0.401 GIN 0.498 0.004 TIS 0.996 0.999 0.998 Results of the factors SPH 0.93 1 and international rivalry rivalry diamond factors .912 TFE 0.948 0. structure and 0.990 TIN 0.997 0.000 FPI 0.50.927 0.898 0. we calculated the internal composite reliability (ICRs) to evaluate the reliability of our reflective constructs.999 0.877 0.131 JAR 0.971 0.014 0.001 FEX 0.683 CPI 0.000 1. Table IV provides the findings related to the reliability and validity analysis for all reflective constructs of the research model.248 SVA 0.776 National firm strategy: structure and 0.70 0.899 0.982 0.63 1 The correlations industries industries matrix of the national (4) Firm strategy.942 TPE 0. 2011).994 industries industries ECO 0.71 0.837 0.645 0.755 National-related and supporting 0.910 0.777 rivalry and rivalry CTB 0.006 0.928 International-firm strategy: structure 0.243 IVA 0.362 0.995 0.949 FDI 0.990 EGS 0. Simultaneously.416 TSB 0.918 AGP 0. Also. IQP 1.913 International-related and supporting 0.492 0. Using the item loadings. structure and 0.98 0.86 0.899 CFD 0.869 0.022 0.84 1 (4) Firm strategy.964 ERD 0. we evaluated each construct’s AVE.983 0.97 1 (3) Related and supporting 0.998 using SmartPLS® The competitiveness dimensions show discriminant validity (refer to Table III) as the values of the correlations are lower for each construct than among them.97 0.895 0.946 International demand conditions 0.042 DTI 0.943 international diamond PAR 0.700 131 PEET 0.942 0.919 0.900 diamond and ICF 0.206 0.808 LFP 0.828 IGS 0. to estimate convergent validity. Because each construct’s AVE exceeded 0.996 0.769 ATR 0.898 AVA 0.98 0. (or very close to it) our Latent variable (1) (2) (3) (4) Latent variable (1) (2) (3) (4) National diamond International diamond (1) Factor conditions 1 (1) Factor conditions 1 (2) Demand conditions 1.000 ATFW 0.633 0. CV is usually assessed by the average variance extracted (AVE) (Hair et al.76 1 Table III.994 of the national TLI 0. the convergent validity (CV) of the construct was evaluated.859 COE 0. National diamond factors International diamond factors Competitiveness Weight Communality Reliability Weight Communality Reliability for emerging Variable (λ) (λ2) (CR) Variable (λ) (λ2) (CR) countries National demand conditions 0.992 CLD 0.992 ATF 0.971 0.963 International factor conditions 0.

1 validity (Roberts and Thatcher.5403 international diamond rivalry rivalry .7649 0. ICCNFj ¼ Index for Competitiveness under Conditions of National Factors (country) j.9942 0. country j=best average among the countries (1) The calculation of scientific and technical articles published in “journals” for each country (refer to Table I) is as follows:    ECU ¼ 0:401  68:70=636:70 ¼ 0:04    COL ¼ 0:401  636:70=636:70 ¼ 0:40    PER ¼ 0:401  160:57=636:70 ¼ 0:10 Once those values were calculated. the index for competitiveness under conditions of national factors (country) j is identified as ICCNF and formula is used to calculate it: X n ICCNFj ¼ ICFi (2) i¼1 We used formula to calculate the national index for competitiveness: X X X X X ICNj ¼ ICCNFj þ ICCNDj þ ICRINAj þ ICESNRj (3) In this case. This research initially used 68 indicators. 132 PLS-SEM application in nature is an exploratory analysis uses the commonalities (λ2) as the weight loads for each of the indicators of the competitiveness index. ICRINAj ¼ Index Latent variable ICR AVE Latent variable ICR AVE National diamond International diamond Table IV. As previously stated. for example. ICCNDj ¼ Index for Competitiveness under Conditions of National Demand (country) j. country j ¼ lJAR    average factori .9133 0.4461 Construct reliabilities (2) Demand conditions 0.8114 (4) Firm strategy.7869 (2) Demand conditions 0..8477 (ICR) and AVES (3) Related and supporting industries 0.7571 (3) Related and supporting industries 0. This assignment is a limitation within this model. we calculated the competitiveness index for each group. 1998. (1) Factor conditions 0.7769 0. structure and 0.6832 0. 2014).9665 for national and (4) Firm strategy.4661 (1) Factor conditions 0. Using the DD methodology.. IJOEM analysis suggests that our measures satisfy the heuristics required to confirm convergent 12.9280 0. 2009). which were reduced to 36 indicators after measuring the structural strength of the model (refer to Table I). The weight of the index was assigned using the ratio of the number of indicators for each construct. With commonality weight for each factor we overcome the arbitrariness objections concerning the models of WEF-IMD (Moon et al. we focused our attention on determining the weight-loadings of the indicators of a country for competitiveness and the index’s constructs are based on the DD model (Moon et al. ICNj ¼ National Index for Competitiveness of the country j. the competitiveness index was standardized for each factor (ICF) of the country j using the formula:   Downloaded by University of Newcastle At 21:34 14 January 2017 (PT) ICFi . Castro-Gonzáles et al.9181 0. We used the first letters of each group for its identification. structure and 0. 1998)..9463 0.

Regarding firms structure and rivalry. Regarding firm structure and rivalry. ECU had a remarkable difference from the other two countries. (ECU is only 11. 2010).. Finally we calculated global competitiveness. The factor conditions construct shows PER within the best position: in FDI (inflows) by attracting higher foreign investors than other countries. 5.9 percent more than COL). On the other hand. the expenses for research and development was 72. however.3 percent than PER and ECU). the three countries have a similar score within its different factors (see Table V). For International Competitiveness Index we did the same procedure by using countries the values of Table II. PER has only . i. Results and analysis From the results (see Table V and Figure 1) we can conclude that: within national competitiveness the most competitive country is COL. Therefore. such as: most ISO-certificated firms. nearly followed by PER and ECU. COL exhibits the best values of the three determinants of competitiveness: demand conditions.e. and Competitiveness ICESNRj ¼ Index for Competitiveness in Enterprises Structures and National Rivalry of the for emerging country j.5 percent more than COL).1 percent more that COL) and electricity consumption (40.6 percent higher than COL. where COL has an advantage to PER and ECU. Within factor conditions construct Downloaded by University of Newcastle At 21:34 14 January 2017 (PT) the least favored country was ECU. Concerning international competitiveness.3 percent more that COL). ECU shows advantages within trade in services (48. ECU shows advantages within trade in services (48. and the high number of international flights (142 percent higher). ECU was the most competitive compared to COL and PER. Within the demand conditions construct. for Competitiveness of Related Industries and National Support of the country j. COL has the most favored factors. However. The corruption index in ECU had an 87 percent higher corruption perception than PER. For its illustration both goals have the same relevance within competitiveness of nations (Sardy and Fetscherin. Figure 1 and its areas represent the situation of each country. related and support industries and enterprises structure. On the other hand. ECU explains best situation within agriculture best value added (52.8 percent from COL) and researchers and R&D (49 percent from PER). COL leads the other two countries because of: a lower cost to establish business (32.5 of PER). We achieved the same result within the international competitiveness analysis. ECU was more competitive than COL and PER in number of phones (7. it imported more goods and services (66.3 percent more that COL).2 percent higher than COL). governments should consider widening the interest of the emerging countries to promote capital flows out of countries by their companies (outward FDI – OFDI) to ensure the long-term development economies rather than narrow strategies only to national interests (Rasiah et al. We found a significant disadvantage for ECU for the production of published articles at indexed magazines: the lowest number of publications in journals (only 10. we emphasize that ECU had a more sophisticated demand than other countries. 2009) and the calculated value is plotted in scale using AutoCAD 2014® in order to have an 133 objective and real appreciation of countries competitiveness levels.3 percent than PER and ECU). less time for exports (less than COL-ECU). Under the demand conditions construct. ECU is nowadays implementing public policies in order to change its technological index with public programs such as PROMETEO Project. Under related industries.8 percent of ECU) and a lower time for starting a new business (55. FDI is not the only indicator that matters when talking about recommendations for public policy.8 percent of ECU) and a lower time for starting a new business (55. COL leads the other two countries because of: a lower cost to establish business (32. and because of the annual growth of its population. most number of applied patents of its residents (177 percent higher than ECU). However. Within related industries. for which we considered the average of national and international competitiveness indexes. ECU was the leader of total expenses for public education with a 64 percent higher than PER.

6 AGP 1.5 1.3 923. World Economic Forum.1 100.7 SVA 50.0 1.5 1. Downloaded by University of Newcastle At 21:34 14 January 2017 (PT) 12.0 2.0 0.2 6.1 1.0 216.0 87.2 1.7 Notes: Bases consulted: IMF.5 2.9 0.9 0.1 0.2 0.0 0.5 108.9 Industries competitiveness index 39.5 1.4 ATR 8.6 0.2 0.3 Structure competitiveness index 62.4 0.9 Structure and rivalry firms internationals 1.4 0.0 2.5 0.8 PEET 4.7 TSB 65.0 19.0 0.0 0.3 TLI 14.8 0.9 3.0 89.3 0.0 0.2 2.8 AVA 10.5 1.6 Industries competitiveness index 100. FAO.3 100. IJOEM local and national Competitiveness index Average 2010-2013 Index Average 2010-2013 Index Factor ECU COL PER λ2 ECU COL PER Factor ECU COL PER λ2 ECU COL PER EGS 31.2 0.2 1.0 0.1 0.2 0.1 134 Table V.7 636.9 0.8 0.0 0.2 1.4 COE 1.8 4.6 0.1 7.3 3.0 0.3 100.9 0.3 55.1 TFE 20.9 84. IDB.4 0.3 20.0 71.0 0.1 0.8 100.1 0.8 0.9 0.7 0. ECLAC.0 ERD 0.0 11.0 0.2 3.7 0.0 Factors competitiveness index 68.8 0.9 FEX 57.0 100.3 1.6 IQP 3.0 IVA 39.0 Demand competitiveness index 87.0 24.8 5.1 100.0 0.7 1.6 CPI 33.0 1.1 1.4 10.0 5.7 CLD 1.0 0.8 0.3 4.5 15.6 3.7 0.2 FDII 0. International Monetary Fund.0 12.5 0.8 MPE 9.9 0.6 0.0 3.0 84.5 1.4 CTB 30.5 56. Food and Agriculture Organization.4 100.9 0.7 Demand conditions internationals 1.0 TPE 25.0 65.0 56.7 0.4 1.0 0.9 JAR 68.6 0.0 12.7 54.7 0.8 0.0 84.0 DTI 3.3 0.3 0. Economic Commission for Latin America and the Caribbean.2 0.7 1.4 0.4 0.4 102.9 0.1 0.9 0.2 0.0 0.9 0.9 ECO 1.8 13.0 66.9 0.4 1.6 1.0 0.5 2.3 88.3 14.6 0.4 2.0 0.4 0. Inter-American Development Bank.3 36.7 0.6 1.9 ICF 9.7 Factor conditions locals 1.2 0.1 28.8 Demand factors locals 3.0 0.2 0. WEF.6 TIN 2.0 0.2 1.7 0.6 1.8 14.9 Factors conditions internationals 3.0 96.0 0.8 0.0 1.0 1.7 0.5 1.0 14.5 0.1 SPH 107.0 78.0 0.6 0.0 0.2 0.2 0.8 0.7 8.2 0.9 0.0 98.4 Related and support industries locals 3.0 0.9 48.8 100.7 160.6 0.0 TIS 6.8 0.6 2.7 LFP 71.0 0.9 0.0 0.6 6.9 0.8 IGS 33.5 0.4 4.0 17.0 0.7 ATF 121.8 38.8 3.0 0.5 23.8 0.8 0.3 1.3 3.1 0.7 Structure and rivalry firms locals 1.1 2.0 0.4 1.4 2.8 Demand competitiveness index 100.1 1.2 2.0 0.9 0.9 0.0 0.8 0.8 ATFW 59.1 167.6 GIN 49.7 20.8 0.3 0.8 0.1 6.1 242.0 0.0 0.8 RRD 106.3 79.0 0.0 0.0 0.9 PAR 5.5 38. WB.3 36.0 36.3 26.0 0.7 FPI 119.6 0.2 0.0 Related and support industries internationals 2.0 1.8 0.9 0.0 38.7 Demand competitiveness index 99.5 Structure competitiveness index 72.2 13.9 130.3 1.5 108.1 0.8 0.7 0.6 3.1 1.1 2.7 0.8 1.1 CFD 21. The italic values are the total values of the each country by construct .3 148.0 0.9 0.0 1.3 18. World Bank.0 0.4 0.3 0.9 0.

7 1 89 . Downloaded by University of Newcastle At 21:34 14 January 2017 (PT) International Competitiveness National Competitiveness Ecuador.0 00 0 Peru Related and Support Related and Support Industries Industries 135 countries competitiveness of Competitiveness international National and Figure 1.77 72 10 0.8 .9 . Colombia and Peru Structure and Rivalry Structure and Rivalry Enterprises Enterprises 10 0.8 .7 Demand 87 Demand 1 96 68 Factors Factors 84 Conditions Conditions 9 10 00 .0 0.4 .2 6 3 . for emerging and Peru Ecuador.30 Conditions Conditions .03 9 Colombia .3 62 .7 10 98 53 . 99 00 1 9 0 0 79 . Colombia and Peru Ecuador. 87 0.28 Key Key Ecuador Ecuador 92 .2 84 Colombia 6 . 00 00 0. 0. Colombia . 0 9 87 00 . 84 10 .9 10 Peru 10 0.2 10 0.

imports of goods and services and decreasing import costs. public expenses for education. increasing added value to agriculture. It provides researchers and practitioners an analysis tool for comparing competitive factors of emerging countries from the DD approach without limitations. their . It has been found that in order to improve national competitiveness. the countries compete among them: industries. It has been found that national competitiveness that is built on three constructs. However. 7. Downloaded by University of Newcastle At 21:34 14 January 2017 (PT) This work may be taken into consideration for an immediate and sustainable improvement in order to win competitiveness in the region. Conclusions and implications This research advises decision-makers and provides the appropriate police guidelines for 136 the national competitiveness strategy to improve the quality of life of its residents from: ECU-COL-PER using the DD model as a theoretical frame and the first in its field using 36 competitiveness indexes and the PLS-SEM statistic methodology to assign the weight of competitive indicators when calculating the weight-load competitiveness indexes using inferential multivariate analysis. ECU should improve by: increasing its FDI (inflows). making its firms more competitive abroad and a higher number of manufacturing exports (111 percent higher than ECU). ECU has best values in: R&D expenses. it achieves only 27 percent of COL. conditions and structure: COL has the greatest advantage. In order to increase national competitiveness PER should: increase the number of scientific articles produced (it has similar number of scientists and researchers but its production is minimum in comparison to COL. PER four and COL three factors. increasing the fuel export and increasing the air transportation. for ECU: reducing time for imports. mostly because of its production of published scientific articles and its quantity of scientists in R&D. it is required to care about the following factors. 6. lowest time for importing. PER has an advantage in two of the factors with greater values than ECU-COL. increasing the number of patents applied to its residents.e. in order to improve the level of national competitiveness. decreasing time to export. increase investment in education. as a framework to assist in formulating economic policy at the national and regional level. Firm’s structure and 12. COL should improve by: increasing exports of goods and services. PER should care about: increasing added value to agriculture. i. reducing the export costs. IJOEM one favored factor which is the lowest time for delivering imports. which are reflected in: ECU. and lowest time for starting a business (refer to Table III). reducing costs of starting a new business. four factors. On the other hand. increase investments in R&D. COL needs to improve its competitiveness level by increasing R&D expenses. increasing aerial transport. From these results we assume that in the medium-term ECU returns on benefits are going to show a difference in its favor. Limitations and future works Since the three countries belong to the Andean Region of South America. On the other side. and increasing the number of patents applied to its residents. increasing added value for services. with the lowest cost of export. mobile phones and fixed lines subscribers and greater trade for services. But. COL has to concentrate on improving and strengthening formal and non-formal institutions. COL has best values among them: greater production of scientific articles. In order to increase international competitiveness it has been found that these countries should care about the following factors. and decreasing tariffs. On the other hand. and reduce time to establish businesses. its corruption index. increasing the number of indexed publications. they border each other and even the three countries historically belonged to a single culture: the Incas.1 rivalry is a domain in COL. reducing time for imports. However. and increasing the number of researchers dedicated to R&D.

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