16/11/2005 3:24:29 pm
Does Competitiveness Not Lead to Growth? The Global Competitiveness Index from World Economic Forum is currently being used in a number of countries by the governments as an argument against reform: If we are already very competitive, why do we need to change things? Not least is this the case in Sweden, which has again ended up with a high total score in the Index.

I have previously pointed out that there seems to be a difference between the map and reality. Countries that are competitive should, for one thing, reveive more investments than others. But Sweden was last year one of only 12 countries in the world that had a net outflow of investments, according to UNCTAD. Are you then an extremely competitive country? No, say the investors, yes say the theorists behind the Index.

Another aspect is that a competitive country should have a high economic growth. Currently, 15 EU countries have a higher economic growth than Sweden, according to Eurostat. But a colleague of mine took a more systematic look at the Competitiveness Index and growth. He made a regression of 70 countries where the position in the index in 2000 was compared to the average growth 2000-2004. He found - as can be seen below - that there is no connection at all between a high position in the index and growth. Again: is reality or is the Index correct? Is the map or reality correct?