Competitiveness between both Developing and Developed Nations - Research Paper Example

Introduction With the progress of globalisation, the overall competitive rivalry between developing nations and developed countries is gaining momentum day after day. Developing nations have the challenge of putting in place dual –faceted strategies. The fall of international barriers has in the past years transformed global economy all over the world. Competitiveness is defined as the concerted drive that enables a nation to compete with other countries in the selling of services and goods. This helps in improving or maintaining the nation’s living standards. (Lasserre, 2003) Technological advancement in the twenty first century has given both small scale and the large scale businesses opportunities to explore global markets. Despite the forces of globalisation, national advantage and locality are among the key factors that determine competitiveness. This paper looks at the evidence from trans-national corporations and specific industries in various nations. Nations like China, Japan, US, UK and Germany. Research shows that global competition has really gone high tech. The competition is very stiff. (Porter, 1998) It is very clear that the factors that determine the competitiveness of nations are quite numerous. When public finances in a nation are mismanaged, and inflation occurs, this highly affects the business environment a great deal. This results in undermining of incentives that are necessary for investment in the business sector. When there is macro-economic stability there results in increase in productivity within industries. The institutional environment is also very essential in influencing the business environment. Other factors include having a quality judicial system within a nation. Training and education within a nation are among the factors that drive competitiveness. Nations that ensure that their labour force is trained and has access to latest technologies and new knowledge are normally very competitive. (Peng, 2006) Just as the factors are numerous, they matter quite differently in different nations. This also depends on the nation’s stage of development. According to the Global Competitiveness Index (GCI), there are various driving factors that influence the competitiveness in a nation. These factors include the following; National advantage Locality Infrastructure Institutions Macro-economy Market efficiency Higher education and training of labour force The world economic forum has over the years measured competitiveness of nations in international environment. The Growth competitiveness index is used to assess the competitiveness of nations. Research reveals that Poland still remains the worst performing nations among European Union nations. It actually ranks forty eight behind Greece that ranks forty seven. Czech Republic ranks twenty nine while Estonia ranks twenty five. Poland has got weaknesses in its labour market that is quite rigid. Research shows that unemployment in this nation. Research reveals that Singapore is the leading nation in relation to competitiveness. Japan takes the seventh place. Taiwan is position thirteen while Hong Kong takes position eleven. All these nations have got efficient and flexible markets, workforce that is well educated and healthy and high quality infrastructure. Japan has been experiencing economic recovery even though it still has got its own challenges that it needs to overcome. China as a nation has been ranked the sixth and this is due to its very low inflation. Its public debt is manageable and it also has got one of the highest savings rates worldwide. Research shows that there are low penetration rates for China in relation to the up to date technologies. Training and education of the labour force in China is better than that in India. (Porter, 1990) This is still considered to be low according to the international standards. According to the Business Competitiveness Index, United States remains to be the leading position in competitiveness. It is very clear that this nation is highly competitive compared to Germany. Research shows that the strength in United States is highly based on the business environment. This nation is known to be highly innovative and it has got good infrastructure. This is in relation to banks and financial sector. National advantage in United States is a factor that has really played a great role in its overall competitiveness. United Kingdom has been ranked among the world’s top ten most competitive nations. Nations are normally judged on how their business climates are conducive in relation to sustaining economic growth therein. United Kingdom is highly praised for having labour markets that are highly flexible. There is low unemployment rate was compared to other nations. Research however reveals that Germany and United Kingdom are highly affected by deficits in the public sector. This has resulted in having increased levels of public indebtedness. (Porter, 1998) China is known to be one of the world’s fastest growing economies. Its global competitiveness has been affected by the over regulated banking sectors. There is low penetration of internet technology and mobile especially outside the urban areas in China. Looking at it on the positive side, China’s growth rates have been influenced with low inflation rates as earlier on illustrated. This has resulted in this nation having high savings rates all over the world. The levels of debt within this nation are manageable and this has influenced its ranking on the pillar of macro-economy. Research shows that the structural weaknesses in this nation still need to be addressed. This includes their banking sector that is highly state controlled. Another factor in China is that there are low levels of financial intermediation. In fact the state has in the past had to intervene so that there is mitigation of adverse effects of the non performing loan portfolio that is so large. (Zhan, 1999) Research also shows that this nation has got low penetration rates in relation to computers and internet. Very few individuals in this nation have personal computers. This is highly affecting their growth in the business sector. There is also a backdrop in the entire quality of the environment in institutions. This is in relation to both public and private institutions therein. United States is known to have taken its position in line with global competitiveness ahead of Germany. The reason is that it has national advantage over the other nations. Its locality has also played a big role in its success in relation to competitiveness. Research shows that there is greater efficiency that is quite evident in United States. There are more or rather increased technological innovations. The following is the ranking shows the global competitiveness of nations. Competitiveness in among nations is shown below, starting with United States, Germany, United Kingdom, Japan and China. United States Germany China Japan United Kingdom Considering the evidence from trans-national corporations and industries, it is very clear that locality and national advantage. A nation like Germany and United States has national advantage and this has greatly affected their competitiveness. (Porter, 2002) Conclusion Competitiveness between both developing and developed nations has gained momentum since the nineteenth century. Competitiveness is a concerted drive that enables nations to compete with each other. This is in line with products that are locally produced. Research reveals that United States ranks first among other nations in relation to its overall competitiveness. Japan ranks position seven worlds wide, in relation to its competitiveness. China is known to take position six. China’s growth rates have been influenced with low inflation rates. This has resulted in this nation having high savings rates all over the world. National advantage is among the factors that influence a nation’s competitiveness. Factors like training and education of labour force, infrastructure, market efficiency, macro-economy and financial institutions also play a very big role. Reference: Chapter in Global Competitiveness Report 2005-06; World Economic Forum Myths and Realities of Governance and Corruption Lasserre, P. (2003): Global Strategic Management; New York; Palgrave Macmillan O’Shaughnessy, n. (1997): The Idea of Competitive Advantage and the Ideas of Michael Porter, Strategic Change; Vol.6 Peng, M. (2006): Global Strategy; South-Western Porter, M. (1990): The Competitive Advantage of Nations; Harvard Business Review Porter, M. (1998): Clusters and the New Economics of Competition; Harvard Business Review Porter, M. (1998): The Competitive Advantage of Nations: with a new introduction, Macmillan Business Porter, M. (2001): Strategy and the Internet; Harvard Business Review Porter, M. (2002): Governance Crossroads; Chapter in Global Competitiveness Report World Economic Forum; Oxford University Press Zhan, S. (1999): Choosing a Market Entry Strategy; World trade Read More