Global Competitiveness:part 3

Third pillar: Macroeconomic environment

 The stability of the macroeconomic environment is

important for business and, therefore, is important for

the overall competitiveness of a country.

Although it is certainly true that macroeconomic stability alone

cannot increase the productivity of a nation, it is also

recognized that macroeconomic disarray harms the

economy.

The government cannot provide services

efficiently if it has to make high-interest payments on

its past debts.

 Running fiscal deficits limits the government’s

future ability to react to business cycles.

Firms cannot operate efficiently when inflation rates are out of

hand.

 In sum, the economy cannot grow in a sustainable

manner unless the macroeconomic environment is stable.

This issue has captured the attention of the public most

recently through discussions on exit strategies to wind

down deficit spending, and in the context of the recent

buildup of sovereign debt.

It is important to note that this pillar evaluates the

stability of the macroeconomic environment, so it does

not directly take into account the way in which public

accounts are managed by the government. This qualitative

dimension is captured in the institutions pillar

described above.

Fourth pillar: Health and primary education

A healthy workforce is vital to a country’s competitiveness

and productivity.

Workers who are ill cannot function

to their potential and will be less productive. Poor health

leads to significant costs to business, as sick workers are

often absent or operate at lower levels of efficiency.

Investment in the provision of health services is thus critical

for clear economic,

 as well as moral, considerationsIn addition to health, this pillar takes into account

the quantity and quality of basic education received by

the population, which is increasingly important in

today’s economy. 

Basic education increases the efficiency

of each individual worker.

 Moreover, workers who have

received little formal education can carry out only simple

manual work and find it much more difficult to

adapt to more advanced production processes and techniques.

Lack of basic education can therefore become a

constraint on business development, with firms finding

it difficult to move up the value chain by producing

more sophisticated or value-intensive products.

For the longer term, it will be essential to avoid

significant reductions in resource allocation to these

critical areas,

 in spite of the fact that government budgets

will need to be cut to reduce public debt brought

about by the present stimulus spending.

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