The competitiveness versus the wealth of a country

TL;DR

This paper investigates the relationship between a country's economic growth, competitiveness, and corruption perceptions, revealing exponential distributions in rank changes and proposing a new measure of relative competitiveness that correlates with economic resilience.

Contribution

It introduces the concept of relative competitiveness based on GCI and demonstrates its effectiveness in explaining economic resilience during downturns.

Findings

The probability of a country's GDP rank improving follows an exponential distribution.

Changes in CPI and GCI ranks also follow exponential distributions with similar decay constants.

More competitive countries experienced smaller GDP declines during the 2008-2011 economic downturn.

Abstract

Politicians world-wide frequently promise a better life for their citizens. We find that the probability that a country will increase its {\it per capita} GDP ({\it gdp}) rank within a decade follows an exponential distribution with decay constant $\lambda = 0.12$. We use the Corruption Perceptions Index (CPI) and the Global Competitiveness Index (GCI) and find that the distribution of change in CPI (GCI) rank follows exponential functions with approximately the same exponent as $\lambda$, suggesting that the dynamics of {\it gdp}, CPI, and GCI may share the same origin. Using the GCI, we develop a new measure, which we call relative competitiveness, to evaluate an economy's competitiveness relative to its {\it gdp}. For all European and EU countries during the 2008-2011 economic downturn we find that the drop in {\it gdp} in more competitive countries relative to {\it gdp} was substantially smaller than in relatively less competitive countries, which is valuable information for policymakers.