Impact of Competitiveness on Economic Growth: Case Study of WEF Countries

Many scholars emphasize the importance of economic competitiveness in the improvement of economic growth. However, studies that quantitatively analyze the interconnection between different components of competitiveness in one economy and their impact on economic growth are very limited. Therefore, the purpose of this study is to fill the gap in the literature on economic growth and study the effect of competitiveness in different stages of economic development. In this regard, using the data of 81 countries of the World Economic Forum (WEF) in three groups of resource-, efficiency- and innovation-driven countries for years 2008-2017, the relationship between national competitiveness and economic growth is examined through the econometric model of generalized method of Moments (GMM). Our results indicate that the impact of institutions, infrastructure, higher education, business complexity and innovation on economic growth is positive and significant in all three groups of countries. In addition, the impact of labor market efficiency, financial market development and macroeconomic stability has been significant only in inefficiency - and innovation-driven, and the impact of primary education and health had been meaningful only in resource-driven countries. In addition, the effect of the goods market efficiency and market size on economic growth has been significant only in innovation-driven countries and technology-readiness was significant in all but innovation-driven countries. In summary, our estimation results indicate that the impact of competitiveness components on economic growth in different countries varies according to their stage of development.