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Concepts and indices guiding cross-national analyses should be informed by a combination of normative/philosophical theories and positive/empirical approaches. Despite the need for constructing comprehensive and sophisticated indicators to measure the highly complex dimensions inherent to government systems, the previously mentioned institutes have only focused on an empirical approach. To overcome this limitation, the Center establishes GC indicators based on a broad framework borrowing from three foundational theories.

+Easton’s systems theory

The concept of GC adopts Easton’s systems theory as a guiding theoretical framework. Systems theory assumes that a system, in a dynamic relationship with its environment, absorbs various inputs, transforms them in certain ways, generates outputs, and achieves outcomes. This view suggests that organizations can accomplish their objectives with diverse inputs and with varying internal activities (conversion processes). Using this theory, the Center categorizes government roles into four sequential levels: input, throughput, output, and outcome. Most national competitiveness indices measure outputs as the main contributors to a country’s competitiveness, but this method under-evaluates the competitive potential of countries with high information processing capacity or public management capability. In contrast, the GC Index first analyzes competitiveness through each of the four levels – input, throughput (public management capacity), output, and outcome. The index then aggregates results from each level to produce an overall competitiveness score. This approach generates a variety of policy implications at each systemic level. The following are some representative indicators for each level: 

Inputs: pupil-teacher ratio of primary schools, public spending, subsidies Throughput: competence of public officials, anti-corruption policies, transparency, efficient use of assets, fiscal policy, quality of public administration Output: unemployment rate, literacy rate, CO2 emissions Outcomes: life expectancy, suicide rate, e-participation rate

+Maslow’s hierarchical needs theory

The Center also employs Maslow’s (1954) hierarchical needs theory to better understand administrative demand. The “national competitiveness” approach interprets competitiveness as the establishment of a good environment for business. Contrasting this perspective, GC views a country as competitive only when the government fulfills the needs of citizens. The nation’s needs represent administrative demand, and thus GC begins with a thorough understanding of citizens’ needs and how they are served through effective policy delivery and implementation. As Maslow’s theory suggests, the most basic level of needs must be fulfilled first, and then each next level can be addressed step by step. In the world’s poorest nations, where a large population suffers from starvation, basic physiological needs are urgent. As the nation’s standard of living is raised through economic development, citizens’ dominant needs evolve from basic to more

+Fukuyama’s state function

If the dominant citizen need in a certain country is identified, the next question concerns whether and how the government should address the issue. There is no consensus perspective about the appropriate function of government or the scope of the public domain, due in part to the variety of ideological perspectives about state and society. To ground the analysis of government roles in a robust theoretical orientation, the Center applies Fukuyama’s state function.

Fukuyama divides a nation’s functions into three stages: minimal, intermediate, and activist. The fulfilment of minimal functions includes the provision of national defense, disaster management, and property rights protection. Environment and education are typical intermediate functions, while industrial polity and distributional issues are activist functions. Fukuyama’s framework can be partially overlaid with Maslow’s hierarchical needs theory. Minimal functions concern physiological and safety needs. After the minimal function is fulfilled, the next stage is to address the intermediate function. Education and social welfare functions are partially related to “social needs” and “self-actualization needs” of citizens. Ho and Im (2012) argue that administrative demand for more aggressive government intervention will emerge after intermediate functions are fulfilled. As such, the role of government does not end at higher GDP. Government should actively intervene to fulfill a nation’s social needs; at this point, the government is truly competitive.
  • Minimal Functions Providing pure public goods Defense, law, and order Property rights Macroeconomic management Public health Improving Equity Protecting the poor
  • Intermediate Functions Addressing externalities Education, environment Regulating Monopoly Overcoming imperfect education Insurance, financial regulation Social Insurance
  • Activist Functions Industrial Policy Wealth redistribution