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Importance of context
Existing competitiveness indices are developed from experiences in developed countries. However, it is doubtful that these indices are appropriate for discussing GC in developing or under-developed countries, as previously discussed. For example, developed countries possess high amounts of human capital, as well as other forms of capital accumulated in the private sector; the combination of these tacitly aids government in carrying out its tasks. In contrast, developing and underdeveloped countries are less likely to have amassed such resources. Strategies to enhance competitiveness for developed nations are therefore different from those used to stimulate competitiveness for developing nations. Thus, extant competitiveness indicators do not provide concrete and practical policy remedies for the leaders of developing and less-developed nations. It is necessary to develop indicators that account for the contextual idiosyncrasies of government competitiveness.

The concept of national competitiveness typically focuses only on economic outcomes such as business-friendly conditions and economic growth.Therefore, it is less likely to include welfare-related issues such as education and health. In contrast, government competitiveness more closely considers the role of government in shaping socio-economic factors. Similarly, some scholars use the concept of government capacity in a broader sense. In the West, the term “governance” represents a certain type of government activity that incorporates citizens into both the policy making process and service delivery. In contrast, the Center’s concept of government competitiveness focuses specifically on the efforts of formal government rather than its capacities.

The standard economic assumption of “everything being equal” (ceteris paribus) underlies many competitiveness indices. However, for measuring government activity this assumption is problematic; each country has a unique history and a politico-administrative system. GC therefore aims to consider contextual uniqueness in attempt to compare the “un-comparable.” This necessarily broadens the scope of GC research, but only through such detailed comparisons can practical lessons can be identified. The validity and reliability of comparison can and should be debated, in an effort to constantly improve the index. The Center begins with the more modest step of categorizing countries into groups based on a variety of comparative dimensions. The next step is to continually improve the methodology of comparison as the Center’s research progresses.

Another dimension relevant to country context is time, without which a government’s competitiveness cannot be accurately evaluated. Time is important for several reasons. First, a government’s scope of intervention and overall culture is the product of historical path dependency; these aspects are included in the contextual dimensions of the comparison. Second, understanding a government’s gradual evolution and dynamic changes in its behavior over time is critical to evaluating competitiveness; a longitudinal analysis reveals more than a snapshot. Third, the time dimension is necessary for evaluating both the short and long-term impacts of policy, which in turn represent important indicators of competitiveness. Finally, a highly competitive government should consider the long-term, requiring interventions and their impacts to be economically, environmentally, and socially sustainable. Thus, government competitiveness is oriented more towards the future than the past.

The principal goal of ranking competitiveness is not to evaluate what a government has achieved in the past, but to identify and justify policy recommendations for increasing competitiveness in the future. This approach assumes that government should be pragmatic and judicious in developing strategies under resource constraints, while at the same time responsibly fulfilling its role within the greater national society. Developing countries often struggle with more resource and governance constraints than do developed countries. As such, the Center gives rigorous consideration to the unique circumstances of developing countries, an approach lacking in most other competitiveness rankings. The Center does not assume that there is a uniformly applicable path to economic development. Rather, its advice contextualizes representative examples of rapid development to the particular challenges of each case.