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How do we measure competitiveness?

Existing national competitiveness indices, while helpful, suffer from certain theoretical and methodological shortcomings. With a disproportionate focus on business-related factors, indices such those introduced by the International Institute Management Development and World Economic Forum emphasize industrial productivity over social outcomes. Government’s role in and contribution to general welfare has been unduly overlooked. As such, a burgeoning line of research has begun to broaden the concept of national competitiveness, by exploring additional dimensions. This developing line of research has also, in recent years, spurred interest in governments’ relationship to different aspects of national competitiveness. In turn, several institutions have begun to develop indicators emphasizing the role of government in driving development and national competitiveness. Prominent examples include the World Bank’s Worldwide Governance Indicators (WGI) and the Quality of Government Institute’s (QGI) (the University of Gothenburg) Quality of Government indicators (QoG). While these two indices represent important steps toward improving scholarly understanding about how government supports competitiveness, they also suffer from deficiencies that represent opportunities to improve on competitiveness studies.

The Government Competitiveness (GC) Index, developed at the Center for Government Competitiveness (CGC) at the Graduate School of Public Administration, Seoul National University, represents a new approach to competitiveness by focusing on broader interpretation of the role of government. After investigating the limited capabilities of existing competitiveness indicators to define and measure levels of GC, the CGC has aimed for a novel approach to conceptualizing and measuring GC. The primary purpose for developing the concept of GC is not to evaluate what a government has achieved during previous years, as existing indicators emphasize, but to provide policy recommendations for increasing its competitiveness in the future.

What are the government roles?

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 certain outcomes. This view suggests that organizations can accomplish their objectives with diverse inputs and with varying internal activities (conversion processes).

Based on the systems theory, the GCG 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
Stage → Input Throughput Output Outcome
Knowledge about the problem (data, explanatory theories, benchmark statistics with other countries) Process of converting knowledge into policy (agenda setting, policy formulation, implementation strategies, evaluation standards) Policy addressing problem (funding, institutional structures, reform) Improvement in problem (data and benchmark statistics)
Public health High rate of lung cancer deaths; research linking smoking with cancer Political/negotiative processes to decide whether a problem exists, which data to use, and how to address the problem Public service announcements to inform public about smoking risks, higher cigarette taxes Lower rate of lung cancer deaths compared to previous years and compared to peer countries
Education Low literacy; research linking poor education with low literacy Political/negotiative processes to decide whether a problem exists, which data to use, and how to address the problem Programs for early childhood education, teacher training programs Higher literacy compared to previous years and compared to peer countries
Traffic congestion Long commute times, congested roads, high pollution levels; examples of transit programs Political/negotiative processes to decide whether a problem existㅜs, which data to use, and how to address the problem Additional subway lines, bus rapid transit, higher gas taxes Shorter commute times, less congested roads, lower pollution levels