Build Competitive Advantages

World Economic Forum is headquartered in Geneva, Switzerland and releases a global competitiveness report yearly since 1979. Global competitiveness report ranks the nations' competitiveness index according to the foundation of countries. The evaluation of index including institutions, infrastructure and macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication and innovation. These 12 factors make a huge contribution to evaluate the competitiveness. On September 7, 2011, the World Economic Forum, (hereinafter referred to as the WEF) issued the global competitiveness report 2011-2012.

This year's report shows that Switzerland still ranks the first as same as last year, Singapore has replaced Sweden's second position. Western and Northern European countries take 6 places in top 10 of the report. Otherwise, The United States continues the decline began last year, falling 2 places to the 4th position. Ranking results show that the competitiveness of developed economies has remained stagnant in the past seven years, but the competitiveness of many emerging market is improving. It reflects that economic vitality is transferred to the emerging economies from the developed economies; the disparity emerging economies and developed economies is narrowing. Although many Asian countries have a strong performance in the first 30 position, however, Asian developing countries' competitiveness tend to be slow down the growth of economy, including Indonesia, India and Vietnam are standstill in recent years. The reports also points out, as people have to worry about, the essential reform and investment for their growth momentum are not in position in time.

This assignment is aimed to identify the most significant determinants of competitiveness of the present knowledge based-economy, analyze policy dynamics of one of the most competitive countries and contrast with one of the least competitive countries in the world by applying and referencing relevant economic theories. Moreover, the assignment will contain: 1) identify specific competitive skills that would enhance people's performance as future employees; 2) propose a potential solutions to the problems of one of the least competitive countries in the world.

Identification of the 12 pillars of competitiveness

As have mentioned, the 12 pillars are the main factors to measure the competitiveness of a country. They also can be divided as 3 parts: basic requirements, efficiency enhancers and innovation and sophistication. Among them, basic requirements refer to institutions, infrastructure, macroeconomic environment and health and primary education; the factors of efficiency enhancers are made of by higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, and market size; then, the innovation and sophistication part includes business sophistication and innovation (Chen, 2011). All of these components affect a country's competitiveness.

Here are some detail analyses of these factors:

1) Institutions environment is determined by the legal and administrative framework and influenced by the interactions between individuals, firms and government, generally play a key role to create wealthy. Government policy, regulate and control towards the market and freedoms directly, which is especially apparent in the financial crisis few years ago. Good institutions will try best to avoid corruption, overregulation and red tape; it also operates honestly to maintain investors and consumers' confidence.

2) Infrastructure refers to the material engineering facilities which provide public service to social production and residents' lives; it is a public service system that is used to guarantee the national or regional social activities running well. It involves roads, railways, airports, communications, waterpower etc. Developed and advanced require strong strength of economy, but at the same time, it usually reduces the bad effects of distance between countries or regions and makes people's daily life more convenient.

3) Macroeconomic environment stability is important for business that is the reason why it is important for the overall competitiveness of a country as well. Obviously, it cannot stand alone to increase the productivity of a nation, but it will be always concerned by government and firms. The factors of macroeconomic environment are reflected in the following: economic development stage and level, economic and market system, income level, budget scale and fiscal balance, trade and balance of international payments. It is related to institutions closely mentioned above.

4) Healthy workforce is crucial to the competitiveness and productivity of a country. Workers who have received basic or primary education can solve simple problems independently and accept more advanced tasks. From a long term perspective, to build a healthy and primary educated system for workers is extremely necessary.

5) High quality of higher education and training will bring the competitiveness of a country to a new level. Unfortunately, it is awful neglected in many economies.

6) Efficient goods market in countries are well positioned to produce the right mix products and services, that are sold or provided on a specific condition which could meet the supply and demand conditions, to ensure these good can be mostly effective traded in the economy. According to the different culture and history, buyers and customers are often affected by subjective factors, such as orientation and sophistication. However, this could become more competitive to create new advantages in the economy.

7）To ensure the of workers if they are allocated to the most effective workplace, the efficiency and flexibility of the market should be considered firstly. In other words, the labor market refers to that both the employers and employees in the labor market could react rapidly to match the changes in labor market environment. Efficient labor markets must be required to build a clear relationship between worker incentives and their efforts, meanwhile, a good efficient labor market is supposed to provide gender equity.

8) An efficiency financial market will distribute resources reasonably. It delivers resources to those entrepreneurial or investment projects with the highest expected rates of return instead of government or politic related projects. The investment of business is also critical to productivity. Therefore, in order to fulfill the available capital (loans from a good reputation bank,