The Global Sustainable Competitiveness Index 2019

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Sustainable CompetitiveTable ofContents7 From Evaluating to Defining SustainableCompetitivenessThe GSCI evaluates the competitiveness of nation-economies. But what actuallyis competitiveness?Policy and investment decision in all pillars of competitiveness are inter-actingand affect the competitiveness of a country:• The availability and state of natural capital does not affect short-termeconomic development or recovery – unless the capital in question is oilor other commodities in demand on the global market. Exploitation ofnatural resources (natural capital) can bring short-term economicbenefits, but is often accompanied by diminishing the basis of futuredevelopment (e.g. in the case of forest exploitation)• Resource intensity is cost. The higher the resource efficiency, the higherthe competitiveness of an economy. However, resource intensity is notdirectly linked to short-term economic development. While resourceusage is increasing with initial development, efficiency tends to increasewith higher development and investments. However, economic decline(as has occurred in Greece since 2010), leads to lower resourceconsumption.• Social capital is negatively affected by economic decline. A decliningeconomy leads to fewer financial resources available for social capitalaspects (health, community development, integration, …), and leads tohigher criminality as well as individual despair – all of which negativelyaffects the competitiveness of a nation-economy on the long term.• There seems to be a fairly direct connection of Intellectual capitalavailability and positive/negative economic development. All countriesthat have cut investments (including, but not restricted to, innovation,R&D and education), have seen a slower recovery or even furtherdecline since the financial crisis – and vice versa. While it may looksensible at first glance to cut expenditure to reduce deficits, cuts do notwork because they also cut the required base to kick-start growth.Cutting investments is unsustainable competitive, i.e. not sustainablecompetitive. Sustainable competitiveness means: analysing the likelyoutcome of measurements before they are implemented – i.e.calculating not only the cuts, but also the cost of cuts. A majority of policymakers these days seem to be blind to the long-term cost of cuts andbenefits of investments. They do not look ahead.• The analysis of individual indicators suggests a fairly straightforwardconnection between the Governance framework provided to theeconomy: countries who cut investments (infrastructure, generalinvestments), countries with a large (uncontrolled) domestic financialinvestment markets, and a low industrial base have all declined moreand recovered slower than countries with higher investments, smallerdomestic financial markets and a better industrial base. It also seemsstraightforward that a steep increase of financial market size in short termseems to be the indication of an imminent burst of a bubble.26
Sustainable CompetitiveTable ofContentsIn a sustainable efficient entity, powers are balanced. Imbalance in powerbetween individuals, groups, and entities always lead to lower efficiency overtime. Low efficiency means higher overall cost, less benefits. What might appearcompetitive now (e.g. the exploitation of natural non-renewable resources), butis not into the future, is not competitive. Competitiveness that is not sustainable isnot competitive.In a sustainable entity, the economy does not run against nature and/orcommunities/society. All dimensions of an entity are all running in parallel in winwininteractions. The fundamentals hat make an economy, a society, and thenatural environment in which both of the above operate/live in, are balancedinteracting:The Sustainable Competitiveness Framework:Sustainable competitiveness only requires two fundamentals as its base:• Equal opportunities, everywhere• Decision-making based on science and sustainable cost-benefit analysisthat lead to low-cost, high-benefit solutions (LCHBs)27
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The Global Sustainable Competitiveness Index 2019

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