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  • International Journal of Basic & Applied Sciences IJBAS-IJENS Vol: 12 No: 02 31

    123802-9090 IJBAS-IJENS April 2012 IJENS I J E N S

    Defining and Measuring Competitiveness: A Comparative Analysis of Turkey With 11 Potential Rivals

    Neslihan Arslan* Hseyin Tatldil**

    ABSTRACT

    In this paper, the concept of the competitiveness is tried to be disclosed by defining national competitiveness and measurement methods of competitiveness. However, there are large number of methods measuring competitiveness, the most leading and attractive ones are WEFs Global Competitiveness Report, IMDs World Competitiveness Yearbook, and IFCs Business Competitiveness - Ease of Doing Business Report. The purpose of this paper is to describe the national competitiveness and to examine the variables and the indicators used for measuring the competition power. In addition, the paper aims at comparing Turkey with the countries which are regarded as the rivals or the potential rivals of Turkey according to the experts of World Bank, IMF, OECD and so on. In this regard, in this paper, a comparison will be made among BRIC (Brazil, Russia, India and China) +KM (South Korea, Malaysia) and CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) countries. Moreover, a general evaluation and discussion will be made based on the mentioned indices as the conclusion.

    JEL Classification: F14, F15

    Keywords: national competitiveness, measurement of competitiveness, competitiveness indices, multidimensional scaling

    *Corresponding Author: Yldrm Beyazt University, Department of Economics, narslan@ybu.edu.tr **Hacettepe University, Department of Statistics, tatlidil@hacettepe.edu.tr

  • International Journal of Basic & Applied Sciences IJBAS-IJENS Vol: 12 No: 02 32

    123802-9090 IJBAS-IJENS April 2012 IJENS I J E N S

    1. Introduction

    In the globalized world, the concept of the competitiveness has gained and has been gaining an unprecedented importance in the recent years. After 1970s, there occurred an increase in foreign direct investments of the countries causing a change in the business segment of the firms. Before 1970s, the activities of the firms were concentrated on the manufacturing sector with the primary products; however, during and after 1970s, the activities of the firm gave its place to technology intensive manufacturing and services sector. Therefore, 1970s can be regarded as the turning point in the view of globalization. Furthermore, during 1980s, many developing countries started to be more liberal in their economic policies. Privatization, increasing market economy, financial liberalization and the attempts of the countries for the articulation to the world economy existed in these countries started to be in great demand. Then, developing countries began to be more connected to each other which brought an increasing competition in the world. Owing to these changes observed in the world economy, firms in the developed and developing countries became more efficient and they became as a serious rival at the international markets. All these developments and changes gave rise to the increased volume of trade in the world and paved the way for accelerating competitiveness and prevailing globalization. In this regard, the concept of international competition power gained importance in the world. This implies that in general, international competition power is explained as the share of trade volume in the world trade that a country owns.

    In the matter of competition power or competitiveness of a country, competitiveness is defined as "the ability of a country to produce goods and services that meet the test of the international markets and simultaneously to maintain and expand the real income and also rise the welfare level of its citizens" (Haque, 1995) [1]. However; the concept of competition power shouldn't be totally explained by only the ability of a country's productivity, it should also be explained by the firm level competition power and the industrial level competition power.

    The purpose of this paper is to disclose the concept of the competition power of a country, to examine the variables and the indicators used for measuring the competition power, to compare the scores obtained from the indicators used for measuring competitiveness and to clarify the competitiveness of the countries which are revealed as the rivals of Turkey or the countries which are seen as the potential rivals for Turkey. In this regard, the competition power of 11 countries (Brazil, China, Colombia, Egypt, India, Indonesia, Malaysia, South Korea, South Africa, Russia and Vietnam) will be compared with Turkey in line with this purpose.

    This paper consists of four sections; after the introduction section, in the second section literature search will be given in chronological order. In the third section, competition scores and the rankings of 11 countries according to the indices-related with competitiveness prepared by 3 institutions: World Economic Forum (WEF), International Institute for Management Development (IMD) and International Finance Corporation will be analyzed. Then, with regards to these scores and rankings, general situation for competitiveness of Turkey will be compared with that of mentioned countries. Moreover, which one of these indices is more reliable and when is more reliable will be elucidated by obtaining a correlation between these scores and rankings of three indices. In the fourth and final section, a general evaluation will be made for each country and the comparison of these countries with Turkey will be interpreted according to the rankings and score values of these three indices prepared by the mentioned institutions.

  • International Journal of Basic & Applied Sciences IJBAS-IJENS Vol: 12 No: 02 33

    123802-9090 IJBAS-IJENS April 2012 IJENS I J E N S

    2. Literature Review

    In his book International Productivity and Competitiveness, Bert G. Hickman (1992) defines international competitiveness as the ability to sustain, in a global economy, an acceptable growth in the real standard of living of the population with an acceptably fair distribution, while efficiently providing employment for substantially all who can and wish to work and doing so without reducing the growth potential in the standards of living of future generations. Hickman primarily focuses on the determinants of productivity growth while explaining the competitiveness on an international scale. The chapters of this book provide information about the concepts and measures of productivity and competitiveness and discuss the price and output conversion in international comparisons in the global perspective. The writer associates the international competitiveness highly with the growing productivity of a country depending on four criteria: the first one is the pace of productivity growth, the second one is past and present trade policies, the third criterion is the different pattern of technological change followed by a different economic system and special growth strategy, the fourth and the final criterion is particular characteristics of the countries, such as natural endowments, geographical location and their history (Hickman, 1992) [2].

    In the article of Measuring Competitiveness of National Economies with Emphasis on Slovenia Stanovnik & Kovai (2000), focuses on Slovenia when explaining the international competitiveness and the measurements of competitiveness of the countries. In this paper, international competitiveness is defined with respect to the definitions given by IMD and OECD. In line with the definition of IMD, competitiveness is defined as to create added value and thus increase national wealth by managing assets and processes, attractiveness and aggressiveness, globality and proximity and by integrating these relationships into an economic and social model, whereas OECD defines international competitiveness as at which level a country can, under free and fair market conditions, produce goods and services which meet the test of international markets while simultaneously maintaining and expanding the real incomes of its people over the long term. In addition to defining international competitiveness, this paper explains the methodological approaches to the measurement of competitiveness. With these approaches, the rankings of the competitiveness are also given with the focus on Slovenia in this paper (Stanovnik & Kovai, 2000) [3].

    In his book called Creating an Internationally Competitive Economy, Harry Bloch and Peter Kenyon (2001), contribute to answering the questions of What does international competitiveness mean? and What can countries do to achieve international competitiveness?.The main focus of this book is not only on the term of competitiveness which is generally reflected as the higher exports and higher imports, but on the potential measures of competitiveness as well. In this regard, potential measures of competitiveness are derived from approaches in the scope of economic analyses. In the second chapter of this book, international competitiveness is defined as the ability of a country to realize central economic policy goals, especially growth in income and employment, without running into balance of payments difficulties and the approaches to define the alternative measures are given in this chapter. In the subseq