An empirical study of competitiveness and international economic growth: The case study of the EU

Abstract

The paper's general topic considers national competitiveness, a factor suppressing the competitiveness and economic growth of the EU member states, including the UK. The paper's main objective is to investigate possible causal links between economic growth and competitiveness with an exclusive focus on factors which disadvantage national competitiveness. As a primary source of data, results compiled within the Global competitiveness report (GCR 2017-2018) and provided by the World economic forum (WEF) have been used. The national competitiveness of each member state was expressed by its unique Global competitiveness index (GCI) elaborated according to the GCR methodology. Part of the report was an exclusive business opinion survey about general business and entrepreneurial conditions in each state. Firstly, the probability distribution of each random variable was established. As most problematic factors were highlighted taxes and tax regulations, inefficient state bureaucracy and restrictive labor conditions. Subsequently, the relations between the national competitiveness (GCI), factor score, and economic growth were analyzed. The results point to a relatively weak link between the GCI vs factor score and GCI vs economic growth, which was statistically insignificant. However, there was a moderately strong negative correlation between the factor score and economic growth, suggesting a higher factor score means lower economic growth and vice versa. There is a number of EU member states, including 'old' member states afflicted by slow economic growth. Also, these states have a higher factor score. Conversely, there are states, mostly 'new' ones, which are less developed, however, were able to achieve higher economic growth rates. In turn, their factor score is lower. Based on the results, the possible causal relationship between the economic growth and factors suppressing the business cannot be ruled out. The position of each EU member state is mainly a consequence of its own social-economic policy framework design and implementation.