FAQ


  I. Definition of Competitiveness

1. What is the competitive advantage for a country?

Despite numerous attempts to define the competitiveness of a country, there is not one concrete definition that would satisfy all parties. A number of definitions provided by institutions and various international bodies have evolved over time. However, the commonly used definition is provided by the World Economic Forum stating that competitiveness of a country is determined by, “the availability of institutions and economic policies, which allow the achievement of economic growth at high rates in the long term, through improved productivity at a faster rate than competitors, and then enable the state to compete on the international level, as well as ensuring the improvement of living of citizens”.

2. When did studying competitiveness on the national level become the center of interest?

Economists became interested in the broad concept of competitiveness of a country since the early eighties of last century. This period was highlighted by the growing trade deficit of the United States of America, and growing foreign debts, as well as the intensification of foreign goods in the U.S. market. This interest intensified further during the subsequent decades due to the rising trends of liberalization of many economies, and the establishment of economic blocs facilitating the integration in the global economy. In addition, the improvements in the technological sphere made information, communication and transport easier and available and thus creating a global environment of strong and intense competition.
Michael Porter first presented the theoretical framework of the concept of a competitive state in his book “The Competitive Advantage of Nations” in 1990. In his book he stated that the concept of competitiveness is mainly based on productivity at the national level, which is the main driver for competitiveness and growth in the long term.

3. Does the concept of competitiveness at the state level differ from the concept of competitiveness at the enterprise level?

The concept of competitiveness of the state is more complicated as it focuses on all the factors, at the national level, affecting the productivity of all production elements of the state. Competitiveness on the enterprise level is determined however by a company’s ability to achieve steady profit, by providing a different product or producing at a relatively low cost, or both, as well as its ability to increase its share in the global market.

 
  A Better Egyptian for A Better Egypt

4. What is the difference between the concept of competitiveness and competition? Do they have the same meaning?

Competitiveness is different from competition. Competitiveness is linked to the ability of the enterprise or the state to achieve high growth rates through improved productivity that will be reflected in improvements in the standard of living of citizens. Competition on the other hand is about reducing or preventing monopolistic practices, allowing all enterprises and all countries to participate freely in the different markets, according to the same set rules. In order to ensure competition in the markets, many countries, including Egypt (Law No. 3/2005), issued laws to protect competition and prevent monopolistic practices.
Nevertheless there is a strong correlation between both concepts because enhancing competition is a necessary condition to support and improve the competitiveness of companies and countries. Improving the competitiveness of a country or a company would enhance their capacity to compete in different markets.

5. Popularized among the public as well as the economists is the concept of comparative advantage of the nation. Is it the same as the competitiveness of the state? What is the difference between both concepts?

The concept of comparative advantage is highly associated with the concept of factor abundance. For example, Egypt has a relatively abundant labor compared to other factors of production, hence it engages in the production of labor-intensive goods with a relatively low cost of production. The economic theory asserts that every state should produce and export commodities in which it has a competitive advantage. Nevertheless, the concept of competitiveness is a broader and more inclusive one. It is based not only on what a state owns as factors of production, but also focuses on the model of the institutions and policies regulating the state. Institutions and policies have a crucial role in determining whether the state will lose its competitive advantage, or will gain and benefit from its competitive advantage by improving its productivity levels compared to other nations, thereby enhancing the standard of living of citizens.

6. Is there a relationship between improving the competitiveness of the nation, job creation and enhancing the standard of living of citizens?

Improvements in the competitiveness of an economy – according to the above definition – is a mere reflection of improved productivity at the national level in comparison to other countries. Hence, this will be translated into higher rates of economic growth that which ensure, in turn, the availability of more productive jobs and improved standards of living citizens.


  II. Determinants of Competitiveness and Measurement Indicators

7. What are the different elements that determine the competitiveness of the state?

According to the Global Competitiveness Index issued by the World Economic Forum annually, elements determining the competitiveness of a country can be limited to twelve components. They are as follows:

a. State institutions and their efficiency.

b. Availability of infrastructure and its efficiency.

c. Macroeconomic policies.

d. Availability of health services and primary education and the quality of services provided.

e. Availability of higher education, training and their quality

f. The efficiency of markets and the level of the competition.

g. The efficiency of the labor market.

h. Financial market development.

i. State ability to deal with modern technology.

j. Size of the market. Market size affects productivity, since large markets allow firms to exploit economies of scale and hence reduce the cost of production.

k. Business sophistication and the efficiency of markets in terms of availability of a network of supporting industries or activities facilitating business and thus reducing production costs.

l. Innovation, and the ability of the state to make it a main determinant of competitiveness.

8. What is the Global Competitiveness Index?

Every year since 2004, the World Economic Forum has issued the Global Competitiveness Index (GCI). The GCI is a composite index based on measuring the competitiveness of 142 countries. The objective is to evaluate the performance of nations in the twelve above-mentioned pillars which represent the determinants of the competitiveness for countries. The index itself includes about 116 sub-indices. According to the latest report issued in 2012, the best performing economies are Switzerland, Singapore, Sweden, Finland, and United States of America. The worst performers are Chad, Haiti, Burundi, Angola and Yemen.
For more details on this index kindly refer to www.weforum.org

9. Are there other indicators to measure the competitiveness of nations?

There are many indicators, although the Global Competitiveness Index is the most comprehensive and widely reported one. There are many indices measuring the competitiveness of countries in
various sectors, such tourism sector, manufacturing sector, and the IT industry. In addition, other indices have the objective of measuring the competitiveness of countries with regard to knowledge and education and preservation of the climate and environment. Furthermore, developed as well as developing countries have set up indices to measure competitiveness in different areas at the provincial level, Egypt is trying to set up a Governorates Competitiveness Index.

10. Are there international reports specialized in the study and measurement of competitiveness? And what are the most important of these reports?

There are many international reports issued studying and measuring competitiveness and the most important of these reports is the Global Competitiveness Report which is an annual report by the World Economic Forum (WEF). In addition, the WEF issues various reports on regional competitiveness such as Africa, Latin America, Europe and the Arab Countries (Arab World Competitiveness Report). There are also other reports issued by the International Institute for Management Development, and the Organization for Economic Cooperation and Development (OECD). It is useful in this context also to refer to the Doing Business Report (DBR), which is published annually by the World Bank to assess a country’s ability to provide a friendly business environment – compared to other countries – in a way that supports competitiveness.

 
  III. The Egyptian National Competitiveness Council (ENCC): Vision, Mission and Goals

11. What is the Egyptian National Competitiveness Council?

The Egyptian National Competitiveness Council (ENCC) is an independent policy advisory body established through the efforts of several Egyptian businessmen and academia. It is the first non-governmental organization to focus primarily on the issue of competitiveness in Egypt and the Middle East. ENCC issued its first report in the summer of 2004. It became registered as a NGO on January 9, 2005 under Law No. 84/2002.
Since its establishment, ENCC has addressed the issues of inclusive and balanced growth, social justice and equal opportunities, especially in the sixth and seventh report.

* We combine research and national policy advocacy to effect a significant change in the welfare of all Egyptians.

* We have alliances with national and international organizations to better serve and enhance Egypt’s competitiveness.

* Our agenda is Egypt’s agenda and our concern is the Egyptian citizen.

12. Are there any competitiveness councils in the region?

There are a number of councils in the region, notably in the United Arab Emirates, the Kingdom of Bahrain and Saudi Arabia. They are mostly government bodies.

13. What is the vision of ENCC? What is its message?

ENCC will become a key instrument in changing government strategies and policies to increase Egypt’s global competitiveness leading to high inclusive growth and sustainable development that will improve the welfare of all Egyptians.
ENCC will achieve its vision by being an efficient and effective platform that brings together civil society, government, political groups, business, and academia; in order to raise awareness and advocate policies that enhance competitiveness and inclusive growth.

14. What are the strategic objectives that ENCC is working to achieve?

ENCC’s strategic objectives can be summarized in three main points:

a. Identify, benchmark, monitor, and evaluate Egypt’s regional and international competitiveness ranking and disseminate the results to all stakeholders through creating and releasing diverse publications that will help guide Egypt’s development.

b. Communicate and cooperate with various stakeholders from the Egyptian economic community to create awareness of the importance of improving competitiveness of Egypt mainly through raising the productivity of national institutions and the labor force.

c. Develop and advocate strategies and economic policy recommendations, and suggest initiatives that will gain national consensus on actions that aim at creating a world-class business environment and improving the standards of living for all Egyptians.

15. How can the ENCC achieve its strategic objectives?

ENCC will achieve its objectives using the following tools:

a. Dissemination of publications including reports and working papers.

b. Interaction with all stakeholders in the community through conferences, workshops and seminars, as well as communication via numerous media channels (audio, visual and social networks)

c. Advocacy through meetings and workshops

d. Monitoring the implementation of the proposed economic policies to create success stories that encourage further reforms.

16. How is ENCC funded?

ENCC is a non-profit, non-governmental organization, and depends on membership fees from the members of the council in addition to grants and donations from a number of organizations.

 
  IV. Egypt’s Competitiveness vis-á-vis other Countries

17. How is Egypt performing on the GCI and DBR?

Egypt’s rank has deteriorated over the last three years, and is the worst performer with respect to other countries.
Please refer to www.encc.org.eg or write to info@encc.org.eg for more information.

18. Why has Egypt’s ranking deteriorated?

The deterioration in Egypt’s position in absolute terms as well relative to other countries over the last three years is the result of weak macroeconomic policies, the quality of health and education services, a fragile infrastructure system and a modest ability to innovate and to benefit from existing technologies. All these factors affected negatively the business environment and hence, undermined Egypt’s ability to attract local and foreign investors and its ability to provide job opportunities.

19. Can ENCC help in improving Egypt’s competitiveness?

ENCC plays a leading role in this area by benchmarking and monitoring changes in Egypt’s competitiveness rankings and analyzing the causes behind the changes. ENCC is proposing policies, initiatives and reform programs that could enhance Egypt’s productivity and hence competitiveness. Moreover, ENCC is engaged in dialogue with the various stakeholders in the society to get support for the policies and initiatives it proposes. ENCC can also support the government and the decision-makers in the implementation process of these programs.