Photo: WikiMedia Commons
Nordic countries including Sweden, Denmark and Norway have the most productive businesses of all and are best-equipped to compete in the global economy. These countries won based on worker productivity, cost of business and monetary policy, according to a study by Mercedes Delgado at Temple University, Christian Ketels and Michael E. Porter at Harvard and Scott Stern at MIT.
While countries’ global competitiveness is a common topic, the researchers say they are the first to input the cost of doing business into the country’s ultimate standing. They also use their index as a predictor of future economic success.
Outside of the Nordic countries, Singapore was highly-ranked, coming in at sixth. The U.S. ranked 20, behind Germany, Hong Kong, Taiwan and France.
They also found that production at the micro level was more important than previously thought:
“We find that the micro economic conditions have a positive influence on competitiveness even after controlling for historical institutional conditions and incorporating country fixed effects (which offer a broader measure of a country’s unobserved legacy). Current institutions and macroeconomic policies seem largely endogenous to historical legacies. Overall, the findings strongly suggest that contemporaneous public and private choices, especially those that relate to microeconomic competitiveness, are an important driver of country output per potential worker and, ultimately, prosperity.”
Here’s their table ranking the best countries:
And a chart showing how labour productivity affects economic outcome: