Page 24 - Policy Economic Report - December 2024

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Lessons from Economics

Global Competitive Report/Index

The Global Competitiveness Index (GCI), a highly comprehensive index, which captures the
microeconomic and macroeconomic foundations of national competitiveness. Competitiveness as the set
of institutions, policies, and factors that determine the level of productivity of a country.

Competitiveness and economic growth are intimately intertwined, mutually reinforcing each other;
therefore, increased competitiveness leads to increased economic growth, which in turn can increase
competitiveness.

Competitiveness refers to the capacity of a country or company to generate goods and services that can
compete on the global market, whereas economic growth refers to the increase in the quantity of goods
and services produced over time.

Advantages of Global Competitiveness

• Competition between enterprises will, on the one hand, drive firms to produce more and better-
quality items, which will benefit consumer economic agents, while on the other hand, it will
generate larger profits, firms will grow their market share, and be able to attract more clients.

• The rise in turnover at the microeconomic level and the gross domestic product at the
macroeconomic level will, over time, lead to an increase in investment, which will generate an
increase in aggregate supply, resulting in a rise in employment and, consequently, a rise in the
standard of living and social and economic welfare.

• When a nation is competitive, it is more likely to attract foreign investment, which can provide
enterprises with capital, technology, and knowledge to enhance their competitiveness and
productivity. This can result in increasing exports, which can contribute to economic expansion.
To increase economic growth, it would be beneficial to focus on competitiveness-enhancing
measures, such as investments in education, infrastructure, innovation, and trade liberalization.

Since 2004, the report published by the World Economic Forum, ranks the world's nations according to
the Global Competitiveness Index, based on the latest theoretical and empirical research. It is made up of
over 110 variables, of which two thirds come from the Executive Opinion Survey, and one third comes
from publicly available sources such as the United Nations. The variables are organized into twelve pillars,
with each pillar representing an area considered as an important determinant of competitiveness.

The report has twelve pillars of competitiveness. These are:

1. Institutions

2. Appropriate infrastructure

3. Stable macroeconomic framework

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