Competitiveness of Nations in Global Economy Competitive Perspectives of the European Union

Abstract

One of the most topical questions of 21st century is competitiveness of nations in global economy. The competitiveness of a region defines life standards of its inhabitants and commercial potentials of businesses. The aim of the paper is to define and analyse the preconditions of competitiveness of a nation on an example of the European Union (EU). The authors have used analytical and graphical methods, such as comparative method, factor determination method, specifications method, meta-analysis, ethnographic/qualitative analysis and others, to investigate and analyse the existing concepts of competitiveness, as well as applied economic mathematical and statistical methods (modulation of optimization, macroeconomics methods), quantitative and qualitative methods to analyse the main factors which determine the level of competitiveness of a nation. As a result of the analysis authors came up to a conclusion, that competitiveness is a comparable value, and its interpretation depends on a certain standpoint. The Lisbon strategy, which has its ambitious aim to make the EU the most competitive economy in the world by 2010, considers competitiveness as continuous increase in life standards and minimisation of unemployment rate. From an entrepreneurial aspect, competitiveness is the maintenance of market position and its further development on the global scene, as well as ability to offer and sell products or services in certain markets. The competitiveness of a nation is connected with foreign direct investments, which encourage external trade and accordingly ensure production scale necessary for increase in productivity, consequently facilitating national wellbeing. Accumulating the theories of national development of 20th and 21st century, authors have rounded out that the competitiveness depends on available resources (natural, human, capital and informative) and the ability to effectively use them (entrepreneurship). Famous economists, such as P.Krugmann or M.Todaro, consider that the competitiveness of a nation depends on productivity in sectors which are connected or are not directly linked up with trade. Productivity comes from effective export policy which ensures the necessary production volume. In the world of mobile capital and free movement of working force, the countries with relative attractiveness for external partners, not with comparable advantages, are supposed to gain more from globalisation. Statistics show that the EU is one of the main players in the world economy. Its successful operation derives from ability to realize high quality goods (luxury goods, agricultural products, equipment and machinery) at reasonable prices. European manufactures are among the strongest in telecommunication, distribution, financial, insurance, transport and environmental protection sectors. However, the leader position is not permanent, and tendencies in market dynamics play crucial role in its maintenance. The EU has faced the dominance of USA in high technology and knowledge-based sectors. China through its industrialization and increasing foreign direct investments commences to compete successfully in high value-added product markets, along with low value-added. India demonstrates its comparative advantages by offshore and outsourcing, providing services of well-educated, English-speaking and cheap working force. Authors are convinced, that rapid development of China, India and other regions brings to Europe not only alarming challenges but also new opportunities. Authors propose to use a spread analysis to reflect a correlation between the most important for the EU competitiveness factors and the EU position in the global market. Authors consider that wide and strong internal market is a necessary precondition for Europe to benefit from globalisation process.… [ABSTRACT FROM AUTHOR] Copyright of Economics & Management is the property of Kaunas University of Technology, Faculty of Economics & Management and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)