The paper aims at reaching three objectives:
Conceptual Objective: based on the contemporary theoretical approaches, we model competitiveness of a catching-up economy as a dynamic phenomenon that denotes national ability to reach developmental objectives through integration within the global network of economic interconnections;
Empirical Objective : following the suggested model and a measurement method, we assess the progress of the EU-10 countries in building their global competitive position;
Policy Recommendation Objective: based on the characteristics of best group performers, we develop suggestions on economic policy directions for catching-up economies.
BACKGROUND
Competitiveness is a dynamic phenomenon, which evaluated in relative terms, denotes how well a country performs in the global economy. However, benchmarking should be conducted within groups of countries at comparable levels of economic development. This implies that modelling competitiveness of a catching-up economy needs to take into consideration its unique characteristics. Research shows that catching-up economies are contextually different from the developed countries, and tend to have weaker institutional, physical and technological infrastructure. As the national growth factors are often underdeveloped, the pace of catching-up can be accelerated by establishing long-term global relations. Thus, openness is of particular importance for competitiveness of economies at lower levels of development which, through integration within the international division of labor, have a chance for an accelerated convergence.
METHOD/ DATA
The analysis is based on a pyramid model of a competitive catching-up economy – a new method for cross-national benchmarks. In this model, socio-economic upgrade, as a fundamental goal of a catching-up economy, is enabled through reaching the instrumental goal: strengthening the positioning within the international division of labor. Reaching instrumental and fundamental goals depends upon the creation of a favorable business environment, which is enabled by a set of interrelated social, institutional, economic and technological factors of convergence, and strengthened by a “smart” competitive strategy.
We apply the model to the New EU Member States for the years 2000-2014. For every country in the sample, along the pyramid dimensions, we construct a database and run regressions to assess its progress in building their global competitive position.
EXPECTED RESULTS AND POLICY IMPLICATIONS
The paper constitutes a comprehensive attempt to conceptually model and measure competitiveness of EU-10 economies. Based upon the characteristics of the best performers in the analyzed group, we develop general policy recommendations for the catching-up economies, aiming to strengthen their position on the international arena.