Governments Importance in National Competitveness Essay

Decent Essays

‘National competitiveness is a measure of the extent to which a country is capable of generating more wealth than its competitors in world markets’. It is known that in order for economies to develop and increase social welfare within its country; national competitiveness must exist to achieve this. Economic performance, government efficiency, business efficiency and infrastructure are all factors of national competitiveness. Throughout this essay I will discuss the government’s importance and assessing different ways in which it can influence national competitiveness.
It is important to clarify that over past decades, globalisation (the movement toward greater integration and interdependence among people and organisations across national …show more content…

Making sure the macro side of the economy is strong will also aid national competitiveness.
Countries seeking to expand international trade and investment, create jobs and generate income and improve standards of living must create domestic markets in which most goods and services are available for consumers. Governments can help increase competition by allowing prices to reflect true scarcities. Governments can use macroeconomics adjustment policies such as taxation and interest rates to encourage market mechanisms that can efficiently and effectively allocate resources. This requires financial liberalisation and reducing price controls but will in turn increase efficiency and flexibility of producers and consumers to respond to market signals. This is only possible with government interventions.
Policies promoting market competition should prevent collusion through antitrust laws and reduce barriers to entry. At the same time, those countries that face inflation and declining output must ratify economic stabilisation policies aimed at reducing balance-of-payments deficits. Liberalisation of trade regulations and investment policies will encourage exports and foreign direct investment which all contribute to increasing national competitiveness. This allows new products

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