Comparative analysis of the international competitiveness of the region (on the example of independent states of the South Pacific region)

Introduction

International competitiveness is an extremely complex and multifaceted phenomenon. The problems of assessment and analyses of the economies’ competitiveness are widely considered in modern both foreign [19–22, 27–33] (Porter, 2011; Porter, 2008; Porter, 1993; Porter, 2006; Chih-Kai Chen, 2013; Delgado, Ketels, Porter, Stern, 2012; Luminita, Bacali, Lungu, 2013; Porter, 2008; Porter, 1985; Porter, 1990; Porter, 1980) and Russian [2–13, 18, 25, 26] (Bogatyreva, Boslovyak, 2018; Bondarenko, 2015; Galimova, Yudina, Livshits, Dunaeva, 2018; Garmashova, 2019; Go, 2019; Drobot, 2012; Drobot, 2004; Drobot, 2016; Drobot, 2015; Drobot, 2012; Drobot, Klevleeva, Kostyleva, 2014; Drobot, Kostyleva, 2017; Mezinova, 2019; Tsikin, 2019;Shkiotov, Markin, Mayorova, 2016) scientific publications.

The most influential modern researcher of competitiveness problems is no doubt Michael Porter [19–22, 28, 30–33] Porter, 2011; Porter, 2008; Porter, 1993; Porter, 2006; Delgado, Ketels, Porter, Stern, 2012; Porter, 2008; Porter, 1985; Porter, 1990; Porter, 1980), who founded the Institute for Strategy and Competitiveness (ISC) in the USA in 2001 [1].

According to the search query “national competitiveness”, we can find 277,658 publications on the portal ELIBRARY.RU, including 611 works published in 2019. Current issues of contemporary competitiveness of such States as the European Union countries [18] (Mezinova, 2019), Russian Federation [12, 26] (Drobot, Klevleeva, Kostyleva, 2014; Shkiotov, Markin, Mayorova, 2016), China [6] (Go, 2019), etc. are discussed in these publications. The particular attention is paid to the concepts and models of national competitiveness [4, 5, 11, 25] (Galimova, Yudina, Livshits, Dunaeva, 2018; Garmashova, 2019; Drobot, 2012; Tsikin, 2019), to the innovation impact on the competitiveness of national economies, as well as to the role of human capital in enhancing the attractiveness and the national competitiveness [2, 3] (Bogatyreva, Boslovyak, 2018; Bondarenko, 2015).

However, research and comparative analysis of the national competitiveness of the South Pacific island States, in fact, have never been conducted.

Among the publications devoted to the problems of the South Pacific region which have been published during the past three years, we can highlight the scientific articles by V.V. Balashov, T.E. Javadov [1] (Balashov, Dzhavadov, 2019), Ya.O. Zakharev [14, 15] (Zakharev, 2019; Zakharev, 2017), I.G. Kostyuchenko [16, 17] (Kostyuchenko, 2017; Kostyuchenko, 2018), A.V. Skripnichenko and S.E. Pale [23] (Skripnichenko, Pale, 2017), A.E. Ulyanina [24] (Ulyanina, 2017), etc.

So, according to the search query “South Pacific region” on the ELIBRARY.RU it is possible to find only 334 publications, and among them it has been only 19 paper works published in 2019.

That is why the study of international competitiveness and factors of competitive advantage of independent States in the South Pacific region is of particular interest (Table 1). It will allow us to determine the factors of competitive advantage of the countries in the South Pacific region, as well as to assess the possible reasons for their competitive weakness. It is also interesting to compare these States with the Russian Federation.

Table 1

Independent States of the South Pacific region

As a research methodology, we will use the author’s well-settled methodological approach for determination of the integral indicator of national competitiveness, repeatedly used for conduction the comparative analysis of the national competitiveness of Russia and the G-7 countries [8, 10] (Drobot, 2004; Drobot, 2015), as well as of the Eurasian Economic Union countries [13] (Drobot, Kostyleva, 2017).

Also, in our opinion, it is interesting to analyze what places the studied countries occupy in such international rankings as the Global Competitiveness Index of the World Economic Forum (WEF), the annual World Competitiveness Ranking of the Institute Management Development (IMD), and the UN Human Development Index (HDI). Such a study will allow us to get a really comprehensive view of the competitiveness level of the States in the South Pacific region. In addition, it will also be interesting to compare the South Pacific countries with the Russian Federation.

The purpose of our research is to conduct a comparative analysis of the national competitiveness of the independent States in the South Pacific region in order to identify the factors of their competitive advantage.

The object of the study is the economy of the South Pacific independent States. The subject of the study is the competitiveness and factors of competitive advantage of the South Pacific independent States.

The assessment of the national competitiveness and factors of the competitive advantage of the South Pacific countries and Russia will be conducted in this study. Based on the results obtained, we will conduct a comparative analysis of the national competitiveness of the reviewed countries. Then, using data from the Human Development Indices and Indicators report of the United Nations Development Programme (UNDP) for 2018 [3], we will compare the South Pacific countries and Russia in terms of the level of their development.

The scientific novelty of the study is as follows: for the first time on the basis of the author's methodology for determining national competitiveness, a comparative analysis of the factors of competitive advantage of the countries of the South Pacific region is carried out.

Methodology of national competitiveness assessment

In our opinion, when studying the issues of international competitiveness, it is necessary to use a methodology that allows us to determine and quantify the factors of a country's competitive advantage, as well as to conduct a comparative analysis of the national competitiveness of the reviewed economies.

When it comes to the most of the world's countries, as a rule, there are no problems with assessing their competitiveness.

In addition to available, complete and detailed statistical information, there are also two international rankings of countries’ competitiveness: the Global Competitiveness Index of the WEF, which has been published since 2004, and in 2019 it represents data on 141 national economies; the annual World Competitiveness Ranking of the Swiss Institute Management Development (IMD), which has been published since 1996, and the competitiveness factors of 63 national economies are analyzed in its last version of 2019.

It is no doubt that such countries as Australia, New Zealand and Russia are presented in both rankings. In 2019, according to the WEF Global Competitiveness Index, Australia was in 16th position, New Zealand was in 19th position, and Russia was in 43rd position [4]. In the IMD World Competitiveness Ranking for 2019, Australia was the 18th, New Zealand was the 21st, and Russia was the 45th [5].

As for the other countries of the South Pacific region, which are the object of our study, they are not represented in these ratings. The reason is obvious. It is the difficulty of obtaining relevant statistics for this group of countries for the numerous indicators.

We will try to conduct a comparative analysis of the national competitiveness of the countries of the South Pacific region on the basis of available statistical information. And we have tried to collect as accurate data as possible, but the list of indicators is not as extensive as in case of assessing the competitiveness of developed countries.

So, let's move on to the method of determining the integral indicator of national competitiveness.

To start with, we will identify three blocks of national competitiveness factors and for each factor we will determine the optimal indicator set which charts the idea of the level of economic development, economic potential and integration of the national economy into international trade and the country's participation in the international factors movement. In our opinion, the following basic factors and indicators can be used to determine national competitiveness (Fig. 1).

Figure 1. Factors and indicators of national competitiveness

Source: compiled by the author.

When testing the methodology in the next stage, these indicators should be tabulated and weighted. The weight parameters are determined by the analytic hierarchy process [10, p. 136–146] (Drobot, 2015, р. 136–146).

We will assess the country's competitiveness from the standpoint of two criteria – productivity and the living standard [8, 10] (Drobot, 2004; Drobot, 2015).

The structuring of the problem of the national competitiveness is presented in the Figure 2.

Figure 2. Hierarchical representation of the problem of national competitiveness

Source: compiled by the author.

The next step is to create a matrix of pairwise comparisons of criteria by importance [6].

The results of the comparison of the importance of the criteria are summarized in Table 2.

Table 2

Comparison of criteria by importance

The criterion of “Productivity” moderately exceeds the “Living standard”, since at the stage of the market economy formation; the efficiency of all types of economic resources is one of the determining factors of economic growth. So, the criterion “Performance” with 0.75 weight rating has the priority in importance. The criterion “Living standard” has a weight equal to 0.25.

At the next stage, matrices of pairwise comparisons of factors for each criterion are made (by analogy with the matrix for criteria) [10, p. 157–160] (Drobot, 2015, р. 157–160). The author has adopted the following gradation of the importance of competitiveness factors according to the “Productivity” criterion: the level of economic development of the country and the resource potential, as well as state policy have the primary influence on the productivity of the national economy. Therefore, we assign these factors a score of 5 and 7 points. By the “Living standard” criterion, the factors the level of economic development and economic potential, integration of national economy into international trade and participation in international factors movement have the maximum ratings, as in modern conditions they provide the well-being of society and quality of life.

The results of the calculations are presented in Tables 3 and 4.

Table 3

Determining the weight of competitiveness factors according to the “Productivity” criterion

Table 4

Determining the weight of competitiveness factors by the “Living standard” criterion

Let's calculate the generalized priority (weight) for each indicator. For this purpose the component value of the vector of priorities of this indicator for the first criterion is multiplied by the priority value of the first criterion, and then the value of the vector of priorities of this indicator according to the second criterion is multiplied by the priority value of the second criterion. The results are summed, and a generalized priority (weight) for each factor is obtained. After that the calculations of the generalized weight for each indicator are made (Table 5).

So, such factors as national policy (1), level of economic development and economic potential (2) and the integration of national economy into international trade and participation in international factors movement (3) have the highest priority and importance in national competitiveness.

Table 5

Generalized priority (weight) of competitiveness factors

As soon as the weight and priority of individual indicators have been determined, it is possible to evaluate directly the integrated competitiveness indicator.

In order to calculate the integral indicator of national competitiveness (IC) for the country j, the following formula is proposed:

ICj = CF_1j*W₁ + CF _2j*W₂ + … + CF _nj*W_n , (1)

CFnj = ± ± … ± , (2)

IC – an integral indicator of the country's competitiveness;

CFnj – aggregate indicator of competitive advantages (competitiveness factors) of the national economy;

Wn – weight of the factor (Table 5);

Fij – values of the individual indicators i and j in the competitiveness factor CFnj;

j – number of countries;

CF _nj*W_n – weighted value of aggregated indicators of the national competitive advantages (competitiveness factors);

± – a plus or minus sign determined by the influence of the indicator on the competitiveness of the country. If the effect of a high value of the indicator is positive, we put the plus sign; and if the effect is negative, we put the minus sign.

The comparative analysis of the national competitiveness of the South Pacific countries and Russia in the world economy

We will conduct a comparative analysis of the competitiveness of the South Pacific countries and Russia. The initial data for the calculations are presented in Table 6. The integral assessment of competitive advantages (competitiveness factors) of the national economies is presented in Table 7.

Table 6

Initial data for determining the national competitiveness of the South Pacific countries and Russia, 2018

Source: compiled by the author according to Human Development Indices and Indicators. 2018 Statistical Update. United Nations Development Programme, 2018. Retrieved from: http://hdr.undp.org/en/content/human-development-indices-indicators-2018-statistical-update; The World Bank. Retrieved from: https://data.worldbank.org/; TheGlobalEconomy.com. Retrieved from: https://www.theglobaleconomy.com/; NONEWS. Retrieved from: https://nonews.co/directory/lists/countries/ (date of access 10.01.2020).

Table 7

Calculation of the national competitiveness indicators of the South Pacific countries and Russia, 2018

Source: compiled by the author.

Table 8

Ranking of the national economies competitiveness

The analysis allows us to draw the following conclusions.

According to the absolute value of the integral index of competitiveness Australia followed by New Zealand were two leaders in 2018. Russia was the third. But Russia significantly lagged behind Australia by the level of economic development and economic potential and the effectiveness of national policy. The positions in the ranking of island independent microstates are as follows. Fiji and Samoa are the leading microstates ranking 4th and 5th respectively. Papua New Guinea (9), Vanuatu (10) and the Solomon Islands (11) were the outsiders (Table 8) because of national policy inefficient.

Assessment of the competitiveness of the South Pacific countries and Russia on the basis of the Human Development Index

We will try to assess the positions of the South Pacific countries on the basis of HDI data in 2018. First of all, let’s look through the HDI itself and consider its components (Table 9).

Table 9

HDI and its components for the South Pacific region and Russia, 2018

Source: compiled by the author according to Human Development Indices and Indicators. 2018 Statistical Update. United Nations Development Programme. 2018. Retrieved from: http://hdr.undp.org/en/content/human-development-indices-indicators-2018-statistical-update (date of access 10.01.2020).

Australia (3) and New Zealand (16) were included in the group of countries with very high HDI. Russia is in the same group (on the 49th position). Low GNI per capita and insufficient life expectancy are еhe main reasons for the significant gap between the countries of the South Pacific region and the countries-leaders of the HDI rating. The 2018 UNDP HDI report also provides average data for groups of countries (Table 10). The similar summary for the countries of the South Pacific region (excluding Australia and New Zealand) are presented in Table 11.

Table 10

Average HDI 2018 data by countries’ groups

Table 11

Calculation of the average HDI 2018 and its components for the South Pacific countries (excluding Australia and New Zealand)

Source: compiled by the author according to Human Development Indices and Indicators. 2018 Statistical Update. United Nations Development Programme. 2018. Retrieved from: http://hdr.undp.org/en/content/human-development-indices-indicators-2018-statistical-update (date of access 10.01.2020).

Thus, according to the average HDI indicator (0.662), the group of independent microstates of the South Pacific region is generally closer to the countries with the medium level of development (0.645). If we conduct the analyses in the context of individual indicators, we will see that in terms of life expectancy small microstates of the South Pacific region (71.06) are closer to the countries with the medium level of development (69.1). In terms of expected years of schooling the South Pacific microstates (12.64) are also closer to the countries with the medium level of development (12.0). And in terms of mean years of schooling (8.83) they are closer to the countries with high level of development (8.2) (Fig. 3). According to average GNI per capita ($5.289) the South Pacific microstates are between countries with medium ($6849) and low ($2.521) level of development.

If we compare the countries of the South Pacific region with each other in terms of HDI 2018, we can note the following: in terms of life expectancy Australia (83.1) and New Zealand (82) are the leaders among the South Pacific countries, while Kiribati (66.5) and Papua New Guinea (65.7) lag behind. According to this indicator, Russia is more than 10 years behind not only two leading countries, but also almost all the microstates of the South Pacific region. Australia (22.9) and New Zealand (18.9) lead the way in terms of expected years of schooling, while Vanuatu (10.9), Solomon Islands (10.2) and Papua New Guinea (10) lag behind. Russia is at the level of such countries as Palau (15.6) and Fiji (15.3) on this indicator. In terms of mean years of schooling, New Zealand is the leader (22.5), and it is followed by Vanuatu (6.8), Solomon Islands (5.5) and Papua New Guinea (4.6). Finally, in terms of GNI per capita Australia ($43.560) and New Zealand ($33.970) lead the way; and the rest of the South Pacific microstates lag behind by more than 8 times (Fig. 3, 4).

Notes: data for Tuvalu, Nauru, Niue are not provided.

Figure 3. Indicators of life expectancy and learning in the South Pacific region (Oceania) and Russia in the HDI rating 2018

Source: compiled by the author according to Human Development Indices and Indicators. 2018 Statistical Update. United Nations Development Programme. 2018. Retrieved from: http://hdr.undp.org/en/content/human-development-indices-indicators-2018-statistical-update (date of access 10.01.2020).

Notes: data for Niue are not provided.

Figure 4. GNI per capita in the South Pacific region and Russia in the 2018 HDI ranking, $

Source: compiled by the author according to Human Development Indices and Indicators. 2018 Statistical Update. United Nations Development Programme. 2018. Retrieved from: http://hdr.undp.org/en/content/human-development-indices-indicators-2018-statistical-update (date of access 10.01.2020).

The analysis of the changes in the HDI of the South Pacific countries in 1990–2017 is conducted (Table 12). The data show that there have been no substantial changes in the HDI ranking of the South Pacific countries. Fiji (+3 positions during the past 5 years) and Tonga (+2 positions) have improved slightly.

Moreover, the dynamics of the HDI for 27 years shows a stable improvement in the South Pacific region in terms of human development. A slight decline was observed only in Kiribati: in 2016 the HDI decline from 0.621 to 0.610 (i.e. by 1.7 %), but in 2017 it went up again. A similar trend was observed in the Solomon Islands during the same period: a decrease in the HDI from 0.546 to 0.543 (i.e. by 0.05 %).

Table 12

HDI trends in1900–2017

Source: compiled by the author according to Human Development Indices and Indicators. 2018 Statistical Update. United Nations Development Programme. 2018. Retrieved from: http://hdr.undp.org/en/content/human-development-indices-indicators-2018-statistical-update (date of access 10.01.2020).

To structure the strengths and opportunities of the South Pacific countries, i.e. the factors of competitive advantages, as well as to identify their weaknesses and threats the SWOT analysis has been conducted (Table 13).

Table 13

SWOT-analysis of the national competitiveness of the South Pacific countries

Thus, it is possible to particularize the competitive advantages of the South Pacific countries.

1. The remoteness of the continent allows to preserve the unique culture and national flavor of the South Pacific region. The South Pacific countries could be of potential interest to both researchers and tourists. And their remoteness and isolation reduce the possibility of threats to military security.

2. The endowment of the region with mineral resources provides opportunities for the mining industry development.

3. The openness of the economy of the South Pacific countries creates prospects for the development of foreign economic relations and economic integration.

Conclusion

The conducted research allows us to draw the following conclusions.

The microstates of the South Pacific region are not represented in the published international rankings of global competitiveness. The developed countries of the South Pacific region such as Australia and New Zealand hold a consistently high stable position.

Our analysis of the integral indicators of national competitiveness shows that Australia is the leading country in the South Pacific region. New Zealand is the second. Russia has significantly lagged behind Australia (these data correspond to international competitiveness ratings). Fiji and Samoa are the leaders in the ranking among the island independent microstates. The outsiders are Papua New Guinea, Vanuatu and the Solomon Islands. The main causes of the lag are in inefficient mechanisms of public policy.

Having conducted the analyses of the reviewed countries by the Human Development Index, we came to the following conclusions. The Human Development Index, which is calculated on the basis of the fundamental measures of human development such as life expectancy, mean years of schooling, expected duration of schooling and gross national income per capita, could be used as one of the criteria of the national competitiveness level because this index takes into account basic vital interests of the people. Australia is the leader in HDI ranking (3) among the countries of the South Pacific region. Papua New Guinea is the outsider (153). Life expectancy and GNI per capita are the main problem areas for the South Pacific microstates.

Thus, in order to increase the level of national competitiveness of the South Pacific countries, it is necessary to focus on the following directions:

- improvement of the national policy mechanisms and development of the government efficiency;

- development of the measures and mechanisms of demographic policy aimed at increasing the life expectancy;

- improvement of the overall economic situation in order to provide the increase of the income of the population;

- preservation of the unique culture of the South Pacific countries in a globalizing world.

[1] The Institute for Strategy and Competitiveness. Retrieved from: https://www.isc.hbs.edu/COMPETITIVENESS-ECONOMIC-DEVELOPMENT/RESEARCH-AND-APPLICATIONS/NATIONAL-COMPETITIVENESS/Pages/default.aspx (date of access 10.01.2020).

[2] Niue is a self-governing State in the Commonwealth with New Zealand, independently participating in regional international relations.

[3] Human Development Indices and Indicators. 2018 Statistical Update. United Nations Development Programme, 2018. Retrieved from: http://hdr.undp.org/en/content/human-development-indices-indicators-2018-statistical-update (date of access 10.01.2020).

[4] Global Competitiveness Report 2019: How to end a lost decade of productivity growth. World Economic Forum. Retrieved from: https://www.weforum.org/reports/how-to-end-a-decade-of-lost-productivity-growth (date of access 10.01.2020).

[5] IMD World Competitiveness Rankings 2019. Retrieved from: https://www.imd.org/wcc/world-competitiveness-center-rankings/world-competitiveness-ranking-2019/ (date of access 10.01.2020).

[6] The comparison is made on the basis of following scale: “1” – equal importance; “3” – moderate superiority; “5” – sufficient superiority; “7” – strong superiority; “9” – extremely strong superiority; “2”, “4”, “6”, “8” – intermediate estimates between two neighbouring ones. Inverse values to the above numbers (1/3, 1/5, 1/7, 1/9 etc.) are put down in the following cases: if the comparison of one element with another obtained a whole number, then when comparing the second element with the first one the reverse (fractional) number is put down. The normalized vector of priorities is calculated as follows [10, p. 157–160] (Drobot, 2015, р. 157–160). For each row of the matrix, all elements are multiplied, and the N-th root is extracted (n is a number of criteria (indicators)). The resulting numbers (a1, a2, ..., an) are summed, and then each of these numbers is divided by the resulting sum. It gives the components of the vector of priorities which add up to 1 and represent the weight values of the criteria priorities.