Comparative Determinants of Global Competitiveness: Governance, Social Progress, and Economic Trade-Offs

Abstract

This study analyses the determinants of global competitiveness in 2018 and 2023, focusing on governance, social progress, economic dynamics, sustainability, and human development. Using an Ordered Probit Regression model, countries are classified into low, middle, and high competitiveness tiers, enabling a structured assessment of how these factors influence rankings over time. The results indicate that reducing corruption and improving social progress are key to enhancing competitiveness across all tiers, as governance quality and human capital investment significantly impact economic advancement. Environmental performance and trade openness present trade-offs: while they support long-term growth, they impose short-term costs, particularly in highly competitive economies. Human development emerges as a consistent driver of upward mobility, emphasising the importance of sustained investment in education and healthcare. This study contributes uniquely by providing a two-year comparative analysis and employing an Ordered Probit Model to assess competitiveness, offering deeper insights into how countries transition between tiers. The findings highlight the need for tailored policy approaches: low-tier nations should prioritise institutional reforms, middle-tier economies should focus on innovation-driven growth, and advanced economies must balance environmental policies with economic sustainability. These insights provide valuable guidance for policymakers navigating global economic transitions.