The establishment and sustainment of the prosperity of a nation have become one of the significant challenges that leaders face especially with the rise of the modern global economy. National leaders require advice from different institutes for strategies and competitiveness to enhance their competitiveness and improve on the living standards of its citizens. National competitiveness demonstrates the ability of an economy of a nation to grow, and this is measurable through policies and institutions which are responsible for determining the level of productivity of a nation. National competitiveness is essential to a country that wishes to improve the quality of life. Increasing the quality of life compels the nation to increase productivity to achieve higher national investment outcome which ultimately results in growth. Economic growth is an essential factor when a country wishes to improve on the quality of life. National competitiveness is also a concept that can be used to examine the ability of a country to compete and grow with other nations for investments, human capital and other critical economic resources. Specific strategies can be used by a nation to enhance its national competitiveness, and the level of national competitiveness often has determinants.

How nations can enhance their competitive advantage

A country can improve its competitive position through productivity. The aim of a nation is often to improve on the living standards of the citizens, and the ability to develop the living standards depends on productivity. Productivity requires the application of capital and labour of a nation. Productivity is the measure of output that is produced by applying capital and labour. Productivity is determined by the quality and features of products which dictates the prices that they deserve. Increased productivity of a nation results to a long term improvement in the living standard which determined the per capita income of the country (D & Sergi, 2017). The productivity of human resources examines the wages of the employees. The productivity determines the living standard of a state of its companies. The companies must strive to achieve high levels of productivity and to escalate productivity with time. The companies of a nation must increase productivity by increasing on the quality, improving product technology and boosting efficiency on production. Therefore, to compete effectively with other nations, a country must ensure that all its companies develop the capabilities to increase productivity.

The competitive advantage of a nation can be enhanced depending on the capacity to innovate and upgrade. Companies are in a better-placed position if they can face pressure and challenge from other nations. The pressure obliges the companies to adopt recent improvements in technology which can differentiate their product from the companies in other countries.  Companies can approach innovation through different means such as new product design, a new approach in the market, a new process of production and new ways of conducting training. Companies have to find new ways of or better ways to compete with other companies. Innovation encompasses ideas that are not even new but have been present in the industry and has never been pursued (Dupire & M, 2018).  The companies must invest in skills and knowledge as well as brand reputation to be able to compete effectively with companies in other nations. An innovation establishes a competitive advantage by exploring new opportunities in the market or by serving a segment in the market that others have ignored. After a company in a nation acquires a competitive advantage through innovation, they are obliged to sustain it through constant improvement.  Competitors can ultimately overtake any company that stops innovating and improving on the change.

Determinants of national competitiveness

There are reasons why most nations through their companies can overcome barriers for change and innovation. The reasons rely on the four extended attributes of a country. The characteristics comprise the playing field where each nation establishes and operates for its industries. The attributes include factor conditions, demand conditions, firm strategy, structure and rivalry and finally related and supporting industries.

Factor conditions

Factor conditions encompass the status of a nation in factors of production like skilled labour or infrastructure that is essential to compete in a particular industry. Standard economic theory explains that the factors mentioned above of production like land, labour, capital, infrastructure and natural resources determined the flow of trade (Kheir-El-Din, 1991). A nation decides to export goods that make use of the factors which is well specialised and endowed. The essential elements of production are those that encompass massive and sustained investment and are specialised.

Demand conditions

Demand conditions involve the nature of demand in the home market for the product and services from industry. The globalisation of competition is likely to reduce the significance of home demand. Nations acquire competitive advantage in sectors where the home demand provides their companies with a vivid and earlier image of the emerging needs of buyers and places where the demanding buyers impose pressure to companies to innovate faster and become most competitive than foreign rivals (Porter, 1990). The conditions in the home demand assist in developing a competitive advantage when a particular segment in the industry is more visible in the domestic market than in the foreign markets.

Related and supporting conditions

The presence or absence in the nation other associated industries and supplier industries that can compete globally determine the competitive edge. Nationally competitive industries compete by delivering the most cost-effective inputs (Tănase, Tănase & Hamat, 2014). Home-based industries can provide innovation and upgrading which is an advantage of close working relationships. Suppliers located close to one another can take advantage of short lines of communication, exchange of ideas, a constant flow of information and innovations.

Firm Strategy, Structure, and Rivalry

The circumstances in nations establish strong tendencies in how companies are created, managed, the nature of domestic rivalry and how they are organised. An example of a country that uses the national industrial policies is in Italy where international competitors who are successful are always medium-sized and small companies that are owned privately and operate like extended families (Tayeb, 1995). The availability of strong local rivals results in the development and persistence of competitive advantage.

The US has attained a competitive advantage through the improved application of technology in innovation which cannot be matched by other companies in the world.  The economy of US is the largest, and it is the most productive in the world. The US accounts for one-fifth of the world GDP but has only 4.5% of the global population (Tayeb, 1995). The US is also a leader in the manufactured goods, and hence the employment rates are high leading to improved standards of living among its population.

In conclusion, the prosperity of a nation is determined by its ability to compete globally with other countries. The companies present in a nation contribute to the position of a nation in global competition. Improved productivity of a nation results to increased living standards of the citizens making the country strategically positioned to compete effectively in the world. The ability of a nation to innovate and upgrade through the application of specific technology has also contributed to the success of most companies in a country. There are determinants of a nation’s competitive advantage such as demand conditions, factor conditions, related and supporting companies and firm strategy and rivalry. The US has been able to compete effectively in the world due to the application of improved technology and the ability to increase employment opportunities in the highly rated manufacturing industry.

 
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