Impact of Competitiveness on the Economic Growth: A Panel Moderator Approach
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Date
2017
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UMT.Lahore
Abstract
This study builds on the model of real sector (agriculture, industry and service sector) to growth productivity, with an objective to explore the influence of competitiveness on the productivity of the real sector and economic growth and compared 115 countries in 4 different groups based on their income levels. These groups were high income group, upper middle income group, lower middle income group and low income group which were identified by the Global Competitiveness Report. This study has used panel moderator approach to evaluate the effect of competitiveness on the real sector to growth productivity. The study concluded that overall competitiveness has positive effect on economy growth. While discussing the indirect effect of competitiveness in overall country group, the results show that higher level of competition positively boosts the agriculture productivity, and in industry productivity, while it lowers the productivity of service sector. For the case of high income countries competitiveness is fruitful for agriculture and industry sector productivity. The major contribution of competitiveness is that it completely changes the negative effect of increase in agriculture value added to positive effect except for high income countries. Competitiveness also supports the industry sector and service sector except for high income countries, where higher competition leads to reduce the sellers’ control over the price and increasing the market demand. The study recommends the improvement in competitiveness as it will lead to higher productivity of the agriculture and services sector for the less developed economies.