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Abstract
The term “competitiveness” causes many academics some discomfort, piques the attention of policymakers and assumes near-mantra status in much of the private sector1. The competitiveness index rankings that this chapter discusses were designed as a tool for businesses and governments, a spur to reform and a signal of success rather than a strict academic exercise. The index subordinates market size, natural-resource endowments and other characteristics of business interest to economic growth, which represents a better estimate of the medium-term health of national economies. Survey results and empirical data both show that the most important factor in propelling economic growth, attracting foreign direct investment in the long term or allowing the healthy increase of domestic firms is a stable, well-managed economy. The work described here, conducted originally for the 1998 Africa Competitiveness Report, measures the competitiveness of 23 African countries based on estimates for their medium-term economic growth, controlling for levels of initial income (Table 6.1).
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