Competitiveness :Challenges ahead

The World Economic Forum has made public its report with the Competitiveness global index, plus two additional indexes related to a better understanding of the dynamics of such process. Chile stay well above the most important economies of Latin America, measured by volume and added value to product (23rd place followed by Uruguay 54th place). The question is How Chile has been able to get such improvement?. The report itself give some answer , mentioning those factor which explain for other countries a relative lower position in the ranking : Political instability, Bureaucracy and corruption. Chile is better on this issues than its neighbourhood. How is it possible? . The extraordinary high cost of the whole reform process, carried out during the first stage (1974-1990),has created incentives to follow a consensus based agenda on key issues for the second stage (1990-2010), such as the reform of the state to make it more competitive, and smaller than what it was in the seventies (The subsidiary state concept, which allowed the participation of private sector to build up what it was usually known as public investment : new modern high ways, ports , and airport facilities), helping to release public resources to allocated them to social programs, improvements on institutional variables(financial sector reform , accounting practices supervision, public business information policy, business social responsibility ),and macroeconomic policy coordination based on rules. In other words, it is a unique combination of the private interest with the public interest, such as to make possible a sustainable increase in long run welfare levels. Is it enough? . It seems that there still a long way to go, in the modernization process. Of course the deeper each country goes into it ,the more feasible the remaining steps to be concluded and the better prospect for growth.-
The key fundamental of all the previous reform package, is to understand that the Role of the State, must be balanced with the role of the market in a complementary way. Too much State, can make heavy harm on the welfare potential of society. Too little State, it is also risky when markets fail.-
The WEF report also includes two additional indexes. The Growth Competitiveness index, and the Business Competitiveness index , related to company –specific factors to improve efficiency and productivity at the micro level.
On the Growth Competitiveness index Chile also is on the 27 nd place,(two places above 2004), which means it has the institutional support to sustain growth. On the other hand, the Business competitiveness index place Chile on the 29th place, (the same as 2004).It is interesting that this index allows to know the strength of national firms to do their jobs, which is to create wealth. In this case, this result shows what has been discussed on the academic level concerning the weakness in the management style of Chilean companies. They do not make well on technology information application to management, decreasing its expected productivity impact ,along with some deficiencies on the chain value added process.-
What lies ahead ?.Competitiveness is not an objective by itself, because it does not imply any specific result in terms of short run welfare increase . It is an important measure of some capabilities to pursue growth, which is the first step to increase welfare. From the long run perspective, it is positive to stay on the top 25 of the list, however the challenge is also to maintain and improve the conditions for higher competitiveness giving more attention to better environmental consideration, quality of education, and modernization of the State.