Towards a Broader Conception of Economic Competitiveness

The economic crisis has challenged popular conceptions of economic growth, both in terms of the definition and the measurement of it. While engendering growth and bolstering competitiveness remains high on political agendas, immediate attention has shifted to creating jobs, lifting wages, addressing inequality, and fostering long-term, sustainability prosperity.

A new report from the Martin Prosperity Institute, “Creativity and Prosperity: the Global Creativity Index,” addresses the challenge of nurturing sustainable economic development head-on, shifting the dialogue from a narrow focus on competitiveness and growth to a broader focus on creativity, prosperity, and well-being.

We first introduced the Global Creativity Index (GCI) in 2004. One again, the Index assesses the prospects for long-term prosperity across 82 nations according to a combination of underlying economic, social, and cultural forces. We refer to these forces as the 3 Ts of economic development: Technology, Talent, and Tolerance. The Index also compares the GCI to a series of other metrics of competitiveness and prosperity, from conventional measures of economic growth to alternative measures of economic equality, human development, and happiness and well-being.

The Global Creativity Index strong correlates with other measures

We compared the 3 Ts metrics with the GCI to established measures of economic and social progress. The GCI is closely associated with conventional measures of economic output and economic competitiveness, and it is also associated with broader measures of human development and life satisfaction (or happiness). Nations that score better on the 3 Ts not only have higher levels of economic output but also higher levels of human development and happiness. We also find that the GCI is associated with greater economic equality; nations that score higher on the GCI have less inequality. Our findings suggest that there are two distinct paths available to greater economic competitiveness. On the one hand, there are nations like the United States and the United Kingdom, who exhibit high levels of economic output and competitiveness alongside higher levels of inequality. On the other hand, there are a greater number of nations like Sweden and Norway, where high levels of economic output and competitiveness occur alongside far greater equality. This suggests that there exists a high-road path to sustainable prosperity, where the fruits of economic progress are broadly shared.

The data in this report covers 82 nations for the period 2000–2009.

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The Martin Prosperity Institute at the University of Toronto’s Rotman School of Management is the world’s leading think-tank on the role of sub-national factors—location, place and city-regions—in global economic prosperity. We take an integrated view of prosperity, looking beyond economic measures to include the importance of quality of place and the development of people’s creative potential.