Authors: Panagiotis Liargovas, Christos Papageorgiou, Athanasios Anastasiou, Alexis Parthymos

Title: Competitiveness and its Relationship to GDP per capita and Economic Growth in European Countries

Abstract

The purpose of this paper is to investigate the importance of competitiveness for the global economy and in particular for the economy of European countries in a period of economic crisis, and the correlation of competitiveness with GDP per capita and economic growth in these countries. Given that competitiveness is considered a broad and multidimensional term as a result of the synthesis of economic concepts and ideas that directly affect economic growth, it may be considered also the goal of competitiveness is to improve living standards and achieve economic prosperity, stemming from higher incomes and rising employment.

The paper describes ways to assess competitiveness by specific institutes, focusing on specific conditions and counting on the performance of specific competitiveness pillars. Such international bodies are the Institute of Management Development using the IMD score index, the World Economic Forum, which uses the GCI indicators and the European Union that uses the RCI indicators for its regions and the CCI indicators for its member countries.

Using data from the annual publications on European Competitiveness Indicators from the above-mentioned entities, combined with data on per capita income for the same countries, we attempt to confirm an exponential relationship between per capita income and competitiveness indicators, as well as a linear relationship between the rate of change of GDP and the change of competitiveness indicators for specific periods of time. The survey confirms the existence of these relationships at statistically acceptable levels, mainly for the IMD score and GCI competitiveness indicators, while the CCI indicator cannot be confirmed for its recent and limited use. Thus, the work confirms the link between competitiveness and productivity, innovation and entrepreneurship and its relative impact on GDP per capita and economic growth in the European countries, particularly during the economic crisis.