Impact of Competitiveness on Social Welfare

Supplying and upgrading living has always been the main economic goal of all societies. Today, the level of national competitiveness is one of the factors contributing to sustainable economic growth and long-term prosperity in the countries. Indeed, competitiveness is a set of institutions, policies and conditions that determine the level of productivity of a country. The level of productivity, in turn, determines the level of welfare that a country's economic system can achieve. Therefore, the purpose of this study is to investigate the impact of competitiveness on social welfare of twenty selected developing countries. This study is carried out with the data approach panel and generalized method of moments (GMM) during the time period 2007-2015. The results of the study indicate that the Global Competitiveness Index has a positive and significant effect on each of its three main index (basic requirements, efficiency enhancers and innovation and sophistication factors) on social welfare in the study group. Also, the effects of urbanization, abundance of natural resources, government size and unemployment rate were considered as controlling variables in the pattern. Among these, the impact of urbanization on positive and significant social well-being, the impact of unemployment rate and size of the government were significant and the abundance of Natural resources is negative but statistically. The findings also show that the greater the weight of income distribution in the social welfare function, the less positive impact on competitiveness, its triple indicators and the urbanization on social welfare.