Over the past two decades, productivity and competitiveness have emerged as priority objectives in most mainstream economic policy discourse. However, few policymakers manage to clearly articulate the channels of interaction between productivity and competitiveness theorized by several authors. Thus, this study attempts to analyze the causal links between these two concepts. In order to achieve this objective, the analysis is based on an econometric method consisting to use an Autoregressive Vector and to test the causality in the sense of Granger. The data used are from the World Bank, The Conference Board and National Electricity Company, and cover the period 1976-2021. The results show that there is no causality between productivity and competitiveness. Instead, the combination of all factors (cost of electricity, productivity and competitiveness) causes productivity. The results also show an absence of causality between competitiveness and the cost of electricity and a bidirectional causality between productivity and the cost of electricity. Furthermore, neither productivity nor the cost of electricity and the combination of all factors causes competitiveness. These results suggest that productivity growth may be relatively unrelated to competitiveness if it is concentrated in non-trade sectors.
Support the magazine and subscribe to the content
This is premium stuff. Subscribe to read the entire article.