The global competitiveness index

Ninth pillar: Technological readiness
In today’s globalized world, technology is increasingly
essential for firms to compete and prosper. The technological
readiness pillar measures the agility with which
an economy adopts existing technologies to enhance the
productivity of its industries, with specific emphasis on
its capacity to fully leverage information and communication
technologies (ICT) in daily activities and production
processes for increased efficiency and competitiveness.
14 ICT has evolved into the “general purpose
technology” of our time,15 given the critical spillovers
to the other economic sectors and their role as industrywide
enabling infrastructure. Therefore ICT access and
usage are key enablers of countries’ overall technological
Whether the technology used has or has not been
developed within national borders is irrelevant for its
ability to enhance productivity. The central point is that
the firms operating in the country need to have access
to advanced products and blueprints and the ability to
use them. Among the main sources of foreign technology,
FDI often plays a key role. It is important to note
that, in this context, the level of technology available
to firms in a country needs to be distinguished from the
country’s ability to innovate and expand the frontiers
of knowledge. That is why we separate technological
readiness from innovation, captured in the 12th pillar,
described below.
Tenth pillar: Market size
The size of the market affects productivity since large
markets allow firms to exploit economies of scale.
Traditionally, the markets available to firms have been
constrained by national borders. In the era of globalization,
international markets have become a substitute for
domestic markets, especially for small countries. There
is vast empirical evidence showing that trade openness is positively associated with growth. Even if some recent
research casts doubts on the robustness of this relationship,
there is a general sense that trade has a positive
effect on growth, especially for countries with small
domestic markets.16
Thus exports can be thought of as a substitute for
domestic demand in determining the size of the market
for the firms of a country.17 By including both domestic
and foreign markets in our measure of market size, we
give credit to export-driven economies and geographic
areas (such as the European Union) that are divided into
many countries but have a single common market.