Role of Real Sector and HDI: Does Competitiveness Contribute?

This study envisages exploring the role of business competitiveness as a potential moderator in boosting the capacity of the real sector to cause development. Hence, it is proposed that competitiveness policy can be elementary in increasing the development-based productivity of the real sector. Using the panel data of 110 countries between 2006 and 2017, the FGLS estimates show that business competitiveness policy is useful in increasing productivity of service sector and agriculture sector of low- and low-middle-income countries, while it helps increase productivity of the industry sector and agriculture sector of high-income countries. It is evident from the estimates that higher-income countries are extracting higher returns from the competitiveness policy. Surprisingly, competitiveness reaps positive externality as the overall model shows higher returns to competitiveness than income-wise models.