Analyzing two-way interaction between the competitiveness and logistics performance of countries

Abstract

Logistics has crucial importance in national and international trade and, hence, in the development and competitiveness of a country. On the other hand, making investments in different pillars of competitiveness, such as infrastructure, higher education, etc., is expected to enhance logistics performance. In this study, this two-way interaction between the competitiveness and logistics performance of countries is investigated using a hybrid methodology. Initially, the causal directions between the competitiveness of countries and their logistics performance are established by using a Bayesian Net (BN). Subsequently, the cause-effect information gathered from the BN is taken as the input in a Partial Least Square (PLS) path model to highlight the competitiveness pillars that are more critical in contributing to countries’ logistics performance. As the last step, an importance-performance map analysis (IPMA) is applied to specify the importance of the pillars that have a significant effect on logistics performance. As a result, a roadmap is provided to policymakers that specify which pillars to focus on, thus delivering a significant and immediate improvement in the logistics performance and highlighting which logistics performance indicators will lead to improvements in the competitiveness of the countries. An empirical study is conducted based on two basic indexes, as follows: (1) the Global Competitiveness Index (GCI) and its pillars are used to track the competitiveness performance, and (2) the Logistics Performance Index (LPI) is used to analyze the logistics performance. According to the results, the most important GCI pillars that affect the logistics performance of a country are determined to be “Business Sophistication”, “Financial Market Development”, “Infrastructure” and “Good Market Efficiency” and “Higher Education and Training”. On the other hand, the improvement in the logistics performance index, in its turn, will especially influence the Market Size pillar of a country.