The significance of world oil prices and macroeconomic factors for the global competitiveness of countries

Abstract

There has been a transition to renewable energy sources and the abandonment of fossil sources worldwide. Although many researchers have studied the influence of various factors on the competitiveness of selected national economies, there is little research on the impact of resource prices. Based on World Economic Forum (WEF) data, this study examined the impact of crude oil prices and macroeconomic indicators on oil exporting and importing countries' global competitiveness index (GCI). Using the generalized method of moments (GMM) to analyze panel data for 103 countries from 2006 to 2019, we found that rising oil prices increase countries' global competitiveness. Moreover, we assessed the impact of oil prices on GCI sub-indices. These effects are stronger for oil-importing countries than for oil-exporting countries. GDP growth, total factor productivity, average labor productivity, unemployment, and fixed broadband subscriptions, on average, had the most significant impact on countries' global competitiveness. The results draw attention to the most effective support areas for countries in the world's competitiveness ranking in the transition to renewable energy sources. In the medium and long term, oil exporting countries should use oil revenues mainly for innovative development and accumulation of human capital to improve positions in the WEF ranking.