Role of Different Levels of Government
Economic performance is not ruled by borders. The competitiveness of neighboring locations is often closely linked, whether or not they share the same national, state, or local government oversight. Competitiveness provides a conceptual framework to understand related economic outcomes, and to help governments develop collaborative policies to improve them.
Improving competitiveness at all levels of government
- Competitiveness, in particular microeconomic competitiveness, is shaped by policy decisions at many different levels of government. The conditions a company is exposed to in a given location—the diamond—is the result of the sum of all policies from all relevant levels of government.
- Levels of government differ not just in the size of their jurisdiction, but also in the role they play in the policy process. They control different policy tools (e.g., legal, budget) and perform different functions (e.g., creating laws, designing programs).
- Clarifying the roles and responsibilities of different levels of government is critical for effective policies to support competitiveness; this is where many countries fail and pay the price in terms of lower competitiveness and prosperity
Geographic & Governmental Influences on Productivity
State Example
