Given the importance of the TFP as one of the sources of economic growth, and in light of the relevance of the GCI index to the determinants of the TFP, using a sample of 46 developing countries, this study aims at testing the hypothesis that the GCI is a good proxy for the TFP in this group of countries. The contribution of this study is three folds: first, it verifies the global competitiveness report (2018) conclusion that the GCI index is considered to be a good proxy for the TFP with a specific focus on developing countries. Second, it reconstructs the GCI in a way that reflects the relative importance of the different pillars, and finally, it highlights some policy areas which require more attention from developing countries to leverage its TFP.
This study concludes that human capital, financial development, and information and communication technology (ICT) development have the highest contribution to variations of TFP in developing countries.
Further, the results of the study show that the way the GCI is constructed in terms of the choice of variables, as well as the weights given to the different pillars, affects the reliability of the GCI as a proxy for the TFP in developing counties.