International competition is constantly redefining the roles of nations as most nations (or states) must strive to upgrade their national competitiveness. But from the World Competitiveness Reports published respectively by IMD and WEF in Switzerland, we still notice substantial differences in terms of country rankings. Are indicators chosen by IMD and WEF reflective of real national competitiveness? How can we reconcile the differences between numerous measures? To understand Taiwan’s competitive standing relative to other countries, we need to re-examine both competitiveness reports and demonstrate their appropriateness through construct validation (i.e., calculating convergent and discriminant validities) and reliability testing. This pioneering study uses confirmatory factor analysis (CFA) to decompose variations in national competitiveness rankings into three sources: variation due to “methods” (i.e., sources of reports), variation due to “traits” (i.e., indicators of competitiveness), and pure random errors. The major contribution of this study is that a modified or re-defined “national competitiveness” concept makes it easy for our national efforts toward upgrading international competitiveness to find their exact focus.
