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t may seem obvious that the more a country or company invests in an individual'€™s personal development, the higher the chances that that person will succeed professionally and make a significant economic contribution that can benefit all. But just because something seems obvious that does not mean that it is fully understood and much less that it is acted on.

Improving quality of life requires maximizing the benefits that economic activities can bring. Companies can do this by investing strongly in talent and giving all possible encouragement to employees to make a creative contribution. Enterprises that are concerned with their workforce'€™s welfare are more likely to achieve sustainable value creation: they generate products, services and practices that yield both profits and benefits to the community.

Governments and companies operating in their countries can promote quality of life through the policies and actions that they take and the practices they adopt.

Efficient governments, for example, ensure that personal security and private property rights are adequately protected. They ensure that justice is administered fairly. Governments also promote the cohesion of society by making sure that the country'€™s institutions are inclusive and non-discriminatory.

Companies, on the other hand, can contribute to improving the quality of life in a country by, for example, reducing discrimination, both sexual and racial, in the workplace and by promoting equal opportunities for all.

Talent development

Public expenditure significantly determines the quality of the education system. For example, expenditure can reduce pupil-teacher ratios and allow schools to better address the needs of individual students.

Governments can influence the establishment of apprenticeship schemes, which not only increase the supply of quality workers, but also further the development of human capital. Clearly, companies can also contribute here.

Employee training programs do much to further personal development and increase workers'€™ motivation, all of which can improve the performance of the organization in general. At the same time, training programs enable companies to attract and retain talent, which in turn boosts the talent-pool necessary to meet the organization'€™s strategic needs.

Reducing inequality

Another area where government policies and company practices can combine to improve the quality of life, and therefore competitiveness, is in the dynamics of the workplace.

Government policies can influence the inclusiveness of institutions by lowering barriers to participation. A good example would be policies that seek to increase gender equality by encouraging greater female participation in socio-political activities. Other areas where governments can lead the way include promotion of equality in education (i.e., enrolment and achievement), employment and salary differentials between male and female employees.

The private sector can contribute by boosting women'€™s participation in higher-value economic activities and entrepreneurial opportunities.

Equality in the workplace increases the competitiveness of the local labor market by enlarging and improving the quality of the talent pool available to meet market demands, and by broadening the diversity of skills available. It can also increase productivity because employee motivation and morale rise as inequalities decline. For example, access to training opportunities enables employees to maximize their potential, which strengthens their motivation and commitment. This can reduce employee turnover and help generate a work environment conducive to innovation, which organizations need to flourish.

The changing dynamics of competitiveness

Government policies and company practices can combine to generate improvements in the quality of life that in turn can raise the level of talent and skill available in an economy and boost its competitiveness.

But competitiveness dynamics are in constant flux. What we understand as a high quality of life now may not be the same as what was understood by it 10 years ago or in 10 years'€™ time. The analytical framework for competitiveness, therefore, needs to constantly be revised to keep up to date.

For this reason the IMD World Competitiveness Center, in its efforts to maintain the standard of its ground-breaking research, constantly reviews the composition of the World Competitiveness Yearbook. In the upcoming 2015 Yearbook, for example, we have taken a fresh look at our findings on the quality of life and its interconnectedness with other competitiveness indicators.
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Bris is professor of Finance at IMD and directs the IMD World Competitiveness Center. Caballero is Research Fellow with the IMD World Competitiveness Center.