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In today's global economy, a country's level of competitiveness has emerged as an important policy tool for business leaders and the impact of many economic and institutional “hard” factors on competitiveness have been studied. The purpose of this paper is to examine the impact that diversity, a “soft” factor, has on a country's level of competitiveness.

Using a sample of 102 countries, a multiple regression analysis is performed in which the relationship between a country's competitiveness, as proxied by the global competitiveness index, and diversity, as proxied by ethnic, linguistic, and religious diversity, are tested while controlling for other factors known to affect competitiveness. Further, a cluster analysis is performed in an effort to illuminate global patterns in competitiveness.

The results indicate that greater levels of ethnic diversity negatively and significantly affect a country's competitiveness, but greater levels of linguistic diversity positively and significantly affect competitiveness while religious diversity has no effect.

The reasons behind for the analysis results still need further research. For example, why do greater levels of linguistic diversity positively affect country competitiveness?

The IMF, World Bank, and other investors of capital need to understand whether diversity will help or hinder aid and loan programs and corporations need to consider diversity when conducting global business and foreign investment.

This study is the first to examine the relationship between diversity and country‐level competitiveness and has value to global business managers and investors.

The aim of this paper is to create a country‐level measure of tolerance and to test the relationships between this measure of country‐level tolerance and percentage of talented workers, economic development, and competitiveness.

A country‐level measure of tolerance for 62 countries is created using responses from the World Values Survey. In particular, four survey responses which closely mirror the traditional definitions of tolerance are considered in the creation of the index. To test the relationships between country‐level tolerance and percentage of talented workers, economic development, and competitiveness, a series of hypotheses tests are conducted using the Spearman and Pearson correlation coefficients.

The results suggest that more tolerant countries tend to attract more net migrants, have a greater concentration of talented workers, higher levels of economic development, and are more competitive.

While, the results of this analysis suggest that tolerance is an important factor for economic prosperity, it should be noted that tolerance alone cannot foster development. Many other factors have a significant effect on economic prosperity and while tolerance is found to be a significant factor, a more tolerant environment alone will not create economic gains.

Global companies needing to attract talented workers should develop policies and work environments which encourage acceptance and tolerance for differences.

This paper provides a measure of country‐level tolerance for 62 countries and establishes the value of tolerance in regard to economic prosperity. This study has value to researchers studying tolerance at the country‐level and to managers of global companies.