IDEAS home Printed from https://ideas.repec.org/a/eee/streco/v36y2016icp50-62.html
   My bibliography  Save this article

On the concept of 'competitiveness' and its usefulness for policy

Author

Listed:
  • Mulatu, Abay

Abstract

This paper examines the coherence and usefulness of the contentious concept of ‘national competitiveness’. We undertake an interpretative review of the various uses of the concept in international economics. It is argued (á la Erik Reinert) that the concept of competitiveness is coherent in the presence of dynamic externalities, with a ‘winner picking’ exercise, by social planners, at its core. However, its usefulness for real-world policymaking can be limited because of practical problems (political and information imperfections) of picking the ‘real winners’. These problems are nonetheless not insurmountable. There is ample evidence that competitiveness strategies can work if they are the ‘right’ kind for a given political configuration.

Suggested Citation

  • Mulatu, Abay, 2016. "On the concept of 'competitiveness' and its usefulness for policy," Structural Change and Economic Dynamics, Elsevier, vol. 36(C), pages 50-62.
    • Handle: RePEc:eee:streco:v:36:y:2016:i:c:p:50-62
    DOI: 10.1016/j.strueco.2015.11.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0954349X15000594
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.strueco.2015.11.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Brander, James & Krugman, Paul, 1983. "A 'reciprocal dumping' model of international trade," Journal of International Economics, Elsevier, vol. 15(3-4), pages 313-321, November.
    3. J. Peter Neary, 2003. "Competitive versus Comparative Advantage," The World Economy, Wiley Blackwell, vol. 26(4), pages 457-470, April.
    4. Hildreth, Andrew K G & Oswald, Andrew J, 1997. "Rent-Sharing and Wages: Evidence from Company and Establishment Panels," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 318-337, April.
    5. Michael Porter, 2003. "The Economic Performance of Regions," Regional Studies, Taylor & Francis Journals, vol. 37(6-7), pages 549-578.
    6. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    7. Gillian Bristow, 2005. "Everyone's a 'winner': problematising the discourse of regional competitiveness," Journal of Economic Geography, Oxford University Press, vol. 5(3), pages 285-304, June.
    8. Mushtaq H. Khan, 2013. "Technology Policies and Learning with Imperfect Governance," International Economic Association Series, in: Joseph E. Stiglitz & Justin Yifu Lin (ed.), The Industrial Policy Revolution I, chapter 2, pages 79-115, Palgrave Macmillan.
    9. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2007. "What you export matters," Journal of Economic Growth, Springer, vol. 12(1), pages 1-25, March.
    10. Joseph E. Stiglitz, 2011. "Rethinking Development Economics," The World Bank Research Observer, World Bank, vol. 26(2), pages 230-236, August.
    11. Williamson, Jeffrey G., 2013. "Trade and Poverty: When the Third World Fell Behind," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262518598, December.
    12. Patrick Honohan & Brendan Walsh, 2002. "Catching Up with the Leaders: The Irish Hare," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(1), pages 1-78.
    13. Grossman, Gene M & Helpman, Elhanan, 1990. "Comparative Advantage and Long-run Growth," American Economic Review, American Economic Association, vol. 80(4), pages 796-815, September.
    14. Reinert, Erik S., 1995. "Competitiveness and its predecessors--a 500-year cross-national perspective," Structural Change and Economic Dynamics, Elsevier, vol. 6(1), pages 23-42, March.
    15. Robert E. Baldwin, 2004. "Openness and Growth: What's the Empirical Relationship?," NBER Chapters, in: Challenges to Globalization: Analyzing the Economics, pages 499-521, National Bureau of Economic Research, Inc.
    16. J. Peter Neary, 2009. "Putting the “New” into New Trade Theory: Paul Krugman's Nobel Memorial Prize in Economics," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(2), pages 217-250, June.
    17. Harrison, Ann & Rodríguez-Clare, Andrés, 2010. "Trade, Foreign Investment, and Industrial Policy for Developing Countries," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4039-4214, Elsevier.
    18. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    19. Giovanni Dosi & Keith Pavitt & Luc Soete, 1990. "The Economics of Technical Change and International Trade," LEM Book Series, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy, number dosietal-1990, March.
    20. Joseph E. Stiglitz & Justin Lin Yifu & Ebrahim Patel (ed.), 2013. "The Industrial Policy Revolution II," International Economic Association Series, Palgrave Macmillan, number 978-1-137-33523-4, December.
    21. Mowery, David C & Oxley, Joanne E, 1995. "Inward Technology Transfer and Competitiveness: The Role of National Innovation Systems," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 19(1), pages 67-93, February.
    22. Fagerberg, Jan, 1996. "Technology and Competitiveness," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 12(3), pages 39-51, Autumn.
    23. Ben Ross Schneider, 2013. "Institutions for Effective Business-Government Collaboration: Micro Mechanisms and Macro Politics in Latin America," Research Department Publications IDB-WP-418, Inter-American Development Bank, Research Department.
    24. Cristiano Antonelli, 1998. "Localized technological change, new information technology and the knowledge-based economy: The European evidence," Journal of Evolutionary Economics, Springer, vol. 8(2), pages 177-198.
    25. Boltho, Andrea, 1996. "The Assessment: International Competitiveness," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 12(3), pages 1-16, Autumn.
    26. Krugman, Paul, 1987. "The narrow moving band, the Dutch disease, and the competitive consequences of Mrs. Thatcher : Notes on trade in the presence of dynamic scale economies," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 41-55, October.
    27. Fransman, Martin, 1995. "Is National Technology Policy Obsolete in a Globalised World? The Japanese Response," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 19(1), pages 95-119, February.
    28. Nicholas G. Kalaitzandonakes, 2000. "Agrobiotechnology and Competitiveness," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(5), pages 1224-1233.
    29. Szirmai, Adam, 2012. "Industrialisation as an engine of growth in developing countries, 1950–2005," Structural Change and Economic Dynamics, Elsevier, vol. 23(4), pages 406-420.
    30. Dani Rodrik, 2009. "Growth after the Crisis," World Bank Publications - Books, The World Bank Group, number 27937, December.
    31. Krugman, Paul R, 1996. "Making Sense of the Competitiveness Debate," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 12(3), pages 17-25, Autumn.
    32. Krugman, Paul R, 1981. "Intraindustry Specialization and the Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 959-973, October.
    33. Georgios Georgiadis & Johannes Gräb, 2016. "Growth, Real Exchange Rates and Trade Protectionism since the Financial Crisis," Review of International Economics, Wiley Blackwell, vol. 24(5), pages 1050-1080, November.
    34. Barbara J. Spencer & James A. Brander, 1983. "International R & D Rivalry and Industrial Strategy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 50(4), pages 707-722.
    35. Melitz, Marc J., 2005. "When and how should infant industries be protected?," Journal of International Economics, Elsevier, vol. 66(1), pages 177-196, May.
    36. Reinert, Sophus A., 2011. "Translating Empire: Emulation and the Origins of Political Economy," Economics Books, Harvard University Press, number 9780674061514, Spring.
    37. Philippe Aghion, 2009. "Some Thoughts on Industrial Policy and Growth," Documents de Travail de l'OFCE 2009-09, Observatoire Francais des Conjonctures Economiques (OFCE).
    38. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    39. Joseph E. Stiglitz & Justin Yifu Lin (ed.), 2013. "The Industrial Policy Revolution I," International Economic Association Series, Palgrave Macmillan, number 978-1-137-33517-3, December.
    40. Jan Fagerberg & Bart Verspagen & G. N. von Tunzelmann (ed.), 1994. "The Dynamics Of Technology, Trade And Growth," Books, Edward Elgar Publishing, number 163.
    41. Dominick Salvatore, 2010. "Globalisation, International Competitiveness And Growth: Advanced And Emerging Markets, Large And Small Countries," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 1(01), pages 21-32.
    42. Erik S. Reinert, 1999. "The role of the state in economic growth," Journal of Economic Studies, Emerald Group Publishing, vol. 26(4/5), pages 268-326, September.
    43. Bruce Greenwald & Joseph E. Stiglitz, 2006. "Helping Infant Economies Grow: Foundations of Trade Policies for Developing Countries," American Economic Review, American Economic Association, vol. 96(2), pages 141-146, May.
    44. Redding, Stephen, 1999. "Dynamic Comparative Advantage and the Welfare Effects of Trade," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 15-39, January.
    45. Lall, Sanjaya, 2001. "Competitiveness Indices and Developing Countries: An Economic Evaluation of the Global Competitiveness Report," World Development, Elsevier, vol. 29(9), pages 1501-1525, September.
    46. Dani Rodrik, 2006. "Goodbye Washington Consensus, Hello Washington Confusion? A Review of the World Bank's Economic Growth in the 1990s: Learning from a Decade of Reform," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 973-987, December.
    47. Laura D'Andrea Tyson, 1992. "Who's Bashing Whom? Trade Conflict in High-Technology Industries," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 86, October.
    48. Cimoli, Mario & Dosi, Giovanni & Stiglitz, Joseph E. (ed.), 2009. "Industrial Policy and Development: The Political Economy of Capabilities Accumulation," OUP Catalogue, Oxford University Press, number 9780199235278.
    49. John Lovering, 2001. "The Coming Regional Crisis (And How To Avoid It)," Regional Studies, Taylor & Francis Journals, vol. 35(4), pages 349-354.
    50. Reinert, Erik S., 2012. "Neo-classical economics: A trail of economic destruction since the 1970s," MPRA Paper 47910, University Library of Munich, Germany.
    51. Guerrieri, Paolo & Meliciani, Valentina, 2005. "Technology and international competitiveness: The interdependence between manufacturing and producer services," Structural Change and Economic Dynamics, Elsevier, vol. 16(4), pages 489-502, December.
    52. Erik S. Reinert, 2009. "Emulation versus Comparative Advantage: Competing and Complementary Principles in the History of Economic Policy," The Other Canon Foundation and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics 25, TUT Ragnar Nurkse Department of Innovation and Governance.
    53. Guerrieri, Paolo & Milana, Carlo, 1995. "Changes and Trends in the World Trade in High-Technology Products," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 19(1), pages 225-242, February.
    54. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February.
    55. Venables, Anthony J, 1996. "Localization of Industry and Trade Performance," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 12(3), pages 52-60, Autumn.
    56. Ben Ross Schneider, 2013. "Institutions for Effective Business-Government Collaboration: Micro Mechanisms and Macro Politics in Latin America," IDB Publications (Working Papers) 83740, Inter-American Development Bank.
    57. Brian Arthur, W. & Ermoliev, Yu. M. & Kaniovski, Yu. M., 1987. "Path-dependent processes and the emergence of macro-structure," European Journal of Operational Research, Elsevier, vol. 30(3), pages 294-303, June.
    58. Erik S. Reinert, 2006. "Evolutionary Economics, Classical Development Economics, and the History of Economic Policy: A Plea for Theorizing by Inclusion," The Other Canon Foundation and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics 01, TUT Ragnar Nurkse Department of Innovation and Governance.
    59. Berg, Birgitta & Kilvits, Kaarel & Tombak, Mihkel, . "Technology Policyfor Improving Competitiveness of Estonian Industries," ETLA C, The Research Institute of the Finnish Economy, number 73.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. COMAN Cristiana-Ioana, 2022. "Empirical Evidence Of Romania S Competitiveness With A Focus On Education And R&D. Evolution And Recommendations," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 74(3), pages 35-49, October.
    2. María de las Mercedes Capobianco-Uriarte & María del Pilar Casado-Belmonte & Gema María Marín-Carrillo & Eduardo Terán-Yépez, 2019. "A Bibliometric Analysis of International Competitiveness (1983–2017)," Sustainability, MDPI, vol. 11(7), pages 1-22, March.
    3. Andrius Zuoza & Vaida Pilinkienė, 2021. "Energy Efficiency and Carbon Emission Impact on Competitiveness in the European Energy Intensive Industries," Energies, MDPI, vol. 14(15), pages 1-16, August.
    4. Shu-Yi Chi & Tsorng-Chyi Hwang & Li-Hsien Chien, 2023. "Business Policy and Competitiveness of Farmers’ Organizations—Empirical Evidence from Taiwan," Agriculture, MDPI, vol. 13(3), pages 1-17, February.
    5. Jaime de Pablo Valenciano & Juan Uribe-Toril & Juan Milán-García & José Luis Ruiz-Real & José Antonio Torres Arriaza, 2019. "Auxiliary Companies of the Horticultural Sector as a Competitiveness Element: The Case of Almeria (Spain)," IJERPH, MDPI, vol. 16(14), pages 1-19, July.
    6. Peter Mayerhofer, 2017. "Oberösterreichs Wirtschaft im europäischen Konkurrenzumfeld. Zweiter Bericht zur internationalen Wettbewerbsfähigkeit, 2017," WIFO Studies, WIFO, number 60592, April.
    7. Fang, Kai & Zhou, Yunheng & Wang, Shuang & Ye, Ruike & Guo, Sujian, 2018. "Assessing national renewable energy competitiveness of the G20: A revised Porter's Diamond Model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 93(C), pages 719-731.
    8. Jing Li & Chi-Hui Wu & Chien-Wen Chen & Yi-Fen Huang & Ching-Torng Lin, 2020. "Apply Fuzzy DEMATEL to Explore the Decisive Factors of the Auto Lighting Aftermarket Industry in Taiwan," Mathematics, MDPI, vol. 8(7), pages 1-27, July.
    9. Serhii Volyk & Oleksandr Kukhar & Mykhailo Bril, 2023. "Management Of The Agricultural Enterprises' Competitiveness In The Context Of Food Security," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 9(4).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Magdalena Olczyk, 2016. "International Competitiveness in the Economics Literature: A Bibliometric Study," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 2(4), pages 375-388, October.
    2. Dosi, Giovanni & Roventini, Andrea & Russo, Emanuele, 2019. "Endogenous growth and global divergence in a multi-country agent-based model," Journal of Economic Dynamics and Control, Elsevier, vol. 101(C), pages 101-129.
    3. repec:hal:spmain:info:hdl:2441/46k9rkvut99i7qnn4vqm25t53b is not listed on IDEAS
    4. Krugman, Paul R., 1989. "Industrial organization and international trade," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 20, pages 1179-1223, Elsevier.
    5. Lazzarini, Sérgio G., 2012. "Strategizing by the Government: Industrial Policy and Sustainable Competitive Advantage," Insper Working Papers wpe_289, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
    6. Dosi, Giovanni & Grazzi, Marco & Moschella, Daniele, 2015. "Technology and costs in international competitiveness: From countries and sectors to firms," Research Policy, Elsevier, vol. 44(10), pages 1795-1814.
    7. Pontus Braunerhjelm & Per Thulin, 2008. "Can countries create comparative advantages? R&D expenditures, high-tech exports and country size in 19 OECD countries, 1981-1999," International Economic Journal, Taylor & Francis Journals, vol. 22(1), pages 95-111.
    8. Lall, Sanjaya, 2001. "Competitiveness Indices and Developing Countries: An Economic Evaluation of the Global Competitiveness Report," World Development, Elsevier, vol. 29(9), pages 1501-1525, September.
    9. Harrison, Ann E. & Rodriguez-Clare, Andres, 2009. "Trade, Foreign Investment, and Industrial Policy," MPRA Paper 15561, University Library of Munich, Germany.
    10. Andre Nassif & Carmem Aparecida Feijo & Eliane Araújo, 2016. "Structural change, catching up and falling behind in the BRICS: A comparative analysis based on trade pattern and Thirlwall’s Law," PSL Quarterly Review, Economia civile, vol. 69(279), pages 373-421.
    11. repec:ebl:ecbull:v:2:y:2002:i:1:p:1-15 is not listed on IDEAS
    12. Ayda Eraydın & Bilge Armatlı Köroğlu & Hilal Erkuş Öztürk & Suna Senem Yaşar, 2008. "Network Governance for Competitiveness: The Role of Policy Networks in the Economic Performance of Settlements in the Izmir Region," Urban Studies, Urban Studies Journal Limited, vol. 45(11), pages 2291-2321, October.
    13. Schiff, Maurice & Olarreaga, Marcelo & Wang, Yanling, 2003. "North-South and South-South Trade-Related Technology Diffusion: An Industry Level Analysis," CEPR Discussion Papers 3711, C.E.P.R. Discussion Papers.
    14. Cyrielle Gaglio, 2015. "Measuring Country Competitiveness: A Survey of Exporting-based Indexes," GREDEG Working Papers 2015-42, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    15. Aykut Kibritçioglu, 2002. "On the Smithian origins of "new" trade and growth theories," Economics Bulletin, AccessEcon, vol. 2(1), pages 1-15.
    16. Dermot Leahy & J. Peter Neary, 2013. "Oligopoly and Trade," Palgrave Macmillan Books, in: Daniel Bernhofen & Rod Falvey & David Greenaway & Udo Kreickemeier (ed.), Palgrave Handbook of International Trade, chapter 7, pages 197-235, Palgrave Macmillan.
    17. Bent Dalum & Gert Villumsen, 1996. "Are OECD Export Specialisation Patterns 'Sticky'? Relations to the Convergence-Divergence Debate," DRUID Working Papers 96-3, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    18. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    19. Lionel Fontagné & Michaël Freudenberg & Deniz Ünal, 1995. "Régionalisation et échanges de biens intermédiaires," Working Papers 1995-11, CEPII research center.
    20. Castellacci, Fulvio, 2008. "Innovation and the competitiveness of industries: comparing the mainstream and the evolutionary approaches," MPRA Paper 27523, University Library of Munich, Germany.
    21. Azzopardi, Ernest & Nash, Robert, 2013. "A critical evaluation of importance–performance analysis," Tourism Management, Elsevier, vol. 35(C), pages 222-233.
    22. Goya, Daniel, 2014. "Política industrial: Qué es, por qué es necesaria, y su pasado, presente y futuro en Chile [Industrial policy: What is it, why it is necessary, and its past, present and future in Chile]," MPRA Paper 64881, University Library of Munich, Germany.

    More about this item

    Keywords

    Competitiveness; Comparative advantage; Increasing returns; Industrial policy;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:streco:v:36:y:2016:i:c:p:50-62. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/525148 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.