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Competitiveness: From a Dangerous Obsession to a Welfare Creating Ability with Positive Externalities

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  • Karl Aiginger

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Abstract

The attempt to define the term “competitiveness of nations” has reached the phase of decreasing returns. Fortunately, the literature seems to be converging slightly, a tendency, we hope to accelerate. We propose (1) defining competitiveness as “the ability of a country or location to create welfare.” We maintain (2) that a comprehensive evaluation contains an output evaluation and a process evaluation. We claim (3) that the output evaluation (competitiveness achieved) is closely related to a welfare assessment, with a specific slant and stepwise operationalisations. Furthermore, (4) process evaluation (investigating the ability) is related to the analysis of production and technology functions, adding qualitative elements like strategies, and the strengths and weaknesses of a country. This consensus is at variance with the concept of price competitiveness; it sidelines the importance of external balances, while the productivity approach to competitiveness is nested within. Dangerous obsessions and wrong policy conclusions can never be excluded, but are much less likely if we use this approach to competitiveness—as compared to concepts focusing on price competitiveness or on external balances. Specifically, the greater competitiveness of one country must not necessarily go hand in hand with lower competitiveness in other countries. In advanced countries specifically, policies promoting the ability to create welfare will create positive spillovers into other economies. Copyright Springer Science + Business Media, LLC 2006

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Bibliographic Info

Article provided by Springer in its journal Journal of Industry, Competition and Trade.

Volume (Year): 6 (2006)
Issue (Month): 2 (June)
Pages: 161-177

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Handle: RePEc:kap:jincot:v:6:y:2006:i:2:p:161-177

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Web page: http://springerlink.metapress.com/link.asp?id=105724

Related research

Keywords: competitiveness; welfare evaluation; innovation; Lisbon strategy; F10; F15; F43; O31; O40; O57;

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References

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  1. Aiginger, Karl, 1997. "The Use of Unit Values to Discriminate between Price and Quality Competition," Cambridge Journal of Economics, Oxford University Press, vol. 21(5), pages 571-92, September.
  2. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, 06.
  3. Eckhard Siggel, 2006. "International Competitiveness and Comparative Advantage: A Survey and a Proposal for Measurement," Journal of Industry, Competition and Trade, Springer, vol. 6(2), pages 137-159, June.
  4. Isabel Grilo & Gert Koopman, 2006. "Productivity and Microeconomic Reforms: Strengthening EU Competitiveness," Journal of Industry, Competition and Trade, Springer, vol. 6(2), pages 67-84, June.
  5. Christine Oughton & Geoff Whittam., . "Competition and Co-operation in the Small Firm Sector," Working Papers 9602, Business School - Economics, University of Glasgow.
  6. Karl Aiginger & Michael Landesmann, 2002. "Competitive Economic Performance: The European View," WIFO Working Papers 179, WIFO.
  7. Aiginger, K., 1998. "A framework for evaluating the dynamic competitiveness of countries," Structural Change and Economic Dynamics, Elsevier, vol. 9(2), pages 159-188, June.
  8. Fagerberg, Jan, 1994. "Technology and International Differences in Growth Rates," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1147-75, September.
  9. Karl Aiginger, 2006. "Revisiting an Evasive Concept: Introduction to the Special Issue on Competitiveness," Journal of Industry, Competition and Trade, Springer, vol. 6(2), pages 63-66, June.
  10. von Tunzelmann, G. N., 1995. "Government policy and the long-run dynamics of competitiveness," Structural Change and Economic Dynamics, Elsevier, vol. 6(1), pages 1-21, March.
  11. Fagerberg, Jan, 1988. "International Competitiveness," Economic Journal, Royal Economic Society, vol. 98(391), pages 355-74, June.
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Citations

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Cited by:
  1. Karl Aiginger, 2013. "The "Greening" of Industrial Policy, Headwinds and a Possible Symbiosis," WIFO Working Papers 450, WIFO.
  2. Christoph Böhringer & Victoria Alexeeva-Talebi, 2011. "Unilateral climate policy and competitiveness: The implications of differential emission pricing," Working Papers V-338-11, University of Oldenburg, Department of Economics, revised Jun 2011.
  3. Karl Aiginger, 2013. "A Southern Europe strategy based on vision and industrial policy," EKONOMIAZ, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 82(01), pages 127-168.
  4. KAPITSINIS, Nikolaos & METAXAS, Theodore & DUQUENNE, Marie Noelle, 2013. "Exploring The Coherence And The Meaning Of Territorial Competition: Do National States Behave In The Same Way As Firms In Case Of Default?. The Cases Of Greece And Dubai," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 13(2), pages 57-72.
  5. Ioanna Boulouta & Christos Pitelis, 2014. "Who Needs CSR? The Impact of Corporate Social Responsibility on National Competitiveness," Journal of Business Ethics, Springer, vol. 119(3), pages 349-364, February.
  6. Karl Aiginger, 2011. "Why Growth Performance Differed across Countries in the Recent Crisis: the Impact of Pre-crisis Conditions," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 35-52, August.
  7. Raphaël Chiappini, 2012. "Les indices composites sont-ils de bonnes mesures de la compétitivité des pays ?," Larefi Working Papers 1205, Larefi, Université Bordeaux 4.
  8. Pitelis, Christos, 2009. "Foreign direct investment and economic integration," MPRA Paper 23938, University Library of Munich, Germany.
  9. Sarker, Rakhal & Ratnesena, Shashini, 2014. "Revealed Comparative Advantage and Half-A-Century Competitiveness of Canadian Agriculture: A Case Study of Wheat, Beef and Pork Sectors," Working Papers 165675, Canadian Agricultural Trade Policy Research Network.
  10. Mercedes Delgado & Christian Ketels & Michael E. Porter & Scott Stern, 2012. "The Determinants of National Competitiveness," NBER Working Papers 18249, National Bureau of Economic Research, Inc.
  11. Karl Aiginger & Susanne Bärenthaler-Sieber & Johanna Vogel, 2013. "Competitiveness under New Perspectives," WWWforEurope Working Papers series 44, WWWforEurope.
  12. Claudia Ogrean & Mihaela Herciu, 2010. "Globalization And The Dynamics Of Competitiveness – A Multilevel Bibliographical Study," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 5(1), pages 126-138, april.
  13. Karl Aiginger, 2012. "A Systemic Industrial Policy to Pave a New Growth Path for Europe," WIFO Working Papers 421, WIFO.
  14. Pitelis, Christos & Kelmendi, Pellumb, 2009. "The political economy of European anti-trust and industrial policy," MPRA Paper 23941, University Library of Munich, Germany.
  15. Karl Aiginger, 2014. "Industrial Policy for a sustainable growth path," WWWforEurope Policy Paper series 13, WWWforEurope.
  16. Karl Aiginger, 2013. "A New Strategy for the European Periphery," WIFO Working Papers 443, WIFO.
  17. repec:old:wpaper:338 is not listed on IDEAS
  18. Raphaël Chiappini, 2012. "Les indices composites sont-ils de bonnes mesures de la compétitivité des pays ?," Working Papers hal-00745413, HAL.
  19. Lechman, Ewa, 2014. "Changing patterns of export of goods versus macroeconomic competitiveness. A comparative analysis for East-Central European countries in the period 2000-2011," MPRA Paper 53639, University Library of Munich, Germany.

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