IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Competitiveness under New Perspectives

  • Karl Aiginger
  • Susanne Bärenthaler-Sieber
  • Johanna Vogel

This paper aims to redefine the term competitiveness to enhance its usefulness for the evaluation of country performance and for policy conclusions. We attempt to establish a definition that is adequate if economic policy strives for a new growth path that is more dynamic, socially inclusive and ecologically sustainable. We tentatively apply the proposed definition to evaluate the "competitiveness" of EU member states as well as to compare Europe's competitiveness with that of the US, Switzerland, Japan and China, where possible. In the first part of the paper, we examine the evolution of the concept from a focus on "inputs" at the firm level (price or cost competitiveness) to economic structure and capabilities at the country level and finally to "outcome" competitiveness, where outcomes are defined in a broad sense and in the context of the WWWforEurope project. We propose to define competitiveness as the "ability of a country (region, location) to deliver the beyond-GDP goals for its citizens". In the second part of the paper, the performance of the EU-27 countries is assessed along the dimensions described above. We begin with price competitiveness and then proceed to economic structure and countries’ capabilities regarding innovation, education, the social system, institutions and environmental ambition. We conclude with outcome competitiveness in terms of economic, social and ecological outcomes. Overall, we compile a database of 68 indicators that describe these different aspects of competitiveness. In the third part of the paper, we investigate empirically the relationship between "outcome" and "input" competitiveness for the EU-27 using panel data analysis for the period from 2000 to 2010. We construct a composite indicator for outcome competitiveness consisting of income, social and ecological pillars, following the beyond-GDP literature. This measure is then econometrically related to composite indicators of the three groups of input indicators: price competitiveness, economic structure, and capabilities. The results of panel regressions suggest that both economic structure and capabilities on aggregate are positively related to our measure of outcome competitiveness, while a negative relationship is found for the wage component of price competitiveness. Among the different dimensions of capabilities, ecological ambition and institutions are positively associated with outcome competitiveness. Overall, we conclude that a narrow focus on the price component of competitiveness neglects other aspects of the concept that are likely to be particularly important for high-income economies like the EU-27.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.foreurope.eu/fileadmin/documents/pdf/Workingpapers/WWWforEurope_WPS_no044_MS46.pdf
File Function: Full text
Download Restriction: none

Paper provided by WWWforEurope in its series WWWforEurope Working Papers series with number 44.

as
in new window

Length: 97
Date of creation: Oct 2013
Date of revision:
Publication status: published
Handle: RePEc:feu:wfewop:y:2013:m:10:d:0:i:44
Contact details of provider:

Order Information: Postal: WWWforEurope Project Office Austrian Institute of Economic Research Arsenal Objekt 20 A-1030 Vienna
Email:


References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Jürgen Janger, 2012. "Structural Change and Competitiveness in the EU," WIFO Monatsberichte (monthly reports), WIFO, vol. 85(8), pages 625-640, August.
  2. Karl Aiginger & Matthias Firgo & Peter Huber, 2012. "Policy options for the development of peripheral regions and countries of Europe," WWWforEurope Policy Brief series 2, WWWforEurope.
  3. Eric A. Hanushek & Ludger Woessmann & Lei Zhang, 2011. "General Education, Vocational Education, and Labor-Market Outcomes over the Life-Cycle," Discussion Papers 11-003, Stanford Institute for Economic Policy Research.
  4. Griffith, Rachel & Redding, Stephen J. & Van Reenen, John, 2000. "Mapping The Two Faces Of R&D: Productivity Growth In A Panel Of OECD Industries," CEPR Discussion Papers 2457, C.E.P.R. Discussion Papers.
  5. Philippe Aghion & Peter Howitt, 1990. "A Model of Growth Through Creative Destruction," NBER Working Papers 3223, National Bureau of Economic Research, Inc.
  6. Wilhelm Kohler, 2006. "The “Lisbon Goal” of the EU: Rhetoric or Substance?," Journal of Industry, Competition and Trade, Springer, vol. 6(2), pages 85-113, June.
  7. Michael Peneder, 2010. "Technological Regimes and the Variety of Innovation Behaviour. Creating Integrated Taxonomies of Firms and Sectors," WIFO Working Papers 362, WIFO.
  8. Werner Holzl & Andreas Reinstaller, 2011. "On the heterogeneity of sectoral growth and structural dynamics: evidence from Austrian manufacturing industries," Applied Economics, Taylor & Francis Journals, vol. 43(20), pages 2565-2582.
  9. Martin Schlotter & Ludger Wößmann, 2010. "Frühkindliche Bildung und spätere kognitive und nichtkognitive Fähigkeiten: deutsche und internationale Evidenz," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 79(3), pages 99-120.
  10. Karl Aiginger, 2006. "Competitiveness: From a Dangerous Obsession to a Welfare Creating Ability with Positive Externalities," Journal of Industry, Competition and Trade, Springer, vol. 6(2), pages 161-177, June.
  11. Fagerberg, Jan, 1988. "International Competitiveness," Economic Journal, Royal Economic Society, vol. 98(391), pages 355-74, June.
  12. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  13. 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.
  14. 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.
  15. Heckman, James & Raut, Lakshmi, 2002. "Intergenerational Long Term Effects of Preschool - Structural Estimates from a Discrete Dynamic Programming Model," MPRA Paper 20657, University Library of Munich, Germany, revised 23 Dec 2009.
  16. Krugman, Paul R, 1996. "Making Sense of the Competitiveness Debate," Oxford Review of Economic Policy, Oxford University Press, vol. 12(3), pages 17-25, Autumn.
  17. Fagerberg, Jan, 1988. "International Competitiveness: Errata," Economic Journal, Royal Economic Society, vol. 98(393), pages 1203, December.
  18. Grupp, Hariolf, 1995. "Science, High Technology and the Competitiveness of EU Countries," Cambridge Journal of Economics, Oxford University Press, vol. 19(1), pages 209-23, February.
  19. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2002. "Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development," NBER Working Papers 9305, National Bureau of Economic Research, Inc.
  20. 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.
  21. Fagerberg, Jan, 1994. "Technology and International Differences in Growth Rates," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1147-75, September.
  22. Aiginger, Karl, 2010. "The Great Recession versus the Great Depression: stylized facts on siblings that were given different foster parents," Economics Discussion Papers 2010-9, Kiel Institute for the World Economy.
  23. Romain Bouis & Romain Duval & Fabrice Murtin, 2011. "The Policy and Institutional Drivers of Economic Growth Across OECD and Non-OECD Economies: New Evidence from Growth Regressions," OECD Economics Department Working Papers 843, OECD Publishing.
  24. Oughton, Christine & Whittam, Geoff, 1997. "Competition and Cooperation in the Small Firm Sector," Scottish Journal of Political Economy, Scottish Economic Society, vol. 44(1), pages 1-30, February.
  25. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  26. Michael Peneder, 2007. "A sectoral taxonomy of educational intensity," Empirica, Springer, vol. 34(3), pages 189-212, July.
  27. 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.
  28. Christian Ketels, 2006. "Michael Porter’s Competitiveness Framework—Recent Learnings and New Research Priorities," Journal of Industry, Competition and Trade, Springer, vol. 6(2), pages 115-136, June.
  29. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  30. Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 97-118, Fall.
  31. Oughton, Christine, 1997. "Competitiveness Policy in the 1990s," Economic Journal, Royal Economic Society, vol. 107(444), pages 1486-1503, September.
  32. Henry Kaiser, 1974. "An index of factorial simplicity," Psychometrika, Springer, vol. 39(1), pages 31-36, March.
  33. 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.
  34. Jérôme Vandenbussche & Philippe Aghion & Costas Meghir, 2006. "Growth, distance to frontier and composition of human capital," Journal of Economic Growth, Springer, vol. 11(2), pages 97-127, June.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:feu:wfewop:y:2013:m:10:d:0:i:44. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.