Competitiveness: A Dangerous Obsession

Paul Krugman, in his 1994 article, made a distinction between competitiveness of a nation and that of a corporation. While uncompetitive corporations go out of business, countries "do not go out of business". Krugman put forth, "it is simply not the case that the world’s leading nations are to any important degree in economic competition with each other, or that any of their major economic problems can be attributed to a failure to compete on world markets". He added that it is productivity growth that determines the living standards of nations. Obsession with competitiveness led to domestic policies targeted at misplaced priorities, protectionism and trade wars, he underscored.