Canada’s Global Competitiveness
THE CONCEPT OF COMPETITIVENESS
Competitiveness: the ability to design, produce and market goods and services, the price and non-price characteristics of which form a more attractive package than those of competitors. Global Competitiveness
International commerce take place in commodities—agricultural products and natural resources. Goals of competitiveness
Internationally competitive economy is a means to an end—the requirement for enhanced social well-being. Weal creation and higher-order goals are necessary Competitiveness through productivity enhancement
Competitiveness: increased productive capacity achieved by innovation, superior technology, continuous skill-enhancing training, and a concern with social equity and environmental preservation. The Krugman Critique
(1) Paul Krugman—competitiveness is, at best, an essentially meaningless concept when applied to countries. At worst, it can lead to incorrect policy formulations. (2) Nations do compete, in that they choose policies to promote higher living standards. (3) Lost of competitiveness might restrict a nation’s economic potential and render it vulnerable to the actions of other political regimes and international consortiums. Economic Growth and Competitiveness
The vast literature economic growth theory fells into three broad categories. (1) The early post world war 2 growth models: associated with the work of Evsey Domar and Roy Harrod (tend to subsume other determinants of growth under the capital-output ratio, which obscures differences in growth rates between countries), emphasize the importance of savings and capital investment. Basic assumption—an economy’s output depends on the underlying amount of capital investment, and that it is the savings of people and firms that make such investment feasible. An economy’s output is linked to its stock of capital by a capital-output ratio that is constant. (2) The neoclassical model: (the importance of technologies). Robert Solow and Trevor Swan: output grows in response to increases in inputs of capital and labour as well as the efficiency with which these inputs are used Assumes a perfectly competitive economy that obeys the law of diminishing marginal returns. Attributes: as the stock of capital increases, growth will slow down without continuous technological progress; the prospect it holds out for economic convergence—poor countries can catch up with rich countries with the help of high-technologies—didn’t take place at most of the countries. Reasons: insufficient national savings and investment, ...