Promoting Industrial Competitiveness in Developing Countries

Lessons from Asia

image of Promoting Industrial Competitiveness in Developing Countries

As developing countries have started to open up their economies, concern about competitiveness has spread to their policy makers. Their relative competitiveness as production and investment sites has become a prime focus of development policy. They are, moreover, faced with a world in which the main determinants of competitiveness are changing rapidly. Competition has intensified due to rapidly falling transport and communication costs, and the performance of economies, industries and firms is constantly compared and benchmarked across nations. So are determinants of competitiveness. These and related issues are analysed in detail in this report. It describes the microfoundations of competitiveness and enterprise, and translates the lessons to the national level.



Why Worry about Competitiveness?

Some economists dispute the need to look at national competitiveness at all. Krugman, for instance, calls the concern with competitiveness a ‘dangerous obsession’, and wishes to “teach undergrads to wince when they hear someone talk about ‘competitiveness’”. This reflects a general feeling among many mainstream neoclassical economists that national competitiveness is not a meaningful concept and that discussing competitiveness policies opens the door to ‘picking winners’ and other forms of harmful industrial policy.


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