45126-Invest. Qual-No111

Competitiveness, Continuous Improvement and Learningof other economists and business analysts to discard the concept ofnational competitiveness and to criticise the focus of governmentsand public agencies on studying and building competitiveness(Turner, 2001).BOX 10.1The concept of competitivenessNational CompetitivenessA number of writers have argued that the concept of competitivenesshas limited meaning when applied to countries (Turner,2001; Krugman, 1996). This argument has been developed mostfully by Krugman who emphasises that a country as an economicentity is fundamentally different to a company so that analogiesdrawn between countries and companies can be misleading. Tosay that a company is uncompetitive is to say that its position isunsustainable; if it does not improve its position it will cease toexist. There is no equivalent for a country of an overall profit orloss. This scepticism about national competitiveness is contentious.Many would still contend that national competitiveadvantage is a meaningful concept and a critical goal of publicpolicy (see Dunning, 1995). In any case, the relevance ofKrugman’s scepticism depends on the size of the economy, asexplained below.Comparative AdvantageThe perspective on trade as mutually advantageous exchangerather than a zero-sum is based on the economic theory ofcomparative advantage. According to this theory, market forceswill lead countries to specialise in those areas in which they havea comparative advantage. This applies to trade between twocountries, even if one country has higher productivity ineverything. The less productive country will specialise in thoseareas in which its productivity disadvantage is lowest; i.e., whereit has a comparative advantage. Provided wages reflect thedifference in productivity between the two countries, one wouldnot expect either country to have a competitiveness problem.535