Competitiveness: Definitions, Useful Concepts, and Issues
Examination of some of the mistakes found in the literature and popular press in addressing competitiveness and trade is instructive in identifying some of the misunderstandings of received theory. Trade theory is but one of the sub disciplines in economics concerned with issues related to competitiveness. Porter’s “National Diamond” is generally used in the context of case studies of competitiveness to assess the prospects of an industry, product, or economic activity. Competitiveness in international food markets, or in the domestic market with imports, is determined by decidedly different factors and measured by different instruments depending on the type of product produced. The most pervasive concept of competitiveness practiced by economists and agricultural economists is price competitiveness. Basing judgment of competitiveness or comparative advantage on international comparisons of costs of production across nations is probably the most blatant violation of received theory in the literature.