ABSTRACT
The term competitiveness has been ‘captured’ for too long by lobbyists and politicians in pursuing a low-wage strategy. The right-wing populists of today, like the new US administration, have embraced and extended this agenda by calling for lower environmental ambitions and lower social standards. The potential loss of jobs linked to ‘unfair’ import competition, as well as to inward migration, can mobilize popular support against globalization even where the trade balance is positive, as it is in the EU. This chapter argues that countries focusing on innovation, skills, and product quality are more successful in the long run and that we should acknowledge this fact when we speak about ‘competitiveness’. Especially for industrialized countries, this is the only strategy to further increase social welfare, since new low-cost countries will enter the market all the time. A high-road strategy, however, needs an alternative framework of concepts and definitions: competitiveness is defined as the ability to deliver outcomes that include social and environmental goals; performance is measured by ‘Beyond GDP indicators’; and a systemic industrial policy must support innovation and retrain the losers of structural change, instead of protecting unviable jobs. In a high-road approach, competitiveness harnesses societal goals and undermines the roots of populism.
