ABSTRACT
The competitiveness of an economy is a very popular concept, but it is understood in various ways. The authors define international competitiveness as a country’s ability to use its labour resources in conditions of free international trade. Though competitiveness is related to productivity, the two should not be confused. An economy can be internationally competitive regardless of its level of productivity, as long as wages are adjusted to the productivity. And accordingly, an economy at any level of productivity will be internationally uncompetitive if wages are too high in relation to productivity.
