And the Winner Is…Competitiveness

Why are countries rushing to improve their competitiveness?

“The countries with low competitiveness now are like paper boats in the world of globalization.”
(Rafael Correa, President of Ecuador, May 2007)

How has globalization changed the game?

“For the first time since the 17th century, the West’s economic pre-eminence is being seriously challenged.”
(Devesh Kapur, director, Center for the Advanced Study of India at the University of Pennsylvania; Pratap Mehta, president, Center for Policy Research, New Delhi; and Arvind Subramanian, senior fellow, Peterson Institute for International Economics, May 2008)

And what is the scope of the change?

“The situation is on the scale of the United States’ first challenging European companies and Japan’s first challenging U.S. companies. This wave is more like a tsunami — and will make earlier waves from developing countries look like mere ripples.”
(James W. Hemerling, co-author of “Globality: Competing with Everyone from Everywhere for Everything,” June 2008)

Can industrialized countries with well-paid workers still compete?

“It is wrong to infer that the world has gone flat — and that there is no comparative advantage left.”
(Jagdish Bhagwati, Columbia University professor and senior fellow at the Council on Foreign Relations, August 2005)

How can the developed world compete?

“When countries such as India and China can provide so much cheap labor, it is obvious that our only competitive advantage is ingenuity.”
(William Brody, co-chair of the U.S. Council on Competitiveness’s National Innovation Initiative, August 2005)

Put another way?

“I don’t fault anyone for competing with us. I fault us for not being smart enough to know how to compete effectively.”
(Hillary Rodham Clinton, U.S. Senator, D-NY, March 2004)

What is on the line for the United States?

“There is no job that is America’s God-given right anymore. We have to compete for jobs as a nation.”
(Carly Fiorina, then-CEO of Hewlett-Packard, February 2004)

And what is the key to success?

“The real debate ought to center around the best way for firms to import competitiveness — not ‘export jobs.’ Global competition is primarily about inter-firm, not inter-country, rivalry.”
(C.K. Prahalad, professor at the University of Michigan, June 2005)

Anything else?

“If we think about the jobs of the future, we think about competitiveness in the future — and you always keep coming back to education as the number one factor that makes a difference there.”
(Bill Gates, chairman of Microsoft, April 2005)

What is dragging on U.S. competitiveness?

“Health care is the Achilles heel of the United States in terms of competitiveness.”
(Craig Barrett, chairman of Intel, September 2007)

Why is competitiveness at the top of Europe’s agenda?

“The rise of China and India is a clarion call to reform and greater competitiveness — not a cause for retreat and introspection.”
(Peter Mandelson, then-EU Trade Commissioner, June 2005)

But what’s the problem?

“You can’t improve your competitiveness, guarantee your energy security and save the environment all at the same time.”
(Jan Keppler, senior researcher at the Geopolitical Center for Energy and Primary Resources, July 2005)

Who’s leading the race for competitiveness in Europe?

“Germany and the Netherlands have cut labor costs and introduced enough reforms to make their economies more competitive. France, Spain and especially Italy have done less — and are suffering more, from both the euro’s rise and the global slowdown.”
(The Economist, April 2008)

What else has an impact?

“How you design a social security system has a direct impact on people’s willingness to adjust. That has a direct impact on a country’s competitiveness.”
(Pär Nuder, then-Swedish Finance Minister, June 2006)

Where does China stand?

“The days of the Chinese mainland’s super-competitiveness are over.”
(Jonathan Anderson, chief economist at UBS, April 2007)

Is there an argument that the focus on competitiveness is overblown?

“We are experiencing another competitiveness panic. These occur every 15 or 20 years. There’s an outpouring of worried reports and articles. After Sputnik in 1957 — the first artificial satellite — we were supposedly doomed to be overtaken by the Soviet Union.”
(Robert Samuelson, Newsweek columnist, August 2006)

Put another way?

“In the late 1970s and 1980s, it was Germany and then Japan. Lately, China and India have been the threats. Through it all, the United States has remained the dominant global economy, representing about one-fifth of the world’s total output.”
(Robert Samuelson, Newsweek columnist, August 2006)

What may be more important than competitiveness?

“A focus on export competitiveness tends to erode living standards and distracts policymakers from a more beneficial emphasis on productivity.”
(Adam Posen, senior fellow at Institute for International Economics, August 2006)

And finally, what is the real key to competitiveness?

“Figure out something new if you can or else build a better mousetrap — and get it before competitors can react.”
(Ted Turner, founder of CNN, August 2002)

To learn more:

• The World Economic Forum publishes an annual Global Competitiveness Report, which examines the economic competitiveness of 134 countries around the world.
• The OECD frequently publishes reports analyzing the economic competitiveness of its member countries.