How do we define competitiveness?
In the traditional ("classic") mode, competitiveness is defined as the capacity of an actor (company, network, cluster, economy) to secure a series of competitive advantages in some markets generating profits. Here's an example: The competitiveness of the enterprise is "the ability to compete (...) resulting from a combination of elements that the company is in favorable position in face of its competitors."[1] The most important factor of competitiveness has become "the ability to adapt products to consumers by increasing the variety of their requirements and ensuring their timely delivery."[2]
As a new research direction we mention the distinction made - correctly -between the competition ability of a firm and the economy. Thus "the view that a country is like an economic company is wrong (...). Economic competition does not lead to bankruptcy of a country. In the context of economic competition between countries, there are powerful forces balancing, usually, that any country will continue to be able to sell a number of products on international markets and to balance, eventually, trade, even though the country is less than the other countries on productivity, technology and product quality."[3]
The differentiation between competition and competitiveness lies in a series of "traps" and possible errors. Finding who to sell low quality products, through uncompetitive competition involves great risk. There are known recent cases when the economic weaker countries with a low competitive power found customers (markets) selling technology polluting products and intensive (concrete) energy, materials with high ecological value (or unprocessed wood low processing), exporting raw metals, providing storage facilities for waste pollution.
Even David Ricardo (in 1817) showed that "a country whose productivity is lower than its trading partners in most or all economic sectors, exporting its products in which disadvantage them in the productivity is lowest, the conventional terminology (...) of a country is always able to find a range of products in which it has a "competitive advantage," even if there is no product in which to have an "absolute advantage."[4]
Such "competitive advantage" to noncompetitive products is ensured by lowering requirements for competitiveness, usually, by low wages, permissive regulation to pollution and workers health (or population), environmental damage, etc. disadvantageous exchange. All these reduced requirements result in damage to living standards of population and economic dependence. There is a "chain of dependence" that works against the interests of the country's future.
That is why the European Union said direct and essential link between economic competitiveness and population welfare: "Competitiveness is the ability of the economy to ensure high-income population and rising employment and higher rates on a sustainable basis."[5] This macroeconomic approach is correlated with a new vision at the microeconomics level, by redefining the social functions of the enterprise. In this perspective "the main function of an enterprise is to create value by producing goods and services needed by society and, through it - to generate profit for its investors and holders of interests ("stakeholders") as welfare for society, particularly through the permanent process of creating jobs."[6]
- [1] Bremond J., and A. Geledan (1994), Economic and Social Dictionary. Bucharest: Expert Publishing House, 201.
- [2] Cooley, Mike (1990), "European Competitiveness in the 21-st Century," Commission of the European Communities, London, 38.
- [3] Krugman Paul R. (1992), "Capacity of Economic Competition," Sinteze, no. 93, 4.
- [4] Ibid., 5.
- [5] *** (2002), Presidency Conclusions Lisbon European Council, 23-24 March: point 24.
- [6] *** (2002), Corporate Social Responsibility. A Business Contribution to Sustainable Development, COM (2002) 347 final Brussels, 5.
