An Overview of International Economic Competition

Abstract

We believe in the existence of economic competition between nations, and that a nation’s competitiveness is an important concept, particularly for the United States at the present time. In this section, we will explain the reasons behind those beliefs, and why we reject this statement by economist Paul Krugman:

The idea that a country’s economic fortunes are largely determined by its success on world markets is a hypothesis, not a necessary truth, and as a practical, empirical matter, that hypothesis is flatly wrong. That is, it is simply not the case that the world’s leading nations are to any important degree in economic competition with each other, or that any of their major economic problems can be attributed to failures to compete on world markets¹ … So, while low productivity is a problem, low productivity relative to other countries is not only not a disaster; it is irrelevant².