Competitiveness - Its Advantages and Disadvantages

Introduction

The world economy has entered an era of total competition. Traditional barriers have begun to fall, new-sophisticated competitors have emerged, and global rivalry increased. There are many examples around the world where the traditional sources of comparative advantage are less valuable than initially perceived for the development of a strong, competitive economy.

The new type of development is one that involves the whole market and all institutions in the economy. Productivity is that component which creates a competitive advantage rather than a comparative advantage; the latter only addresses only the supply side of the market system and ignores demand, historical chance and the role of government. Indeed, the model of competitive advantage addresses the question of development today.

A nation’s standard of living is increasingly dependent on the competitiveness of its economy. Competitiveness is vital if the nation’s firms are to take advantage of the opportunities opened up for them in the international arena. World trade and foreign investment have grown faster than world output in the last several decades.

This paper is essentially divided into three main chapters. The first chapter defines competitiveness and characterizes the main factors that influence it. The end of the chapter describes the main stages of the development of competitiveness, proposed by Michael E. Porter. The second chapter analyses competitiveness from a global perspective. It starts with explaining