Chapter 1: Problem 6

What is meant by international competitiveness? How does this concept apply to a firm, an industry, and a nation?

Short Answer

Expert verified

International competitiveness is a country, industry, or firm's ability to effectively compete in the global market. For firms, this involves efficiency, quality or uniqueness in services and goods. For industries, it is about collective competitiveness, shaped by industry structures, infrastructure, workforce skill, etc. For a nation, it involves creating a supportive environment for its firms and industries with macroeconomic stability, quality institutions, advanced technology, and trade openness.

Step by step solution

Defining International Competitiveness

International competitiveness refers to the ability of a country, industry, or a firm to produce goods and services which meet the test of international markets, while simultaneously maintaining and expanding the real incomes of its people over the longer-term.

Applying the concept to a firm

For a firm, this means being able to produce goods or services at lower costs, superior quality, or through offering something unique to the market compared to international competitors. This can involve aspects such as research and development, efficiency, managerial expertise, or brand reputation.

Applying the concept to an industry

For an industry, competitiveness involves the collective ability of its firms to compete internationally. This can be driven by factors like industry systems, infrastructure, collective investment in research, skills of the workforce, and access to suppliers and resources.

Applying the concept to a nation

For a nation, competitiveness is about how the country supports its firms and industries to compete on the global stage. This involves macroeconomic stability, the state of its institutions and infrastructure, technological advancement, quality of education, labour market efficiency, and openness to trade and investment.

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