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Competitiveness: A Dangerous Obsession

Paul Krugman
Foreign Affairs
Vol. 73, No. 2 (Mar. - Apr., 1994), pp. 28-44
DOI: 10.2307/20045917
Stable URL: http://www.jstor.org/stable/20045917
Page Count: 17
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Competitiveness: A Dangerous Obsession
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Abstract

The view that nations compete against each other like big corporations has become pervasive among Western elites--many of whom are in the Clinton administration. As a practical matter, however, the doctrine of "competitiveness" is flatly wrong. The world's leading nations are not, to any important degree, in economic competition with each other. Nor can their major economic woes be attributed to "losing" on world markets. This is particularly true in the case of the United States. Yet Clinton's theorists of competitiveness--from Laura D'Andrea Tyson to Robert Reich to Ira Magaziner--make seemingly sophisticated arguments, most of which are supported by careless arithmetic and sloppy research. Competitiveness is a seductive idea, promising easy answers to complex problems. But the result of this obsession is misallocated resources, trade frictions and bad domestic economic policies.

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