International Competitiveness and Comparative Advantage: A Survey and a Proposal for Measurement

Abstract

The concept of competitiveness, or competitive advantage, has been given numerous interpretations and tends to be ambiguous. Comparative advantage, although rigorously defined in the Ricardian trade model, is also subject to different interpretations when extended beyond the classical trade theory and, particularly, with respect to its measurement. The present paper first reviews the literature that deals with definitions and measurements of these concepts, distinguishing their main characteristics, such as macro vs. micro, static vs. dynamic, positive vs. normative, ex ante vs. ex post, as well as the different uses made of the proposed measures. Second, the paper proposes an integrated approach, in which it is demonstrated how competitiveness and comparative advantage are best related to each other and how they differ. The proposed measurement serves the purpose of quantifying the different sources of competitiveness. It is shown how it can be applied to guide policy makers in their evaluation of trade and industrial policies. The latter aspect is illustrated by reference to several applied studies using the method of analysis in the context of policy reforms in India, Mali, Kenya and Uganda. Copyright Springer Science + Business Media, LLC 2006competitiveness, comparative advantage, price distortions, policy analysis, F10, F13, F14,

Competitiveness of the European Automobile Industry in the Global Context

“…On the level of industry, however, the original, narrow, neoclassical concept of competitiveness seems more useful. Siggel (2006) shows the distinction between competitiveness and comparative advantage, but even he admits the two theoretical concepts have in fact many features in common. Th erefore, we follow the conception of competitiveness presented by Hindls et al (2003), who call a particular economic subject competitive if it is successful in penetrating the new markets and gaining a comparative advantage in international trade.…”

Uganda’s Revealed Comparative Advantage in COMESA

“…Siggel (2007) further points that the two concepts differ in their conceptualization. This means that the conceptualization of CA constitutes many price alterations in output worth and expenses while competitiveness is based on actual aspects alone.…”

“…CA has also been tied to competitiveness; in his work, Siggel (2007) demonstrates that the most consistent interpretation of competitiveness is the microeconomic view of cost, which is also related to CA. Siggel (2007) further points that the two concepts differ in their conceptualization.…”

Technology and Innovation on Input Sectors of Brazilian Meat Production

“…The differences result from theoretical bases, percepts of industrial dynamic and several ideologies thus, the assessment of firms, industries, countries -depending on analytical plan of investigation -and the proposal of formulated policies (HAGUENAUER, 1989;KUPFER, 1991;SIGGEL, 2006).…”

“…Allocative efficiency, on the other hand, is positioned at the equilibrium point and implies production efficiency in all markets, along with maximum social wellness. Siggel (2006) highlights the static nature of comparative advantage principles 7 , which limits the ability to explain as well as foresee commercial patterns.…”