Competitiveness, Technology and Skills

Competitiveness, Technology and Skills

Sanjaya Lall

This book draws together recent contributions by Sanjaya Lall – a leading authority on international investment, technology and industrial policy – on competitiveness and its major determinants. It draws upon his wide experience of competitiveness analysis in Asian and African countries and his recent work on technology and skills. It contains his most important published material as well as previously unpublished articles, and will be of interest to students, researchers and policy analysts interested in industrial development, technology and human resources.

Chapter 1: What ‘Competitiveness is and Why it is Important

Sanjaya Lall

Subjects: development studies, development economics, economics and finance, development economics, industrial economics, innovation and technology, technology and ict


1. What ‘competitiveness’ is and why it is important INTRODUCTION: GROWING CONCERNS ABOUT COMPETITIVENESS Governments are increasingly concerned about national competitiveness. This concern is not confined to developing countries exposing sheltered economies to global market forces: it was the governments of industrialized countries that first expressed worries about the erosion of their industrial leadership (OECD, 1997). This has evolved over time into concerns about economic competitiveness in a more general sense; with liberalization and adjustment, the concern has spread to many developing countries. Today, competitiveness is accepted as a legitimate basis for policy discourse. Thus, rich countries worry about keeping ahead, not just of each other but also of lower cost, newly industrializing competitors. Middle-income countries worry about catching up with advanced countries in new technologies and skills and about the inexorable encroachment of lower-wage entrants. The least-developed countries worry about getting onto the technology ladder, and the risk of remaining confined to low-wage or primary products that are increasingly marginal to a technology-driven global economy. The opening of the UK Government’s third competitiveness White Paper (UK Cabinet Office, 1996) illustrates the approach of most industrialized countries: Improving competitiveness is central to raising the underlying rate of growth of the economy and enhancing living standards. Achieving this means removing the impediments to investments in machines, people and ideas and improving the efficiency with which resources are used throughout the economy, not just in those sectors directly involved in international trade. It means giving people the freedom...

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