Wednesday, May 20, 2009

A Flawed View of Competitiveness

Here's is what competitiveness guru Michael Porter has to say about the growth strategy Dodoland has embraced:

"The most intuitive definition of competitiveness is a country’s share of world markets for its products. It also underpins policies intended to provide subsidies, hold down local wages and devalue the nation’s currency, all aimed at expanding exports. In fact, it is still often said that lower wages or devaluation “make a nation more competitive".

Unfortunately, this intuitive view of competitiveness is deeply flawed, and acting on it works against national economic progress. The need for low wages reveals a lack of competitiveness, and holds down prosperity. Subsidies drain national income and bias choices away from the most productive use of the nation’s resources.

Devaluation results in a collective national pay cut by discounting the products and services sold in world markets while raising the cost of the goods and services purchased from abroad. Exports based on low wages or a cheap currency, then, do not support an attractive standard of living.

1 comment:

Sanjay Jagatsingh said...

Par ekzamp si nu bann eksportasyon pann depas GBP800 million sa ve dir nu pann vreman ogmant nu par de marse (amwin lindistri linz britanik pe retresi).