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Competitiveness is a widely and repeatedly discussed topic – at least in my country, the annual release of the WEF report receives a lot of attention. A central question in economics is how resources should be allocated – what goods should be produced. Here, competitiveness often is important in evaluationg different industries contribution, and hence becomes important for both firms and authorities in selecting areas for development. But there is no strong agreement on the definition and distinction of the terms. Competitiveness is usually considered to reflect countries or firms long-term performance.

Thr OECD interprets this as: The ability to produce while exposed to competition.

The concept is closely linked to «comparative advantage» developed by David Ricardo – explaining that countries could increase welfare by specializing in production where they perform relatively better compared to other countries. Some distinguish between them based on the source of the advantage.

If it stems from distorted market prices, f.ex influenced by subsidies this may be considered competitiveness, whereas advantages that stem from social prices, reflecting all externalities, this may be considered «Comparative advantage».

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