The 'dangerous obsession' with cost competitiveness … and the not so dangerous obsession with competitiveness

Colin Hay

Cambridge Journal of Economics, 2012, vol. 36, issue 2, 463-479

Abstract: Judging solely by the continued prevalence of the term in policy-makers' discourse, Paul Krugman's now famous warnings as to the 'dangerous obsession' of competitiveness have fallen on deaf ears. In this paper I argue that this is, at least in part, because policy-makers (as distinct, perhaps, from business school gurus) never understood competitiveness in quite the manner he assumed. I suggest that Krugman largely misdiagnosed the problem of competitiveness, directing us to the link between competitiveness and protectionism that was always less prevalent and more tenuous than he imagined. As a consequence he overlooked other more pertinent and problematic aspects of the discourse of competitiveness that persist relatively unchallenged in spite of his warnings. More specifically, I seek to show that Krugman's understanding of competitiveness is insufficiently differentiated and rests on inferences drawn from an overly stylised model of competition for market share in product markets that exhibit a high demand price elasticity and in which success is associated exclusively with strategies of cost containment. As I show through a series of extensions to his model, this leads him to fail to see that it is the privileging of cost competitiveness specifically, rather than the pursuit of competitiveness per se that is the dangerous obsession from which we most need protecting today. Copyright The Author 2011. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.

Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://hdl.handle.net/10.1093/cje/ber006 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:cambje:v:36:y:2012:i:2:p:463-479

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Cambridge Journal of Economics is currently edited by Jacqui Lagrue

More articles in Cambridge Journal of Economics from Cambridge Political Economy Society Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().