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Competitiveness. Its Advantages and Disadvantages

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Introduction

The world economy has entered an era of total competition. Traditional barriers have begun to fall, new-sophisticated competitors have emerged, and global rivalry increased. There are many examples around the world where the traditional sources of comparative advantage are less valuable than initially perceived for the development of a strong, competitive economy.
The new type of development is one that involves the whole market and all institutions in the economy. Productivity is that component which creates a competitive advantage rather than a comparative advantage; the latter only addresses only the supply side of the market system and ignores demand, historical chance and the role of government. Indeed, the model of …show more content…

Globally, by increasing productivity and efficiency in the context of international specialization, competitiveness provides the basis for raising peoples' earnings in a non-inflationary way" ("Enhancing European Competitiveness". First Report to the President of the Commission, the Prime Ministers and the Heads of State, June 1995);
6. "Competitiveness is the degree to which a nation can, under free trade and fair market conditions, produce goods and services which meet the test of international markets, while simultaneously maintaining and expanding the real incomes of its people over the long-term" (OECD).
As it can be easily observed, there is no consensus concerning the concept of "competitiveness". That is why the approach to studying competitiveness is divided into several levels [1]:
1. National Competitiveness, which is used when the competitiveness of a company and its performances are compared to firms of the same type from the national economy;
2. Branch Competitiveness, which is analyzed at 2 levels:
a) Branch competitiveness on the internal market, which is higher if firms from one branch obtain competitive advantages and performances comparing to firms from other branches of the national economy;
b)Branch competitiveness on the external market, that is considered higher if there exists a massive and permanent export, including capital, in a

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