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No. 5: Competitiveness: Concepts and Measures

by Donald G. McFetridge, Department of Economics, Carleton University, under contract to Industry Canada, April 1995


The purpose of this study is to explain and evaluate concepts and measures of competitiveness. Competitiveness means different things to different people. It is helpful to consider competitiveness at three different levels of aggregation:

  • the firm;
  • the industry or groups of industries; and
  • the nation.

At each level of aggregation, there are different measures, or indicators, of competitiveness. They vary in what they imply about the present and future economic success or well-being of a firm, industry or nation. Some concepts of competitiveness are applicable at one level of aggregation but not at another.

This paper begins by discussing measures of competitiveness at the firm level, where the concept of competitiveness is most meaningful. The paper then turns to competitiveness at the industry level and then at the national level. The paper concludes with a discussion of the policy implications of the more persuasive concepts of competitiveness.

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