From a standard-of-living perspective (measured by GDP at purchasing power parity) Europe has been doing well in recent decades, despite sluggish economic growth. But when it comes to geopolitical power, how well people live does not matter; the relative size of the economy does.
MILAN – Economists tend not to worry too much about a country’s international competitiveness. Cross-border trade and investment generally benefit both sides, and faster growth in one country benefits others, which can tap its expanding market. It is domestic productivity, not the ability to outcompete others, that determines national prosperity. That is why, 30 years ago, Paul Krugman called competitiveness a “dangerous obsession.”
MILAN – Economists tend not to worry too much about a country’s international competitiveness. Cross-border trade and investment generally benefit both sides, and faster growth in one country benefits others, which can tap its expanding market. It is domestic productivity, not the ability to outcompete others, that determines national prosperity. That is why, 30 years ago, Paul Krugman called competitiveness a “dangerous obsession.”