The Competitiveness of Nations: Why Some Countries Prosper While Others Fall Behind

SummaryWhy do some countries perform much better than other countries? This paper outlines a synthetic framework, based on Schumpeterian logic, for analyzing this question. Four different aspects of competitiveness are identified: technology, capacity, demand, and price. The contribution of the paper is particularly to highlight the three first aspects, which often tend to be ignored due to measurement problems. The empirical analysis, based on a sample of 90 countries on different levels of development during 1980–2002, demonstrated the relevance of technology, capacity, and demand competitiveness for growth and development. Price competitiveness seems generally to be of lesser importance.