National Competitiveness and Sustainability: Friends or Foes

Abstract

This paper touches upon two important topics of modern economics: national competitiveness and sustainability, and shows that these concepts do not necessarily have to be seen as “foes”. Competitiveness in this study departs from the narrow, “low-road”, cost-based, “zero-sum game” trade perspective and is defined as a national ability to reach developmental goals in the era of globalization. These goals have been divided into instrumental (productivity- and innovation-driven evolution of trade specialization leading to growth, which is measured with GDP per capita) and fundamental (“beyond GDP goals”, reflecting socio-economic development without ecological degradation). The second key issue emerging from this paper, simultaneously contributing to the sustainable competitiveness debate, relates to the positioning of the catching-up economies in the global competitive landscape. For these countries, a transition from a low-road to a high-road strategy is particularly challenging as their rapid growth and current global positioning has been mainly based on low-cost competitive factors and high-emission industries. Without a clear, long-term vision, based on institutional support for eco-innovation and efforts to increase the education or consciousness levels (for both production and consumption), these countries may get stuck in the middle-income trap. Through the suggested sustainable competitiveness model, a link between national competitive ability, competitive strategy, and strategic socio-economic goals has been made. This model proposes an approach to dynamically represent competitiveness development path for countries at low-, middle-, and high-income levels.