Introduction

This book is concerned with some of the key factors that will determine current and future European competitiveness. Key issues in understanding current and future competitiveness are the nature of and trends in internationalisation, and the likely effects of European integration on firm and country structure and performance. In this volume we analyse the experience of firms and countries in order to throw some light on these processes.

Competitiveness is a concept that is widely but not consistently used and that can be analysed at various levels – by groups of countries, country, industry, and firm. Two broad attitudes to competitiveness can be distinguished. The first is that competitiveness is a question of relative efficiency, whether dynamic or static. This can be measured by looking at relative performance levels – productivity and productivity growth, for example. The second is that competitiveness is reflected in relative international trade performance – whether measured as shares of world export markets, the degree of import penetration or an index of revealed comparative advantage. These two broad concepts of competitiveness may coincide but need not. Thus, the country with the highest level of productivity may not have the highest trade share. If trade shares depend on strategic competition in world markets, then they will be determined by a mixture of efficiency and market power considerations.

In looking at Europe, we use both these concepts of competitiveness, recognising that a complex combination of efficiency and strategic factors determine final outcomes.