COMMENTARY Competitiveness in a globalised world: a commentary Patrick Minford Cardiff Business School, Cardiff, UK Correspondence: Professor P Minford, Office E26, Cardiff Business School, Colum Drive, Cardiff CF10 3EU, UK. Tel: þ 44 29 2087 5728; Fax: þ 44 29 2087 4419; E-mail: MinfordP@cardiff.ac.uk Online publication date: 9 March 2006 Abstract Porter’s advocacy of ‘competitiveness’ veers between liberalism and inter- ventionism. He should come down clearly for liberalism. Journal of International Business Studies (2006) 37, 176–178. doi:10.1057/palgrave.jibs.8400191 Keywords: competitiveness; economic freedom; manpower planning; microeconomic intervention I enjoyed this interview, as I would have expected from these experienced authors. Michael Porter’s microeconomic ideas are of great interest, because they reflect a deep experience of industrial practice; I read about them with both benefit and admiration. However, this said, Porter has views that are infuriatingly hard to grapple with at the policy level. How does one make sense, for example, of Sweden as a country of ‘high competitiveness’ when it enjoys the highest marginal tax rates in the developed world, and much of its domestic sector is subject to rather limited competi- tion, with parts (e.g., liquor stores) actually government-owned and operated? Porter talks generally about free markets and competition as the key elements in competitiveness, and yet he is apparently quite comfortable with Sweden and other Scandina- vian countries as exemplars of it. Porter’s views in these respects – ‘bottom up; good micro¼good macro’ – come close to tautology. If companies are good, the economy is good: yes, but why are companies good? What is the implication for government policy? The difficulty that Porter does not face is that government policy is by definition ‘top down’. A government cannot make companies competitive by direct action individually; it must necessarily create a framework – of tax, competition, regulation and so on. What should that framework be? Porter is silent, or – perhaps worse – self-contradictory. He seems on the face of it to suggest that government must be highly interventionist, ‘creating clusters’, ‘encouraging best practice’ and so forth; and yet in the next paragraph, he says that government should not ‘back winners’, should maintain competition and should keep out of corporate affairs. I fear the answer may be that Porter’s work is inherently case study based, and therefore his views at the level of the economy as a system are incoherent. He knows a competitive economy when he sees it – don’t we all? – but he actually has no theory of what makes it so. Journal of International Business Studies (2006) 37, 176–178 & 2006 Academy of International Business All rights reserved 0047-2506 $30.00 www.jibs.net