Tuesday, July 28, 2009

Rudd and "National Competitiveness"

Prime Mininster Rudd's recent essay contains a number of references to global competitiveness.
.... Australia cannot meet the challenges of raising our global competitiveness if we do not lift productivity growth.

The Prime Minister needs to have a read 0f Paul Krugman's classic 1974 article in Foreign Affairs.

competitiveness is a meaningless word when applied to national economies. And the obsession with competitiveness is both wrong and dangerous.

Absolute levels of productivity, rather than levels of productivity relative to our trading partners, are what matters for living standards. The Prime Minister appears to limit his attention to productivity growth in tradeables, but there is no reason to ignore productivity growth in non-tradeables.

1 comment:

  1. Dear Dr Boymal,

    I was one of your student last semester (RMIT, IME course). I have recently been working on some Globalisation - Outsourcing research paper.

    One of the problems with Australian firms is they are moving jobs offshores. The ideas of outsourcing is to reduce cost, focus to the core business, and to improve the quality. But it seems like the main cause for Australian firms is now only cost reduction.

    Deutch bank Research Report wrote "Outsourcing works, but not jobs", meaned to shift the low-skilled tasks overseas and arrange all the skilled staff for higher positions, but it seems like Aust. companies are failling to do it.

    Theoritically saying, Australian population is booming due to government policies supporting both child birth and immigration, how come there are not enough jobs demanding for local market?

    Offshoring jobs debate in 2005 (APH) mentioned job loss issue. Let think, if the government can "somehow" push up the demand for non-tradeables, there might be an first-aid for increasing unemployment rate in Australia (neglecting the recession factor).