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International Trade & Competitiveness
When we think about the term international trade or competitiveness, many of us may presumably think that it occurs among the top countries in the world or among a small group of individuals, but in reality, that is not entirely true. International trade or competition occurs almost every day or in our daily lives. It takes places almost between every single country on this earth. Some people often characterize international trade as a type of importing and exporting system and competitiveness as a way to show who the best among business or individuals is. Competition can take place during trade. As a matter of fact, competitiveness or competition can be both good and bad and can also lead to both advantages and disadvantages. Surprisingly, many of us may ask ourselves these following questions about international trade or competitiveness. Why defining competitiveness of a nation is much more problematic than defining that of a corporation? Is international trade a zero sum game? If not, explain why? Explain whether we agree that competitiveness of a nation is a meaningless concept when applies to a national economics and whether or not we agree that the obsession with competitiveness is wrong and dangerous? As the succeeding paragraphs will discuss, defining competitiveness of a nation is much more problematic than that of a corporation for many reasons; international trade is not a zero sum game; and clearly if ever, competitiveness is a meaningless concept when applies to a national economics, but its obsession is both wrong and dangerous.
Why competitiveness of a nation is much more problematic than a corporation? As stated in the article titled “Competitiveness: A dangerous obsession”, Foreign Affairs by Paul Krugman, competitiveness of a corporation depends mostly on its bottom line, and when it comes to a country, it almost is completely different. For example, if a corporation is running out of money, it is possible that it will get out in business. Most of the time, they will do that because they will not be able to provide services to the customers or to pay taxes, their employers, or their employees. When that happens, the owner of the corporation has the right to determine that he or she is going to get out of business. Contrarily to a corporation, a country most of the time can’t do that. If the country had economic issues or difficulties, the government or the people who are in charge of this country would do their best to find a way to stimulate this country’s economic status, or they would try to put more people back to work, built more schools, or many other things. They would not try to shut the country down or run out of business or competition. Secondly, competitiveness of a corporation can also rely on another corporation or can rely on other corporations’ expenses. For example, let take Pepsi and Coca Cola. Only a small percentage of Pepsi goods goes to Coca Cola. A small percentage of Pepsi workers buys coca cola goods or supplies. The same thing applies to Coca Cola. That mostly means that if Coca Cola becomes successful, it is mainly on Pepsi expenses, or if Pepsi becomes successful, it is mostly to be on Coca Cola’s expenses. As a matter of fact, when it comes to a country, it’s not like that. It doesn’t depend on the other country expenses. If America or USA has problems or economic difficulties, other countries will more likely want to help. They will sell more goods and offer more services to the United States at lower prices, and when they do that, it helps the United States, and they will sell more stuff and make more money, which is contrarily different compared to a corporation. As a matter of fact, even if they do not use the same strategy to compete with each other, we still call that competition. But the competition of a country is much more problematic than of a corporation.
Is international trade a zero sum game? No. International trade is not a zero sum game. Why we may wonder why someone may say that? It is because a country wage has a positive correlation with its productivity or trade. For example, if china’s productivity is increased or its economics is good, it is because of a rise in the wages of China’s output. The same thing happens to almost every other country. Countries usually trade as a way of importing and exporting to each other, and they also do that as a way to increase their productivities with the hope that their GDP can be better or that their unemployment rate can go down. In addition to that, international trade can also help a country to have more merchants and can also help the country in many other ways. However, unfortunately, they are times that it causes deficits to a country, but most of time, it helps.
Now, we may wonder about why competitiveness is a meaningless concept when applies to national economics and how can its obsession be both wrong and dangerous. As stated in the article titled, “Competitiveness: A dangerous obsession,” Foreign Affairs, sometimes a country may encounter troubles or problems to its economy or to many other of its institutions due to lack of competitiveness or competition. In a simple statement, we can say that competitiveness can be a meaningless, useful, or important concept when applied to national economy. Sometimes it can lead to many troubles. It can cause people to be greedy or to be motivated by self-interest. When those people are greedy, they can cause other to suffer or try to have more than what they have, especially the billionaires. They would not hesitate to take one dollar from someone who is poor so that they can have more money. As a matter of fact, the obsession with competitiveness is both wrong and dangerous because it can lead to trade wars, cut in government spending, or taxes or interest rates problems. When they are trade wars, it is conceivable or possible that many people can die or stop involving in trade activities. Trade wars can also cause a lot of disasters. The cut in government spending can be good, but sometime, it would be bad or disadvantageous. It can cause people to receive less help from the government. The government may spend less money in education, infrastructure, etc.…to spend more money in trade. When taxes and interest rates problems occur, many individuals, business, or even the government may encounter troubles. As a result, we can simply say that competitiveness is good somehow for a country, but its obsession is dangerous and wrong.
In conclusion, international trade takes place almost everywhere in the world. It can be both good and bad. Many people may think that it is a zero sum game, but that is not entirely true. International trade has a positive correlation with a country’s economic status, wealth, and many others. In addition to that, competitiveness of a nation or a country is much more competitive than of a corporation. In terms of corporation, competition is mainly based on its bathroom line, but it is different when it comes to a country. The one of a country is much more helpful. When a country is in competition with another country, this country trades with the other country almost every day, but a corporation just depends on the other corporation expenses. International trade is great, not a zero sum game. Finally, competitiveness can be both good and bad, but its obsession is both dangerous and wrong.
See. Paul Krugman in “Competitiveness: A dangerous obsession,” Foreign Affairs.