Twelve years ago, Paul Krugman wrote a beautiful article in Foreign Affairs magazine (bootleg version here), in which he argued that:
competitiveness is a meaningless word when applied to national economies. And the obsession with competitiveness is both wrong and dangerous.
Krugman’s essential argument is that an obsession with trade surpluses and tradeable sectors leads to bad policy. Absolute levels of productivity, not levels of productivity relative to our trading partners, are what matter.
If he wasn’t wageing a one-man crusade against the Bush administration, Krugman might take a moment to note that this week saw the release of the 18th edition of the World Competitiveness Yearbook (with the Australian portion compiled by economic thinktank CEDA).Â
Given that the rankings are based on about 300 indicators, they’re probably about as useful as university rankings (ie. not very). It’s possible that Australia’s rise from 9th to 6th reflects reality, but equally…
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Utopia, you are standing in it! 
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