Why this blog

According to Nobel Prize-winning economist Paul Krugman, talking about “competitiveness” is simply a poetic way of talking about “productivity.”

Indeed, the concept of productivity refers to a company’s ability to produce goods and services by efficiently combining available inputs (capital, labor, intermediate inputs, technology). Competitiveness, on the other hand, can be thought of as a company’s ability to operate and thrive in a market - domestic or international - where other players are also active (cum-petere in Latin = to strive together).

Productivity relates to variables such as output per hour worked, unit cost per unit of product, and value added per employee. Competitiveness instead touches on aspects like brand reputation, reliability, customer relationships, the ability to organize workflows, and market presence.

Productivity is thus a technical concept, perhaps a dry one, but measurable, and for this reason dear to economists. Competitiveness, by contrast, is hard to capture in a precise metric, but it incorporates the idea of a living reality where various actors operate and interact. It is therefore a “warmer” concept, and perhaps for this very reason more appealing (sometimes too appealing) to the political system...

Given these premises, productivity can be framed in absolute, time-based terms, while competitiveness is only relative: I can become more productive (more efficient) over time, according to different metrics, but I cannot become more competitive than before, except in relation to someone else. It follows that if we want to “become more competitive,” a good starting point is to increase our productivity, regardless of what other market players do. This applies to individual firms but, above all, to the country system as a whole. A strategy that the aforementioned politicians sometimes overlook...

For these reasons, today we are launching a blog on “competitiveness,” because we want to speak to our living community of entrepreneurs, students, managers, academics, public officials, and policymakers. And we want to do so by openly discussing the main economic, political, and social issues that shape the broader context.

We aim to contribute to the national debate, in relation to Europe and to the rapidly changing global dynamics. And certainly, though framed under the umbrella of competitiveness, we will consistently reference the concepts of productivity and efficiency. Because an economic policy decision must be based on data and measurable evidence, both ex ante and ex post; otherwise, it’s best avoided.

For the next post, I have the pleasure and honor of writing together with the Dean of SDA Bocconi, Stefano Caselli, a friend and a key figure at our School. After him, I look forward to featuring many of our colleagues on these pages, along with myself.

Happy reading!