Competitiveness is a comparative concept of the ability and performance of a firm, sub-sector or country to sell and supply goods and/or services in a given market. Sao Paulo Stock Exchangejpg|thumb| Virtual market arena where buyer and seller are not present and trade via intemediates and electronical information Although widely used in economics and business management, the usefulness of the concept, particularly in the context of national competitiveness, is vigorously disputed by economists, such as Paul Krugman . Economics is the social science that studies the production distribution, and consumption of goods and services. Management (covering theory practice and scope of management and Manager' (covering the people who manage might help clarify and systematise Paul Robin Krugman ( born February 28 1953 is an American Economist, Columnist, Author, and Intellectual.
The term may also be applied to markets, where it is used to refer to the extent to which the market structure may be regarded as perfectly competitive. In Economics, market structure (also known as market form) describes the state of a Market with respect to competition In Neoclassical economics and Microeconomics, perfect competition describes a market in which no buyer or seller has Market power. This usage has nothing to do with the extent to which individual firms are "competitive'.
Empirical observation confirms that resources (capital, labor, technology) and talent tend to concentrate geographically (Easterly and Levine 2002). This result reflects the fact that firms are embedded in inter-firm relationships with networks of suppliers, buyers and even competitors that help them to gain competitive advantages in the sale of its products and services. While arms-length market relationships do provide these benefits, at times there are externalities that arise from linkages among firms in a geographic area or in a specific industry (textiles, leather goods, silicon chips) that cannot be captured or fostered by markets alone. The process of “clusterization,” the creation of “value chains,” or “industrial districts” are models that highlight the advantages of networks.
Within capitalist economic systems, the drive of enterprises is to maintain and improve their own competitiveness. Capitalism is the Economic system in which the Means of production are owned by private Persons and operated for Profit and where An economic system is a System that involves the production, distribution and consumption of goods and services between this practically pertains to business sectors.
In recent years, the concept of competitiveness has emerged as a new paradigm in economic development. Competitiveness captures the awareness of both the limitations and challenges posed by global competition, at a time when effective government action is constrained by budgetary constraints and the private sector faces significant barriers to competing in domestic and international markets.
The term is also used to refer in a broader sense to the economic competitiveness of countries, regions or cities. Recently, countries are increasing looking at their competitiveness on global markets. Ireland (1997), Greece (2003), Croatia (2004), Bahrain (2005), the Philippines (2006), Guyana and the Dominican Republic are just some examples of countries that have advisory bodies or special government agencies that tackle competitiveness issues. Even regions or cities, such as Dubai or the Basque Country, are considering the establishment of such a body.
The institutional model applied in the case of National Competitiveness Programs (NCP) varies from country to country, however, there are some common features. The leadership structure of NCPs relies on strong support from the highest level of political authority. High-level support provides credibility with the appropriate actors in the private sector. Usually, the council or governing body will have a designated public sector leader (president, vice-president or minister) and a co-president drawn from the private sector. Notwithstanding the public sector’s role in strategy formulation, oversight, and implementation, national competitiveness programs should have strong, dynamic leadership from the private sector at all levels – national, local and firm. From the outset, the program must provide a clear diagnostic of the problems facing the economy and a compelling vision that appeals to a broad set of actors who are willing to seek change and implement an outward-oriented growth strategy. Finally, most programs share a common view on the importance of networks of firms or “clusters” as an organizing principal for collective action. Based on a bottom-up approach, programs that support the association among private business leadership, civil society organizations, public institutions and political leadership can better identify barriers to competitiveness; develop joint-decisions on strategic policies and investments; and yield better results in implementation.
National competitiveness is said to be particularly important for small open economies, which rely on trade, and typically foreign direct investment, to provide the scale necessary for productivity increases to drive increases in living standards. The Irish National Competitiveness Council uses a Competitiveness Pyramid structure to simplify the factors the affect national competitiveness. The National Competitiveness Council is an independent policy advisory body in the Republic of Ireland. It distinguishes in particular between policy inputs in relation to the business environment, the physical infrastructure and the knowledge infrastructure and the essential conditions of competitiveness that good policy inputs create, including business performance metrics, productivity, labour supply and prices/costs for business.
The International Economic Development Council (IEDC) in Washington, D. C. published the "Innovation Agenda: A Policy Statement on American Competitiveness". This paper summarizes the ideas expressed at the 2007 IEDC Federal Forum and provides policy recommendations for both economic developers and federal policy makers that aim to ensure America remains globally competitive in light of current domestic and international challenges. 
International comparisons of national competitiveness are conducted by the World Economic Forum, in its Global Competitiveness Report, and the Institute for Management Development, in its World Competitiveness Yearbook. The World Economic Forum (WEF is a Geneva -based Non-profit foundation best known for its Annual Meeting in Davos, Switzerland The Global Competitiveness Report is a yearly report published by the World Economic Forum.
Krugman argues that "As a practical matter, however, the doctrine of 'competitiveness' is flatly wrong. The world's leading nations are not, to any important degree, in economic competition with each other. " As Krugman notes, national economic welfare is determined primarily by productivity in both traded and non-traded sectors of the economy. Productivity in Economics refers to measures of output from production processes per unit of input .