Rethinking Competitiveness

Edited by Kevin A. Hassett

Publication date:

19 December 2012

Length of book:

354 pages

Publisher

AEI Press

ISBN-13: 9780844772509

Few politicians can make a speech concerning economic policy without using the term “competitiveness.” Yet, despite its frequent and casual use, there is little if any agreement on its meaning. Scholars have been slow to embrace the term, holding a healthy skepticism toward such political utterances.

The American Enterprise Institute (AEI) brought together experts from a variety of fields to discuss the issue of competitiveness and how it may influence their disciplines. This volume is composed of nine prominent scholars' interpretations of and answers to the question: “If ‘competitiveness’ were to have a rigorous and relevant meaning in your field, what might that be?”

The conclusions these papers reach enrich the debate on what competitiveness is and how policymakers should strive to support it in the realms of tax policy, education policy, immigration, health care, international trade and much more.

Contents
List of Illustrations ix
Preface xiii
1. Rethinking Competitiveness, Kevin A. Hassett,
R. Glenn Hubbard, and Matthew H. Jensen 1
Charles Tiebout, Foot Voting, and Competition
among Localities 5
Tiebout and a New View of “Competitiveness” 17
Conclusion 23
Notes 23
References 24
2. Competitive Tax Policy, Joel Slemrod 32
What Exactly Is Competitiveness? 32
How Can Competitiveness Be Measured? 35
Taxation and Competitiveness 37
A Short Digression on Unpersuasive Economic Arguments 40
Business Taxation 42
International Considerations 49
The Corporate Tax and Prosperity: Facts and Evidence 53
Summary 62
Notes 63
References 65
3. Education and Global Competitiveness: Lessons for the
United States from International Evidence, Martin West 68
Ranking the U.S. Education System:
Quality and Quantity Indicators 72
The Economic Costs of Low-Quality Education 82
v
vi Rethinking Competitiveness
Policy Lessons 86
Notes 90
References 91
4. Immigration, Productivity, and Competitiveness
in American Industry, Gordon H. Hanson 95
Immigration and Competitiveness in Theory 100
Empirical Evidence on Immigration and Competitiveness 106
U.S. Immigration Policy and American Competitiveness 122
Notes 128
References 129
5. The Role of Innovation and Intellectual Property
in Economic Competition, Robert J. Shapiro 132
The Economic Value of Innovation 133
The Value of Intellectual Property Rights 135
How Innovations Diffuse across Economies 139
Competition: Efficiency versus Innovation 143
Conclusions 148
Notes 152
References 152
6. American Competitiveness and the Health Care System,
Michael E. Chernew and Philip I. Levy 156
Productivity versus Competitiveness 159
The Health System’s Effect on the Economy 169
Comparing International Health Approaches 178
Conclusions 187
Notes 188
References 189
7. Is the United States “Competitive” Internationally
in Health Care? Benjamin Zycher 196
Some Conventional Wisdom on the U.S. Health Care System 197
Some International Evidence on Prices and Services 202
The Comparative Performance of the U.S. Health Care System 209
Concluding Observations 215
Notes 216
References 220
CONTENTS vii
8. G lobal Value Chains and the Continuing Case for Free Trade:
Trade Theory and Illustrations from the United States and
East Asia, Claude Barfield and Matthew Jensen 225
Two Unbundlings of Trade and Shifting Policy Implications 227
The First Unbundling and the Big Ideas of Trade Theory 228
The Second Great Unbundling 239
East Asian Fragmentation and Supply Chains:
The Impact on Trade Data and Analysis 245
The United States and Global Supply Chains 260
Observations and Conclusions for Policy 268
Notes 270
References 273
9. International Competitiveness, Phillip Swagel 278
Uses and Meanings of “Competitiveness” 283
Capital Markets Competitiveness 293
Policy Appeals to Competitiveness 295
International Competitiveness in the Modern Vernacular 299
Notes 300
References 300
About the Authors 303

This volume is the result of three conferences organized by the American Enterprise Institute for Public Policy Research. This Washington, DC-based think tank is best known as an incubator for neoconservative thought. No doubt many chapters lean right--sometimes so far that it threatens to tip the book over. For example, the chapters on international trade promote free trade initiatives, and the chapters on the health care system argue the system is more efficient than originally thought (take that, Obamacare). Nonetheless, readers in the center (and left of center) will benefit from both Martin West's study of education outcomes in the US compared to those of other countries (chapter 3), and Robert Shapiro's analysis of the role of innovation and intellectual property (chapter 5). Phillip Swagel's contribution on international competitiveness (chapter 9) completes the volume with a 30,000-foot view of competition from a political angle. His perspective offers a much-needed respite after what at times feels like an awkward family dinner conversation between a neoconservative brother-in-law and a liberal niece. Summing Up: Recommended. Upper-division undergraduate collections and above. -- R. H. Scott, Monmouth University