Two Approaches to Global Competition : A Historical Review

From the standpoint of policies, the different branches of economics may be aggregated into two categories: dirigiste and laissez fairist. Dirigiste theories in economics have been based primarily on the complexity of commodities: this allows commodities to be ranked according to the contributions they make to growth and rent. This also means that the gains from free global competition are unequally distributed: and create the global divide between rich and poor countries. Under the circumstances, industrial policies offer the lagging countries their best chance of breaking out of their specialization in low-end commodities. On the other hand, the advanced countries – keen to deepen their competitive advantages in the global economy – look for a theory that camouflages its asymmetric dynamics. Laissez faire economics fulfills this ideological demand; it does this by stripping commodities of nearly all their complexity. The invisible hand only works when all commodities are nondescript: potato chips are no worse than computer chips when it comes to trade and growth