The recent trends toward open economies, global supply chains, and the migration of people and intellectual and financial capital all combine to undermine the concepts of comparative advantage that have traditionally served as the underpinning of what we understand as competitiveness.

For example, the design and production of a Ford Taurus or a Toyota Nissan can occur simultaneously in 40 locations around the world with a mix of geographic centers of excellence for components—some different but many the same. Based on these developments, the following questions arise:

• Who is competing with whom?

• How distinct are the relative advantages of different countries?

• How unique is the value that countries can command in terms of growth and jobs from the international marketplace?

In today’s world, external competitive forces, largely operating through global supply chains, can reshape national economies and, most important politically, determine how economic opportunities, benefits, and costs are distributed. To respond to these radically changed global dynamics, a new framework is needed for understanding the nature of national competitiveness.

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