About the Project
- What is the U.S. Competitiveness Project?
The U.S. Competitiveness Project is a research-led effort to understand and enhance the competitiveness of the United States—that is, the ability of firms operating in the U.S. to compete successfully in the global economy while supporting high and rising living standards for the average American. The Project focuses especially on the roles that business leaders can play in improving the U.S. business environment.
- How does HBS define "U.S. competitiveness"?
The United States is competitive to the extent that firms operating in the U.S. can (1) compete successfully in the global economy while also (2) supporting high and rising living standards for the average American. Company success without worker prosperity is not true competitiveness and is unsustainable. HBS faculty members developed this definition in 2011 to focus and guide the Project’s research. This definition makes clear that neither lower American wages, nor a cheaper dollar, nor job creation per se can lead to true competitiveness.
- Why is the Project’s research focused on PK-12 education, middle-skills gaps, transportation infrastructure, and unconventional energy?
Early research identified PK-12 education, middle skills, and transportation infrastructure as a significant weakness or deteriorating strength for the U.S. Understanding each can help us to explain one of the most troubling trends in the economy: the long-running stagnation of living standards for most Americans despite the success of U.S.-based firms in global markets. In all three areas, business leaders have acted to improve U.S. competitiveness but can do much more. The Project’s research has focused on how they can act as effectively as possible.
In addition, the Project identified unconventional energy as one of the eight strategic priorities
that would be transformative for America. The Project’s research on unconventional energy recommends a strategy for government and business to maximize this opportunity. The win-win path balances the needs of the economy with the environment, and commits the U.S. to a cleaner, lower-carbon energy system in the future.
- Why is U.S. competitiveness a global issue?
With the world’s most productive large market, the U.S. is a key driver of worldwide prosperity. The global economy is too interdependent, and the U.S. economy is too large, for other countries to benefit from a steep decline in U.S. competitiveness. Moreover, the U.S. Competitiveness Project has inspired similar efforts in countries around the world.
- Why has HBS undertaken this effort?
Dean Nitin Nohria explains: “I can’t think of a problem that affects everybody in the world—not just in the United States—more than this question of U.S. competitiveness … There is no more important time than now for us to more deeply understand this question and develop answers that will allow America to sustain its competitiveness in the time to come.”
About the Research
- How competitive is the U.S. economy according to the Project’s research?
In surveys of HBS alumni, business leaders have identified a number of weaknesses in the U.S. business environment that are deteriorating, including the K-12 education system, the tax code, and health care. Other elements, such as skilled labor and logistics infrastructure, were historically American strengths but are now in decline. The U.S. retains some core strengths in clusters, entrepreneurship, and other areas.
- What can business leaders do to improve U.S. competitiveness?
Project research has identified many actions that business leaders can take. Several broad themes stand out:
- Building the commons in the areas where they operate. This can involve skills development in the K-12 and postsecondary systems, upgrading supporting industries, supporting innovation and entrepreneurship, or collaborating to grow clusters for economic development.
- Pursuing productivity and profitability by positioning business activities to draw on America’s unique strengths.
- Reining in short-sighted, self-interested actions, especially in lobbying and government relations, that weaken the commons and undermine long-term U.S. competitiveness.
- How can educators contribute to improving U.S. competitiveness?
- How can policy makers contribute to improving U.S. competitiveness?
- How does U.S. competitiveness affect the average American?
Our survey results point to a fundamental divergence: America is strong in areas that drive firms’ success but weak in key areas that enable the average worker to prosper. Moreover, small businesses, historically engines of opportunity for millions of Americans, are the most pessimistic of all businesses in their view of the United States’ trajectory.
- Isn’t the U.S. economy on an upward trajectory as it recovers from the Great Recession?
Corporate profits may be at an all-time high, but that alone does not create competitiveness. Among our survey respondents, pessimism lingers regarding those elements of the U.S. business environment that most directly drive rising living standards for workers. The cyclical recovery has not erased longer-term structural weaknesses in the economy.
- What do macroeconomic data suggest about U.S. competitiveness?
In the lower and middle strata of the income distribution, household incomes have remained stagnant in real terms for decades. Long-run growth rates in private-sector jobs started falling from historical levels around 2000 and remain low. The meager job creation that has occurred in the last two decades has been overwhelmingly in local industries, not those facing international competition. Labor force participation in America peaked in 1997 and has now fallen to levels not seen in three decades. Real hourly wages have stalled even among college-educated Americans; only those with advanced degrees have seen gains.
All of the above trends began well before the Great Recession. They are structural, not cyclical.