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The Looming Challenge to U.S. Competitiveness

Michael E. Porter and Jan W. Rivkin

The United States is a competitive location to the extent that firms operating in the U.S. are able to compete successfully in the global economy while supporting high and rising living standards for the average American. Changes in the U.S. that help firms compete but undermine living standards, such as lower wages or a cheaper dollar, do not boost U.S. competitiveness by our definition. Whether a nation is competitive hinges on its long-run productivity—that is, the value of goods and services produced per unit of human, capital, and natural resources.

Seen through this lens, America is suffering not only from a deep cyclical downturn but also from underlying structural threats to its long-term competitiveness. The authors cite evidence of structural problems in trends that predate the recent recession. These concerns also reflect the findings of a survey of nearly 10,000 HBS alumni, the vast majority (71%) of whom foresee a decline in U.S. competitiveness in coming years. The authors trace out the most significant dynamics leading to the competitiveness problem that looms before the United States. Although the U.S. retains profound competitive strengths—for instance, in higher education and entrepreneurship—those strengths are increasingly threatened by weaknesses in areas such as the tax code, basic education, macroeconomic policies, and regulation. Steps to reverse the loss will require a new focus by government and business leaders.

Read the full article here.

Tags: Challenge, Choose U.S.

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  • 17 Dec 2011

    Nicolas SERGE

    Dear,

    I really do appreciate and suuport this project: " The looming challenge to US Competitiveness. I've a strong conviction that this 21st century will be the American's one despite speculation. The time has come to put into place the efficient and accurate framework which allow all the Americans to spreadout all of their full potential and overcome all challenges of the globalization. I believe in the sight and the strengh of "Veritas" of Harvard which is playing an overwhelming role in the implementation of this framework. God bless you all! God bless the United States of America.

    Regards, Nicolas SERGE, Think Tank Dynamic 2012

  • 20 Dec 2011

    Anonymous

    Let me open by saying that, as an alumni of HBS, I appreciate the intent and effort of this initiative; it models a critical and desperately needed role academia can play in society. That said, however, it struck me that the initiative is looking for solutions to far toward the end of the competitiveness value chain; e.g., business leaders and higher education. I wonder if a key to the issue doesn't start much further upstream; specifically, our educational system and attitudes / values at home. As a society we under invest in education (both money and time invested by parents in their children's learning) and fail to measure impact appropriately. Focus these days is less about gaining an education but, rather, grades and scoring well on standardized tests. And despite the critical role played by human capital in business, industry passively waits for the output from this arguably flawed educational system as opposed to proactively engaging in it as a strategic partner. Suffice it to say, industry does not remain so passive about other areas of critical resource to their success. In summary, I suggest the initiative take a deeper, more inclusive look at the issue, perhaps engaging colleagues from the Schools of Education to take a look much further upstream.

  • 29 Dec 2011

    Barry Johnson

    I suggest that the US Competitiveness Project consider how its findings will be deployed to ensure that this research produces its intended impact on improving competitiveness. Great research does not deploy itself just as great innovations require diffusion and use to deliver on its promised benefits. I suggest the working group look at "excellence programs" that focus on assessing and improving the competitiveness of organizations in their countries. The Baldrige Program for Performance Excellence is the US program in this area. I am sure Dr. Harry Hertz or someone from the National Institute of Science and Technology (NIST) or the Department of Commerce, where the program resides, would be available to participate and would make valuable contributions in the area I suggest.

  • 11 Jan 2012

    Anonymous

    Our educational system has failed to consistently develop the intellectual potential of our citizens. We seemed to accept that, and began to import much of our human capital. There seemed to be a ready supply of bright immigrants who were attracted to the U.S. by our still superior higher education system. Many stayed to chase the American Dream. Now that we're at the bottom of the ladder relative to the U.K., France, Germany, Spain, Denmark, Canada, etc..in terms of economic mobility, according to a recent report by the Economic Mobility Project at the Pew Center on the States, and our traditional sources of immigrant brainpower have homegrown opportunities for greatness and wealth, I wonder if we will continue to be a magnet for the best and brightest with ambitious aspirations? I worry about our future...Money is not the only motivator, and we've lost sight of many of the values that made us great.

  • 12 Jan 2012

    Kamal Gupta

    US competitiveness stayed much above European levels in the years to 2008, because US was seen as a welcoming country for immigrants.

    Immigrants account for an increasing share of US population and also almost the entire growth in population. This not only provides competitive wages but also a growing and young market.

    The knee jerk reactions to the 2008 meltdown - tinkering with money supply instead of launching public works, and restrictions on immigration - are doing long term damage to US competitiveness.

    All of you have access to census figures, I won't waste your time in quoting these. But the writing is there on the wall.

  • 18 Jan 2012

    Dennis Nelson

    We first must answer "Competitive at what?" What are America's core strengths and capabilities? No athlete or other competitor can be first at everything. Even decathalons and triathalons are limited to a few events. And, who must participate? All who can be motivated to participate should participate. Should the right answers to how America can regain or increase its competitiveness be determined, significant, at least "tipping point" participation from all stakeholders must be ensured for those answers to be pursued and implemented. As each stakeholder group is defined, what each group has to gain or to lose by participating or not participating needs to be clarified and extensively published and discussed. Individuals with at least national and preferrably international credibility and expertise in both succeeding and ensuring stakeholders succeed, as well, should be recruited as spokespeople for the effort .

  • 08 Feb 2012

    Sara

    History has to be review, in lates 1800's and early 1900's studies revealed the importance of treating workers with dignity and having them happy in productivity. Years have passed and this matter is still an issue. Happy employees does not only include paying more it has to be united with respect. Lets try to learn from the past.

  • 27 Feb 2012

    AGYABENG-DANKWAH DOMPREH

    Competitiveness in the direction of "your definition" should be keen in every economy . If an economy lacks such competitiveness then i believe there is the need for a study into the dynamics that threatens such an economy's competitiveness as well as recommendations on the way forward.

  • 27 Feb 2012

    Joseph Jeanes, II

    The issue of productive persons is always rational. There are several methods of production and not all are inventory. Quality is something that rides over production. The issue of the vision in control is the overwhelming calculus.

    The United States has to examine the methods of control it intends to hire. Control is ultimately going to be democratic in some nature and it is important that the papers used in control be attainable to filings of all courts to maintain public verity.

    The issue of hiring control is from worker to management and is intrinsic to all nations. As long as individuals never give up, they have a control of some sort. How to attenuate that control into a constructive policy is hiring control that has experience that provides a constructive platform of the various natures of people in the productive pyramid.

    There is a sense of court due all people and the position of people being hired needs to be able to sell its papers as well as defend them.

    For instance, though we are in a large country, you will always have control that is in synergy or control for the quantum and rarely do they share much in common as the models of the past have one in the future and the other in the past. They are two fixed markets vying for goods and services. Both think they are all it is and yet neither is all of what it is.

    The world includes everyone and at some point a Dean Kamen providing water in rural villages that prevent a hospitalized person is as important as the latest technology to make a better world. They are facts that the world is our employer or else it goes some place else for its control. We would like to be a fair player and have the highest vision in the pyramid, but it is also just a keystone over a door that we either play up with or play out with.

    Money is a commodity and needs to be treated as an incentive at the level of site and hiring. Better control is better vision. Hire by where people look, that is the heart of the economy. You are head over the audience, not the audience to the head.