Two Approaches to Global Competition: A Historical Review

10 Pages Posted: 26 May 2013 Last revised: 2 Jun 2013

Date Written: June 1, 2013


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.

Keywords: global, competition, trade, globalization, laissez faire, dirigiste, dirigisme, advanced, lagging, countries, commodities, economics, mercantilist, classical neoclassical, Austrian, development, disequalizing, rich, poor

JEL Classification: B10, B20, B41, B50, B52, F00, F02, F43, F43, F54, F50, F68, O10, O11, O14, O24, O34, O43, O57, P41

Suggested Citation

Alam, Mohammad Shahid, Two Approaches to Global Competition: A Historical Review (June 1, 2013). Available at SSRN: or

Mohammad Shahid Alam (Contact Author)

Northeastern University ( email )

220 B RP
Boston, MA 02115
United States

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