Wish Prof Michael Porter was an equal doyen at psychology (assuming he is not) as he is at Industrial Economics. Were that to happen, competitiveness may have been defined differently. No doubt, the bonafide objective for all studies is prosperity for mankind (at least in their normative sense); and competitiveness too vigorously aims to endorse this. However, it seems to fall prey to an economist’s inclination to aggregate performance and thus take a systemic look. That is why we are supposed to have competitiveness of a country, or of a city or a region. And necessarily this stands anchored to a land mass; apparently resources are bound to a land, a regulatory regime has control on a contoured land, and even people belong to a piece of land.
A psychologist might have seen competitiveness to be productivity of people. Even Porterian thought tries to emphasize the same; albeit few differences arise. As we have seen all over history and even recent entrepreneurial history, impact of a people flows out of few individuals who take the risk and take the leadership role. Even a single individual in a powerful regulatory seat, or a giant business enterprise can make much more potent and significant impact than hordes of men. This implies an attempt to have aggregation of cumulative productivity of people would give rise to asymmetric analysis of the core drivers, the individuals of import.
Further, the few individuals with a sharp powerful impact are not anchored to a landmass, not compulsorily. They bring on the table natural resources, capital, technology, ideas, managerial practices sourced from diverse geographical origins. It is in their hands that all this amassing morphs into a high productivity system. To associate this productivity outcome to the seemingly larger contributing geography (be in most of labor or most of natural resources or any other ingredient) would be a fallacious treatment. This shall marginalize other contributing sources, many of which may have played a critically contributant importance.
At best, it might be more legitimate to talk of competitiveness of nations, not countries (with people of the nation spread all over the planet), wherein productivities of these people across borders and within borders are reckoned. Even if repatriations are not looked for.
Secondly, prosperity would best be defined for individuals, and CANNOT be defined for aggregation. Since individual differences abound, productivity numerators and denominators would be different in eyes of each individual. To take a stance that more per capita income implies higher productivity, would again be an economist’s myopia, something to which a psychologist would rarely cede. Would more income be a linear curve all the way, or does it touch a cusp whereafter its unsustainable enhancement begins to diminish prosperity. More cars per thousand of the population is what prosperity is about! I recall a tricky Group Discussion themes at a premium B-School in India, “Which is better for an Indian family: 3 cars or 3 children?”. Think on this and the irony jumps at you. Probably we need to have welfare economists marry psychologists.