Sustaining Competitiveness in a Global Economy : Insights Offered by Total Factor Productivity Indicators for the U.S

Determination and implementation of effective policies that enhance and sustain U.S. competitiveness internationally requires a clear understanding of the concept of competitiveness as it relates to a nation. This paper addresses the ambiguity that surrounds the notion of nations competing, and presents a Total Factor Productivity (TFP) based model that more adequately measures the state of U.S. ability to compete in the international marketplace. TFP growth and total output are estimated using data from keysectors of the U.S. economy during 1986-1997. Results indicate that the U.S. remained competitive over this period, even though other popularly used indicators discussed in the paper appeared to suggest otherwise. The paper discusses appropriate policy measures and potential for future research in light of the findings