The political economy of competitiveness: essays on employment, public policy and corporate performance

214 Pages·15.208 MB·English

by  Michael Kitson, Jonathan Michie

The Political Economy of
Competitiveness
The Political Economy of Competitiveness presents the latest thinking on a range
of political and economic issues, challenging conventional wisdom on the
state of the British Economy. The book discusses the lessons of economic
theory and policy within a broad framework, recognising that history mat-
ters, as do political institutions. The authors incorporate lessons from other
social sciences while bringing economic analysis to bear on real world
problems.
Policy issues include:
• The sustainability of fixed-rate exchange rate systems
• Public policy regarding growth and employment/unemployment
• Corporate performance and what makes firms competitive
The Political Economy of Competitiveness is a clearly written, accessible, inter-
disciplinary text which avoids jargon. It will prove to be indispensable to
students of economics, politics and business and management, with great
appeal to all those with an interest in economic policy issues.
Michael Kitson is a Fellow and Lecturer at St Catharine’s College,
Cambridge and Newton Trust Lecturer in the Faculty of Economics and
Politics, University of Cambridge. Jonathan Michie is Sainsbury Professor
of Management at Birkbeck College, University of London.
Contemporary political economy series
Edited by Jonathan Michie
Birkbeck College, University of London, UK
This series presents a fresh, broad perspective on the key issues in the modern
world economy, drawing in perspectives from management and business,
politics and sociology, economic history and law.
Written in a lively and accessible style, it will present focused and com-
prehensive introductions to key topics, demonstrating the relevance of polit-
ical economy to the major debates in economics and to an understanding of
the contemporary world.
Reconstructing Political Economy
The great divide in economic thought
William K. Tabb
The Political Economy of Competitiveness
Essays on employment, public policy and corporate performance
Michael Kits on and Jonathan Michie
Global Economy, Global Justice
Theoretical and policy alternatives to neoliberalism
George De Martino
Global Instability
The political economy of world economic governance
Edited by Jonathan Michie and John Grieve Smith
The Political Economy of
Competitiveness
Essays on employment, public policy and
corporate performance
Michael Kitson and
Jonathan Michie
First published 2000 by Routledge
Published 2015 by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
Simultaneously published in the USA and Canada
by Routledge
711 Third Avenue, New York, NY 10017 USA
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2000 Michael Kitson and Jonathan Michie
The right of Michael Kitson and Jonathan Michie to be identified as
the Authors of this Work has been asserted by them in accordance
with the Copyright, Designs and Patents Act 1988
Typeset in Garamond by
RefineCatch Ltd, Bungay, Suffolk
All rights reserved. No part of this book may be reprinted or
reproduced or utilised in any form or by any electronic, mechanical, or
other means, now known or hereafter invented, including
photocopying and recording, or in any information storage or retrieval
system, without permission in writing from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
Kitson, Michael and Jonathan Michie
The political economy of competitiveness: essays on
employment, public policy and corporate performance / Michael
Kitson and Jonathan Michie
p. cm. — (Contemporary political economy series)
Includes bibliographical references and indexes
1. Great Britain—Economic conditions. 2. Great Britain—
Social conditions. 3. Competition—Government policy—Great
Britain. 4. Economics. 5. Competition. I. Kitson, Michael.
II. Title. III. Series.
HC256.M5 1999
338.6'048'094l—dc21 99-057353
ISBN 978-0-415-20495-8 (hbk)
ISBN 978-1-315-00886-8 (eISBN)
This book is dedicated to our wives,
Jane Denney and Carolyn Downs
‘Anyone seeking a clear and stimulating account of a range of major economic
issues will find this book an invaluable help.’
Malcolm Sawyer, Professor of Economics, University of Leeds
‘If you think economics is all about complex algebra, this book is not for you.
If, on the other hand, you are looking for a clear explanation of what is going
wrong in the economy and how to put it right, I could hardly recommend it
more highly.’
Larry Elliott, Economics Editor, Guardian
‘This book brings theory and evidence to bear on key policy issues. An
important and accessible contribution, it will be useful to students and all
those interested in economic policy.’
Mario Pianta, Professor of Economic Policy, University of Urhino, Italy
‘If you are interested in contemporary economic policy issues, this is a book
you should read — particularly if you are searching for alternatives to current
orthodoxies.’
Roger Berry MP, Chair, Full Employment Forum
‘This collection covers important issues and represents a serious and yet
accessible economic analysis of real world problems. ’
Paul Hirst, Professor of Politics and Sociology, University of London
‘At last, the political economy of trade is a front-and-center worldwide con-
cern, not just a matter for international bureaucrats, corporate lawyers, and
academics. Kitson and Michie are outstanding progressive thinkers in this
area. This new book is an important and timely contribution.’
Robert Pollin, Professor of Economics and Co-Director,
Political Economy Research Institute, University of Massachusetts-Amherst
Contents
List of figures ix
List of tables xi
Foreword — A jit Singh xiii
Preface xv
Acknowledgements xvi
Copyright acknowledgements xviii
1 Introduction and overview 1
PART I
Globalisation 11
2 Globalisation, unemployment and government policy 13
3 Trade theory and policy 28
4 Trade and growth: a historical perspective 45
PART II
History versus equilibrium 69
5 Recession and economic revival in Britain: the role of policy
in the 1930s and 1980s 71
6 The tale of two recessions: 1929 and the Gold Standard, 1992
and the ERM 90
7 Britain’s industrial performance since I960: underinvestment
and relative decline 109
viii Contents
PART III
Public policy and corporate governance 125
8 From welfare to work? 127
9 Markets, competition and innovation 143
Further reading 157
Notes 158
References 173
Index 189
Figures
2.1 Growth of world output and world trade, 1870—1999 15
3.1 GDP shares of ‘world’ capitalist countries (benchmark years) 38
3.2 Export shares of ‘world’ capitalist countries (benchmark years) 39
4.1 Index of the trade orientation (‘openness’) of the world
economy, 1870-1999 49
4.2 Shares of world imports of the three leading regional trade
agreement blocs, 1960-90 59
4.3 Shares of world imports of the three leading geographical
trading blocs, 1960-90 60
4.4 Distribution of world income, 1990 61
4.5 Income per head compared to the EC, 1990 61
4.6 Growth of income per head, 1980—90 62
5.1 UK Gross Domestic Product in the 1930s and 1980s 73
5.2 Unemployment rates in the 1930s and 1980s (%, raw data) 74
5.3 Unemployment rates in the 1930s and 1980s (%, consistent
data) 75
5.4 British and world Gross Domestic Product 1929—37 76
5.5 Manufacturing output per person in the US where the
UK = 100, 1860-1990 81
5.6 Deviations from money supply (£M3) targets, 1979—87 84
5.7 British and world Gross Domestic Product, 1979—90 85
6.1 World employment and unemployment, 1929—38 92
6.2 Unemployment rates in the UK, 1921—98 94
6.3 Number of countries on gold, 1919-37 95
7.1 Gross capital stock per worker in manufacturing, 1960—89 121
9.1 Percentage of firms entering into formal or informal
collaborative partnerships 150
9.2 Reasons for collaboration 150
9.3 Reasons for collaboration: innovators and non-innovators 151
9.4a Employment growth, 1990—95: innovators and
non-innovators 152
9.4b Employment growth, 1990—95: collaborators and
non-collaborators 152