How Countries Compete (review)

The advent of globalization has provided a fillip to countries around the world for recasting their strategies to uplift their economies for survival. Consequently, governments in these countries are striving to strengthen their economies to compete in a new global arena and thereby maintain a high perch in the economic pecking order. Against this backdrop, How Countries Compete written by Richard H. K. Vietor, Senator John Heinz Professor of Environmental Management at the Harvard Business School, is a timely arrival.

This is a well-written book that clearly brings out the crucial role played by governments in making their countries competitive. By laying out examples of nations from the West and Far East, governments have been shown to facilitate competition by providing many of the following measures: high savings and low interest rates for investment; sound property rights; good governance; a technologically capable and motivated workforce; low rates of inflation, and an expanding domestic market. This book is an interesting read that documents the rise of Singapore where a dynamic government adopted the culture of private sector to create Singapore, Inc. Over the years, the evolving strategies employed by the Singaporean government have made this small nation at par with OECD countries. In contrast, Japan's rise since the World War II was mainly marked by tenacious government planning rooted deeply in Japanese culture. The Japanese Diet's (parliament) role in the subsequent deflationary crisis leading to the lost decade has also been limned in sufficient detail. Besides rich Asian countries, this book touches upon the government machinery in India, China, Latin America, and Russia, the BRIC economies, which have become indispensable to global growth in recent years. It is interesting to follow the reforms on controlled liberalization undertaken by the Chinese politburo in setting up special economic zones (SEZs) possessing good infrastructure, labor, and tax incentives to attract foreign investment. Elsewhere regulation by the Chinese state is evident while tackling inflation, unemployment, nonperforming loans, and environment-related regulation. This book brings out the delicate interplay between decentralized capitalism and centralized communism and what it holds for China's future. The chapter on Mexico delineates the country's tribulations through successive governments for transforming it into a global economic force. Despite the similarity in issues faced by other Latin American countries, a separate chapter on Brazil is warranted in a future edition of this book. Brazil is a BRIC (Brazil–Russia–India–China) economy, which other than its significant investments in biofuels is second only to China in attracting the most foreign direct investment (FDI). Besides the success of rising stars, Asia and Latin America, this book vividly describes the continuing struggle of South Africa on the resolution of racial issues for joining the global race. In a similar vein, the efforts of Saudi Arabia and countries of the former Soviet bloc have been detailed on striving to open their markets. This book also charts the workings of the EU and America with an engrossing account of harmonization efforts by the EU for creating appropriate monetary, trade, and financial institutions that have helped the member countries of the EU withstand the rigors of global competition effectively. A future edition of this book, however, should also include chapters on other rich nations that are crucial to global trade. Despite the denting of their markets by the financial crisis, the economies of, though not limited to, Britain and some Scandinavian countries have been indispensable to the global economy. Their governments have facilitated the creation of financial centers and infrastructure for innovations (in mobile phones, for instance) that have significantly abetted the globalization process.

All in all, this excellent work offers a quick read through the intricacies of government strategies around the world. In so doing, this book uses facts and numbers for explaining the social and economic restructuring undertaken by various countries for opening up their markets to globalization. The relevant issues facing the important countries covered in this book are also symptomatic of the wider...