On the Concept of Territorial Competitiveness: Sound or Misleading?

In a globalising economy, territories and not just Ž rms increasingly Ž nd themselves in competition with each other. In fact, unlike countries, cities and regions compete, in single currency areas, on the basis of an absolute advantage principle and not a comparative advantage principle. This means that no efŽ cient, automatic mechanism—like currency devaluation or prompt  exibility of wages and prices—exists to grant each territory some role in the international division of labour, whatever its relative performance. The competitiveness of territories thus emerges as a central issue, in order to secure employment stability, beneŽ ts from external integration, continuing growth of local well-being and wealth. The arguments put forward by Paul Krugman, deŽ ning the concept of competitiveness, are wrong and misleading, and cannot be accepted in a territorial—regional and urban—context.