Krugman (1994) points out that the rise in a country's productivity is related only in a limited way to the performance in international competition. The examples and calculations he presents, show that in the cases of the USA, the European Union (EU) and Japan, the growth rate of the standard of living essentially equals the growth rate of domestic productivity -not productivity relative to competitors. He concludes that national living standards are overwhelmingly determined by domestic

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... s rather than by some competition for world markets. It should be noted, however, that imports and exports imply exposure of domestic firms to foreign capability and efficiency, with implications in turn for domestic productivity. Krugman (1994) also observes that 'thinking and speaking in terms of competitiveness poses real dangers': it could lead to 'wasteful spending of government money' and to inappropriate public policies both supposedly to enhance a country's 'competitiveness'. He concludes that even the hope to appropriate the rhetoric of competitiveness in order to advocate and implement economic policies that are sound in itself, is misleading.