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This paper develops and tests a model of differing trends in international competitiveness and economic growth across countries. The model relates the development of market shares at home and abroad to three sets of factors: the ability to compete in technology, the ability to compete in delivery(capacity) and the ability to compete in price. The test, using data for 15 OECD countries for the period 1961-1983, shows that in the medium and long run, factors related to technology and capacity are very important for market shares and growth, while price- or cost competitiveness plays a more limited role than often assumed. These results are shown to be consistent with earlier findings by Kaldor and others of a "perverse" (positive) relation between export performance and growth in relative prices or costs.
Jan Fagerberg (Wed,) studied this question.