Rethinking Competitiveness

Kevin A. Hassett is the director of economic policy studies and a senior fellow at the American Enterprise Institute (AEI).

This volume is the result of three conferences organized by the American Enterprise Institute for Public Policy Research. This Washington, DC-based think tank is best known as an incubator for neoconservative thought. No doubt many chapters lean right--sometimes so far that it threatens to tip the book over. For example, the chapters on international trade promote free trade initiatives, and the chapters on the health care system argue the system is more efficient than originally thought (take that, Obamacare). Nonetheless, readers in the center (and left of center) will benefit from both Martin West's study of education outcomes in the US compared to those of other countries (chapter 3), and Robert Shapiro's analysis of the role of innovation and intellectual property (chapter 5). Phillip Swagel's contribution on international competitiveness (chapter 9) completes the volume with a 30,000-foot view of competition from a political angle. His perspective offers a much-needed respite after what at times feels like an awkward family dinner conversation between a neoconservative brother-in-law and a liberal niece. Summing Up: Recommended. Upper-division undergraduate collections and above. -- R. H. Scott, Monmouth University

• ContentsList of Illustrations ixPreface xiii1. Rethinking Competitiveness, Kevin A. Hassett,R. Glenn Hubbard, and Matthew H. Jensen 1Charles Tiebout, Foot Voting, and Competitionamong Localities 5Tiebout and a New View of “Competitiveness” 17Conclusion 23Notes 23References 242. Competitive Tax Policy, Joel Slemrod 32What Exactly Is Competitiveness? 32How Can Competitiveness Be Measured? 35Taxation and Competitiveness 37A Short Digression on Unpersuasive Economic Arguments 40Business Taxation 42International Considerations 49The Corporate Tax and Prosperity: Facts and Evidence 53Summary 62Notes 63References 653. Education and Global Competitiveness: Lessons for theUnited States from International Evidence, Martin West 68Ranking the U.S. Education System:Quality and Quantity Indicators 72The Economic Costs of Low-Quality Education 82vvi Rethinking CompetitivenessPolicy Lessons 86Notes 90References 914. Immigration, Productivity, and Competitivenessin American Industry, Gordon H. Hanson 95Immigration and Competitiveness in Theory 100Empirical Evidence on Immigration and Competitiveness 106U.S. Immigration Policy and American Competitiveness 122Notes 128References 1295. The Role of Innovation and Intellectual Propertyin Economic Competition, Robert J. Shapiro 132The Economic Value of Innovation 133The Value of Intellectual Property Rights 135How Innovations Diffuse across Economies 139Competition: Efficiency versus Innovation 143Conclusions 148Notes 152References 1526. American Competitiveness and the Health Care System,Michael E. Chernew and Philip I. Levy 156Productivity versus Competitiveness 159The Health System’s Effect on the Economy 169Comparing International Health Approaches 178Conclusions 187Notes 188References 1897. Is the United States “Competitive” Internationallyin Health Care? Benjamin Zycher 196Some Conventional Wisdom on the U.S. Health Care System 197Some International Evidence on Prices and Services 202The Comparative Performance of the U.S. Health Care System 209Concluding Observations 215Notes 216References 220CONTENTS vii8. G lobal Value Chains and the Continuing Case for Free Trade:Trade Theory and Illustrations from the United States andEast Asia, Claude Barfield and Matthew Jensen 225Two Unbundlings of Trade and Shifting Policy Implications 227The First Unbundling and the Big Ideas of Trade Theory 228The Second Great Unbundling 239East Asian Fragmentation and Supply Chains:The Impact on Trade Data and Analysis 245The United States and Global Supply Chains 260Observations and Conclusions for Policy 268Notes 270References 2739. International Competitiveness, Phillip Swagel 278Uses and Meanings of “Competitiveness” 283Capital Markets Competitiveness 293Policy Appeals to Competitiveness 295International Competitiveness in the Modern Vernacular 299Notes 300References 300About the Authors 303