The Agenda

Michael Mandel and Diana Carew’s Competitiveness Audit

Michael Mandel and Diana Carew of the Progressive Policy Institute back a “Competitiveness Audit” to encourage insourcing or “import recapture”:

The initial results of the Competitiveness Audit will enable us to identify industries that are globally competitive (domestic prices are below import prices, so the price gap is negative); industries that are currently uncompetitive (domestic prices are significantly above import prices); and industries that are ‘near-competitive’ (domestic prices only slightly above import prices). Over time, as the Competitiveness Audit is repeated, it will become possible to tell whether price gaps are widening or closing. 

The data from the Competitiveness Audit will be extremely valuable for small and medium-size U.S. companies trying to compete in global markets. It will in essence provide a benchmark that they can use to guide their investments.

In addition, the Competitiveness Audit data will greatly assist in targeting federal, state and local economic development and training funds. In general, industries that are ‘near-competitive’ will offer the biggest bang for the buck, since assistance might make a difference in regaining market share against comparable imports to the U.S. and in developing export markets overseas. Although there will be upfront costs associated with conducting a Competitiveness Audit, allocating the resources now will save more money in the long-run through the ability to appropriately target future investment.

Competitiveness audits would not be a new tool of an old industrial policy. On the contrary, they could keep us from misspending billions to help US industries that are the farthest from being globally competitive.

This idea seems quite promising, and one can easily imagine Republicans embracing it, particularly since it is the southern United States that stands to benefit most from insourcing

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

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