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analysis five forces of framework
World Economic Forum, 2000).
6 In id. at 312, the effectiveness of antitrust policy was measured in a survey by responses to question
10.14, "The anti-monopoly policy effectively promotes competition," using a scale from 1-7, "strongly
disagree" to "strongly agree."
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economies, an indication that antitrust is also important for poor countries, rather than
just a luxury needed only in wealthy ones. The report also includes a survey question
about the intensity of local competition. While the question is imperfect because of
possible ambiguities in its interpretation by respondents, it also has a highly significant
positive association with GDP per capita.
Figure 1 Competition and Prosperity: Findings from The Global Competitiveness
Report
Regression
Dependent Variable: 1994 - 99 GDP per capita growth
Significance Adj R2
Measure of National Business at 95% level
Environment
Intensity of local competition at 95% level .255
Effectiveness of Antitrust policy at 95% level .117
Regression
Dependent Variable: 1994 - 99 GDP per capita growth
Significance Adj R2
Measure of National Business at 95% level
Environment
Intensity of local competition at 95% level .255
Effectiveness of Antitrust policy at 95% level .117
Regression
Dependent Variable: 1999 GDP per capita
Significance Adj R2
Measure of National Business at 95% level
Environment
Effectiveness of antitrust policy at 95% level .700
Intensity of local competition at 95% level .320
Regression
Dependent Variable: 1999 GDP per capita
Significance Adj R2
Measure of National Business at 95% level
Environment
Effectiveness of antitrust policy at 95% level .700
Intensity of local competition at 95% level .320
“...countries where the intensity of competition is rising
showed by far the greatest improvement in GDP per capita.”
Source: M.E. Porter, “The Current Competitiveness Index: Measuring the Microeconomic Foundations of
Prosperity”, in The Global Competitiveness Report 2000 (Geneva: World Economic Forum, 2000).
Turning to analysis of the rate of growth in GDP per capita, the effectiveness of
antitrust policy and the intensity of competition are again highly significant variables and
contribute substantially to explained variance. Note that the proportion of variance in
GDP per capita growth rate that can be explained is inherently less than for the level of
GDP, because growth in GDP is more sensitive to a wide variety of shocks and shortterm
macroeconomic influences. We find that the competition/antitrust policy measures
are as or more associated with prosperity as transportation infrastructure, telecom
infrastructure, IT readiness, and the like. In a first difference analysis, countries where
the intensity of competition is rising showed registered the greatest improvement in GDP
per capita. All these findings are consistent: competition and a vigorous antitrust policy
are strongly associated with national prosperity.
This research provides some positive evidence of the importance of strong antitrust
for prosperity. There is also ample negative evidence to be cited. For example, Japan is
a country with a history of weak antitrust enforcement, legal cartels, and extensive
government-sponsored collaborative research projects among companies. During the
height of the Japanese economic miracle, the case of Japan was a principal argument
advanced in the United States for weakening antitrust law – for example, in allowing
potentially anticompetitive collaborative activity.7
7 M.E. Porter, H. Takeuchi & M. Sakakibara, Can Japan Compete? (2000).
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Yet one of the major findings of a recent book is the steep price that Japan has paid
for a lax antitrust policy.8 Our research revealed that weak antitrust enforcement did not
explain Japanese [next page]