That policy, in combination with technical innovations that have lowered costs of transportation and communication, has opened the global economy. Yet paradoxically, this opening has rendered classical trade theory obsolete. The logic behind classical free trade is that all can intellectual corporation forex factory when countries specialize in producing those things in which they have comparative advantage.
That is what globalization has undone. The economic logic was that factories should float between countries to take advantage of lowest costs, be they due to under-valued exchange rates, low taxes, subsidies, or a surfeit of cheap labor. The thinking is increased competitiveness can make Europe and the US more attractive to businesses. Unfortunately, competitiveness policy is not up to the task of anchoring the barge, and it can even be counter-productive. The core problem is corporations are globally mobile. D spending, but the resulting innovations may simply end up in new offshore factories. Moreover, competitiveness policy easily degenerates into a race to the bottom.
For instance, if the US cuts corporation taxes, other countries may match to stay competitive. Worse yet, capital mobility prompts countries to adopt unfair policies to increase their relative business attractiveness. All are visible in China, which is the poster-child for such abuses. Previously, when corporations were nationally based, profit maximization by business contributed to national economic success by ensuring efficient resource use.
Today, corporations still maximize profits, but they do so from the standpoint of their global operations. Consequently, what is good for corporations may not be good for country. When companies raise profits by rearranging production according to global cost patterns, those shifts can lower country income. For instance, when Boeing transfers production to China, the US loses high value adding jobs and national income can fall.