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Few economic indicators attract as much controversy as those of international competitiveness. One reason for this is the imprecision of the concept: in common parlance" competitiveness" can be used to cover almost any aspect of market performance. Product quality, the ability to innovate, the capacity to adjust rapidly to customers' needs and the absence of restrictive practices in the labour market are frequently evoked in discussions of competitiveness. This paper, however, will focus on a much narrower meaning, that based on relative prices or costs. It might be stressed at the outset that the link between this narrow concept and economic performance more generally is not unambiguous. The ambiguity arises from the fact that its international relative price or cost position can be both cause and result of a country's economic performance. On the one hand, it is clear that if relative costs are too high, the ability to compete internationally can be compromised. On the other hand, successful economic performance can lead to an exchange rate appreciation, and thus to higher relative costs or prices. For instance, if enterprises in a country become more successful in the non-price dimensions of performance-if they are innovative, flexible, produce high-quality goods and so on-then the real exchange rate would be expected to strengthen. Price and wage competitiveness-the narrow concept-would thus appear to" worsen". But such" deterioration" would of course be a symptom of success, not of failure. A second reason for controversy is that even the narrow concept of competitiveness can be given many distinct statistical forms, using prices, wages …