The competitiveness of industrial economies in the world market has been the subject of heated debate in the mass media as well as in academic research. In the United States the issue has been a prominent feature of recent election campaigns. In Western Europe many attribute slackened economic growth and high unemployment to competition from low-wage countries. Japan ' s preoccupation with competitiveness is often regarded as the key to its phenomenal export success. Until recently the developing countries have not been prominent in the debate, even though some of these countries have been major players in the world market. Now international competitiveness has become the focus of worldwide attention as an increasing number of countries are opening up their economies and launching major trade policy reforms. Innovation and technological improvements are critical to a country ' s economic performance. Human capital, the technical skills of the labor force, managerial practices, and government policies are central to success in the international marketplace. This report presents recent thinking in this field and discusses the implications for developing countries.