Equity, foreign investment and international competitiveness

Is the degree of competitiveness of countries independent of their degree of inequality? Is competitiveness only a question of microeconomic and sectoral efficiency, of the real exchange rate, or is it also a social question? So far, the specialized literature has ignored the problem of equity in the determination of countries’ competitiveness. It has then not been able to fully explain the observed competitiveness, however. In this article, equity is incorporated into the production function and also into investors’ decisions in a world of perfect mobility of capital.