Competition is often described as a race. Individuals compete for jobs, companies for customers, and states for investment, technologies and resources. The strongest performers advance, the less efficient adapt or disappear, and innovation, productivity and growth are expected to emerge from this process of selection.

There is some truth to this narrative. But it becomes increasingly inadequate as competition changes scale.

Not all forms of competition are alike. A company trying to manufacture a product more cheaply does not operate under the same conditions as a platform controlling access to millions of users. An engineer improving their skills is not in the same position as a worker whose tasks can increasingly be performed by artificial intelligence. And a state seeking to attract investment is no longer pursuing growth alone when it subsidizes semiconductor production, secures critical minerals or restricts exports of strategic technologies.

Competition remains a driver of progress. But it has also become one of the mechanisms through which income, economic power and, increasingly, international power are redistributed.

The Promise of Competition

The economic reasoning is relatively straightforward. When a company knows that its customers can turn to a competitor, it has an additional incentive to reduce costs, improve its products, invest and innovate. When new players can enter a market, established companies cannot indefinitely take their positions for granted.

The possibility of being challenged is perhaps the essential element.

The OECD considers that pro-competitive regulation can support innovation, entrepreneurial dynamism, productivity, investment and employment. The World Bank similarly emphasizes that genuinely competitive markets can improve the functioning of essential sectors, provided that entry rules and institutions prevent cartels, abuses of dominance and artificial protection for incumbent firms.

Competition then acts as a form of discipline.

It forces organizations to learn. It accelerates the diffusion of certain innovations. It allows new business models to challenge structures that have become inefficient. It also gives consumers an often underestimated form of power: the ability to switch suppliers.

But this mechanism depends on one fundamental condition: competition must remain open.

A market in which a handful of players enjoy almost insurmountable barriers is not necessarily competitive simply because several companies remain present. The decisive question becomes less how many competitors exist than whether they can realistically be challenged.

When Work Becomes a Global Market

For individuals, this logic has gradually expanded.

For much of the industrial era, professional competition was primarily local or national. An accountant, engineer, architect or administrative employee mainly competed with workers available to companies within the same geographical environment.

The globalization of services, remote work and digital platforms has partially broken down this boundary.

In some professions, a company can now recruit, outsource or purchase services thousands of kilometres away. The labour market has obviously not become entirely global: language, regulation, qualifications, time zones and the need for physical presence continue to fragment employment considerably. But for a growing share of digitizable activities, distance offers less protection than it once did.

A second transformation is now being superimposed on the first: competition no longer takes place only between workers.

It also takes place between different combinations of human labour and technology.

In 2025, the International Labour Organization estimated that around one in four workers worldwide held an occupation with some degree of exposure to generative artificial intelligence. The ILO nevertheless stressed an essential distinction: the transformation of jobs currently appears more likely than their outright disappearance.

That distinction fundamentally changes the question of individual competitiveness.

The issue is no longer simply whether someone has more qualifications or experience than the candidate next door. It is increasingly about identifying which tasks can be automated, which can be augmented by technology, and which continue to depend on judgement, responsibility, creativity, negotiation, local knowledge or trust.

Technology therefore does not necessarily eliminate competition between workers. It shifts its boundaries.

In some occupations, people who master the technology may increasingly compete with those who do not. In others, a small team equipped with artificial intelligence systems may be able to perform a volume of work that previously required a much larger organization.

Productivity consequently becomes less of an exclusively individual characteristic. It increasingly depends on access to capital, data, software and infrastructure.

The Paradox of the Dominant Firm

The same ambiguity appears at the corporate level.

Competition can produce new champions. But the success of those champions can, in turn, reduce the competition that allowed them to emerge.

This phenomenon is not new. Economies of scale have always encouraged concentration in certain industries. But the digital economy has strengthened several mechanisms capable of accelerating the process: network effects, data accumulation, switching costs, ecosystem integration, computing capacity and access to capital.

The more users a platform attracts, the more useful it may become. The more useful it becomes, the more users it attracts. Competitive advantage can therefore develop into a cumulative loop.

The European Commission designed the Digital Markets Act partly in response to this problem. The framework does not merely seek to punish certain anticompetitive practices after they occur. It imposes specific obligations on major platforms classified as “gatekeepers” — companies capable of becoming structural access points between businesses and users.

The debate has even extended to artificial intelligence infrastructure. In June 2026, the European Commission said it had preliminarily concluded that Amazon Web Services and Microsoft Azure should be designated as gatekeepers for their cloud computing services. Among the factors it highlighted were lock-in effects, high switching costs and the growing importance of artificial intelligence tools and partnerships in cloud purchasing decisions.

The problem is therefore structural.

A dominant company is not necessarily dominant because it prevented competition. It may have reached that position precisely because it innovated more effectively than its competitors. Yet once the gap becomes sufficiently large, accumulated infrastructure, data, capital and network effects can make the next wave of innovation considerably more difficult for new entrants.

Competition can therefore produce its own concentration.

Innovation Does Not Always Come From Maximum Competition

This is where another limitation of the conventional narrative emerges.

Innovation does not mechanically increase with the intensity of competition.

A company facing no competition may lose the incentive to innovate. But a company operating under extreme competitive pressure, with almost nonexistent margins and little financial visibility, may also hesitate to finance investments whose returns will not materialize for years.

Some innovations require precisely the opposite: capital, time, infrastructure and the ability to absorb failure.

The relationship between competition and innovation is therefore less linear than it may appear. Research reviewed by the OECD has long shown that the two interact in both directions: competition can stimulate innovation, while innovation itself transforms the structure of competition.

The objective of economic policy is therefore not necessarily to maximize competition at every moment.

It is instead to preserve contestability: preventing a position acquired today from becoming a rent that cannot be challenged tomorrow.

This distinction becomes crucial in sectors with enormous fixed costs, including advanced semiconductors, cloud computing, artificial intelligence, space, energy and telecommunications infrastructure.

When States Enter the Competition

At the international level, the transformation is even more striking.

For decades, economic competition between states was primarily discussed in terms of costs, taxation, infrastructure, workforce qualifications and the ability to attract investment.

That logic remains. But another has been added.

Governments no longer ask only where a factory can produce at the lowest cost. They increasingly ask who controls that factory, where its components are manufactured, which minerals it depends on, which country controls its software and whether its operations could be interrupted during an international crisis.

Economic efficiency then collides with national security.

Semiconductors provide the clearest example. Subsidies for the sector have risen substantially across several major economies since 2020. Similar dynamics are visible in batteries, critical minerals, artificial intelligence, energy technologies, space and parts of the digital infrastructure.

This development changes the nature of international competition itself.

A company no longer competes solely against another company. It may also be supported by the financial, regulatory and diplomatic resources of the state with which it is associated.

The United States, China, the European Union and other powers increasingly use combinations of subsidies, tax credits, export controls, investment restrictions, public procurement and industrial policy to protect or develop capabilities considered strategic.

The boundary between economic policy and power politics is becoming increasingly difficult to identify.

When Competition Stops Seeking the Lowest Price

This transformation produces an even deeper change.

During the period of maximum expansion of global value chains, much of industrial organization revolved around one question: where can something be produced most efficiently?

The succession of the pandemic, shortages, US–China tensions, the war in Ukraine and other geopolitical crises added a second question: what happens if that production becomes inaccessible?

The company optimized for cost then discovers the value of redundancy.

Two suppliers can be more expensive than one. Several industrial sites can appear less efficient than a single enormous factory. Strategic inventories immobilize capital. Domestic production capacity may cost more than imports.

Yet what appears inefficient under normal conditions can become insurance during a crisis.

Competition therefore does not disappear. Its criteria change.

Cost remains important, but it increasingly coexists with resilience, security of supply, technological sovereignty and the ability to continue operating in a deteriorating geopolitical environment.

The Return of the State Does Not Eliminate Distortions

It would nevertheless be misleading to conclude that industrial policy automatically resolves the vulnerabilities created by markets.

Government intervention creates risks of its own.

An IMF study published in July 2026 on industrial subsidies and trade tensions in strategic sectors found that subsidies can alter trade flows and strengthen sectoral specialization in the economies providing them. But the authors also concluded that the recent combination of subsidies and tariffs can reduce global economic welfare by generating distortions and cross-border externalities.

The OECD has similarly observed that some subsidies can increase the market shares of recipient companies without producing equivalent improvements in investment or productivity.

Competition between states can therefore produce a paradoxical situation: each government acts rationally to reduce its own vulnerabilities, while the accumulation of those decisions can make the global economy collectively less efficient.

What is rational at the national level is not necessarily rational at the level of the system.

From Competition to Geoeconomics

This is probably where the most important transformation lies.

International competition is no longer solely about the ability to sell more. It increasingly concerns the ability to control dependencies.

A country possessing a resource that is difficult to substitute holds leverage. A country controlling a critical technology possesses another form of leverage. A power whose currency, financial infrastructure, software, platforms or markets are indispensable can potentially convert that economic centrality into political influence.

Geoeconomics begins precisely when interdependence ceases to be viewed exclusively as a source of prosperity and is also understood as a potential instrument of power.

For several years, the IMF has observed a partial redirection of trade and investment flows along geopolitical lines, although this fragmentation remains highly uneven across sectors. Available research suggests that it is more visible in certain strategic activities — including computing, communications, transportation and scientific and technical services — than across the global economy as a whole.

This is therefore not generalized deglobalization.

It is instead a globalization that is beginning to distinguish between what can remain governed primarily by market logic and what is considered too strategic to depend entirely on it.

The Paradox of Interdependence

Yet no major power can easily withdraw from the global economy it is simultaneously attempting to secure.

The United States, China, Europe and major emerging economies remain connected through trade, financial markets, minerals, components, patents, data, infrastructure and investment.

Competing companies sometimes rely on the same semiconductor manufacturers.

States seeking to reduce their dependencies need foreign partners to build the new supply chains intended to protect them.

Countries subsidizing technological autonomy continue to import some of the equipment required to construct it.

This is the central paradox of contemporary competition: actors simultaneously seek to outperform one another and preserve the systems through which they remain mutually dependent.

Interdependence has therefore not disappeared.

It has become strategic.

Organizing Rivalry

The essential question is ultimately not whether competition is good or bad.

It is under which conditions competition produces progress rather than predation, innovation rather than rent extraction, and resilience rather than fragmentation.

For individuals, this requires access to education and technological tools that enable adaptation rather than simply intensifying competition.

For companies, it requires allowing success to be rewarded without systematically transforming acculste mulated advantages into insurmountable barriers.

For states, it requires distinguishing genuinely strategic dependencies from those invoked primarily to justify protectionism.

Competition, therefore, is not the opposite of cooperation. It depends on it.

Markets need common rules. Competing companies need standards, infrastructure and sometimes shared production networks. Rival states need mechanisms capable of preventing every economic dependency from becoming a vulnerability to be exploited.

For a long time, globalization sought to organize interdependence around efficiency.

The world now emerging is increasingly seeking to organize it around security.

Competition will probably remain one of the most powerful drivers of human innovation. But in an economy where an algorithm can transform an occupation, a platform can become infrastructure, and a supply chain can become a geopolitical instrument, the real question is no longer simply who wins the competition.

It is which rules still allow competition to generate progress without turning every advantage into a position of dominance and every dependency into a source of leverage.

Main Sources

  • International Labour Organization (ILO) — Generative AI and Jobs: A 2025 Update, May 2025. Examines workers’ exposure to generative AI and concludes that job transformation is more likely than widespread outright replacement.
  • ILO — Generative AI and Jobs: A 2025 Update
  • OECD — Competition and Innovation: A Theoretical Perspective, May 2023. Examines the complex relationship between market competition and innovation, including how competition can stimulate innovation while innovation itself reshapes market structures.
  • OECD — Competition and Innovation: A Theoretical Perspective
  • European Commission — Digital Markets Act. The EU regulatory framework governing large digital platforms designated as “gatekeepers,” designed in particular to preserve fairness and contestability in digital markets.
  • European Commission — Digital Markets Act
  • European Commission — Commission reaches preliminary position that Amazon's and Microsoft's market leading cloud services should be designated under the DMA, June 25, 2026. Addresses lock-in effects, switching costs and the growing importance of AI tools and partnerships in cloud computing.
  • European Commission — AWS, Azure and the Digital Markets Act
  • OECD — Recent Trends in Semiconductor Subsidies, April 2025. Documents the expansion of semiconductor subsidies since 2020 and examines their implications for investment, production and international competition.
  • OECD — Recent Trends in Semiconductor Subsidies
  • International Monetary Fund (IMF) — Lorenzo Rotunno, Michele Ruta and Priyam Verma, Industrial Policy and Trade Tensions in Strategic Sectors, July 2026. Examines industrial subsidies, tariffs, trade flows and the cross-border distortions generated by strategic industrial policies.
  • IMF — Industrial Policy and Trade Tensions in Strategic Sectors
  • International Monetary Fund (IMF) — Joanne Tan, How Widespread is FDI Fragmentation?, August 2024. Examines the extent to which foreign direct investment is being redirected along geopolitical lines and finds that fragmentation is more pronounced in some strategically sensitive sectors than across the global economy as a whole.
  • IMF — How Widespread is FDI Fragmentation?