Over a longer perspective, it is productivity growth that matters. By moving from the production of lowvalued-added and low-productivity activities to higher value-added higher-productivity ones, facilitated by flexible markets and appropriate policies, an economy can increase its export earnings and its command over internationally traded goods and services. It can also benefit from the increased efficiency of production of non-traded goods and services.
The alternative is simply to stick with lowvalued activities and, typically in today's world, be faced with limited prospects, due to competition from lower cost production locations. One might be able to technically maintain competitiveness in such circumstances, but only by paring back labour earnings and domestic incomes. Clearly, this is not a very desirable long-term strategy.