Introduction National competitiveness is an important economic indicator which determines the ability to compete in international markets while maintaining or improving living standards over time. From a national viewpoint, the objective of international trade is to increase total national wealth and national living standards 1 . A country is competitive if it trades in a reasonably free and open market environment, produces goods and services and trade, and, by implication, balances its accounts while simultaneously maintaining and expanding the real income of its citizens. The notion of competitiveness and the ability of a nation to compete on the global scale was analyzed and discussed by many economists. Classical economy and modern economic tradition try to determine the main factors and influences important for a nation-state to achieve a leading role in the global economy. Critics admit that to compete in the new world economy nations must adopt new production practices and trade policies 2 . Smith and Ricardo developed the main of national competitiveness explaining the main factors which helped a state to compete with other nations. Modern economists extend their assumptions and add the role of natural resources, foreign direct investments and national advantages. Michael Porter goes beyond traditional economic approach underlining the role of factor conditions, demand conditions, relating and supporting industries, strategy, structure, and rivalry between firms. Thus, these theories have some weaknesses and limitations in their frameworks. The aim of the paper is to analyze the beginning and development of national competitiveness theory, and discuss the main similarities and weaknesses of the theories. The paper consists of an introduction, four chapters and conclusion Classical Economy According to classical tradition, economy was understood as the management of the material affairs of the nation (polis). The “science” of classical economy consisted of the laws and principles that should guide statesmen in their capacity as administrators and legislators 3 . A contribution by classical economists has been their search for an understanding of the varying linkages over time between nations and the ‘outside’ world. How and to what extent do intra-state and also inter-firm relationships provide efficiencies in the allocation of resources over borders and add to overall economic growth? Sometimes nations have not only responded to conditions within the world economy, but have had profound impact on the course of those circumstances 4 . Adam Smiths’ Theory Classical economy theory began with publication of work of Adam Smith “The Wealth of Nations” in 1776, where he wrote that “invisible hand” leads all individuals in their motivation of self-interest to produce the greatest benefit for society and community 5 . In contrast to previous knowledge, Smith narrowed the object of political economy, as implied by its etymology, from the general “material affairs of the nation” to the much more restrictive “nation’s wealth,” a restriction of meaning that was often alluded to by critics of Smith and his followers 6 . According to Smith, a society made up of self-i