Do Countries Compete?

I wrestled with this question last night as I struggled to fall asleep. During the winter semester my senior year, in an International Business Seminar course, I had said, no, they do not. A fellow student promptly countered my assertion and claimed of course they do. I do not remember too much of what he said, but what from what I do recall it was mostly that countries' compete for foreign investment. I never came up with a proper response (on the spot) to his argument and it has bothered me ever since.

I think the problem lies not in either of our arguments but more fundamentally, how the question is posed. In other words, is competition even a relevant concept to international relations? Or can the word be tinkered from the traditional, market sense to a more cooperative meaning? I'm not positive, but as of now I'm leaning toward the former.

I believe this because the stated goals and disposable tools to accomplish those goals are distinctly different for a nation than they are for a private enterprise. For instance if Dell is selling less laptops than Apple or selling them at a lesser margin, Dell can alter their business model by slashing price, cutting costs, hiring better workers, etc...

For a country, there are two issues fundamentally different from the above. One, a nation does not have the ability to do such things to such an efficient degree as a private company can. This is an issue in and of itself, but for now I will simply accept it as true to examine the more important premise.

A country, ideally, should not base its policies around what other countries are doing. The state should, again ideally, do everything in its power to provide its citizens with the clearest and simplest avenue to achieving their own means and building their own wealth, whatever course of action other countries are taking. In other words, nations should step back to let companies compete. Competition, ultimately, should not be in the vocabulary of government when it comes to international relations. If two countries do decide to effectively "compete", each nation's respective government must seize control of the nation to direct as they see fit to defeat their competitor. This quite obviously would lead down the road to war and totalitarianism.

Looking back, Hitler's Germany seems to be the most blatant case of one country explicitly attempting to compete with other countries.