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Flashcards in International Competitiveness Deck (19)
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1

What are the measures of competitiveness? (2)

1. Relative export prices
2. Relative unit labour costs

2

What is relative export prices?

Relative cost of uk exports to other countries

3

What is relative unit labour?

Employing workers to produce one unit labour cost. If wages increases but labour productivity decreases, unit labour cost increases.

4

Factors influencing international competitiveness? (5)

1. Labour productivity
2. Relative inflation rates
3. Levels of infrastructure
4 . Cost of business
5. Exchange rates

5

How does labour productivity influence international competitiveness?

If German productivity rises faster than the UK they are more competitive

6

What affects labour productivity? (4)

1. Levels of education and training
2. Mobility of labour
3. Motivation of workers
4. Technology

7

How do relative inflation rates influence the international competitiveness?

If the uk inflation drops it makes us more competitive

8

How to levels of infrastructure influence the international competitiveness?

Troubles with transport-- and increase in costs and decrease in competitiveness

9

How do the cost of the business influence the international competitiveness?

Regulation and taxes--- if they increase then competitiveness drops

10

How to exchange rates influence international competitiveness?

An undervalued exchange rate will male exports competitive

11

Measures to increase competitiveness? (6)

1. Education and training
2. Investment and infrastructure
3. Privatisation and deregulation
4 . Devaluation in exchange rates
5. Limiting wage growth
6. Flexible labour markets

12

How does education and training increase competitiveness? And decrease

An increase in labour productivity

However -- takes years

13

How does investment in infrastructure increase competitiveness? And decrease

Transport costs drop and an increase in productivity

However-- expensive and takes time

14

How does privatisation and deregulation increase competition?

If efficiency increases from incentives of competition and private sector

15

How does a devaluation in the exchange rates increase competition? And decrease?

Increase in competition and exports cheap

--- however leads to inflation and misses key issues

16

How does limiting wage growth increase competitiveness? And decrease

Increases productivity

-- however difficult for government

17

How does a flexible labour market increase competitiveness? And decrease?

Drops labour costs and encourages firms to invest and grow


--- however can lead to limited regulation

18

Benefits of being internationally competitive? (5)

1. Rising exports
2. Improved current account
3. Low inflation
4. Higher living standard- afford more imported goods
5. Lower unemployment

19

Problems of being internationally competitive and how ? (2)

1. Appreciation could damage growth-- competitiveness causes a rise in exchange rates and makes exports less competitive

2. Economy may become too reliant on exports-- if economy becomes reliant on cheap exports it will be more vulnerable to a downturn in the global economy