4.1 International Economics Flashcards
Define International competitiveness
The ability of an economy to compete in international markets through the demand of exports
What are the measures on international competitiveness?
- cost of production
- productivity
- value of the currency
- relative unit of labour cost
- relative export prices
What is relative unit of labour cost?
total wages/real output
It is the cost of employing workers for each unit of good
A rise in relative unit of labour cost shows a decrease in international competitiveness due to a rise in cost of production
What is relative export prices?
Price of domestic exports compared to the exports of their trading partners
e.g high relative export prices leads to a fall in international competitiveness
Factors that contribute to international competitiveness?
- security
- social capital
- skills of current work force
- transport infrastructure
- stability
- corruption
International competitiveness 2019 rankings
no.1 Singapore
no.2 USA
no.3 Hong Kong
no.9 UK
Factors that determine international competitiveness (syllabus)
- investment
- taxation
- inflation
- exchange rates
- productivity
- regulation
- economic stability
- flexibility
- competition
- FoP
- Openness to trade
Define Globalisation
It is the increasing interconnectedness, interdependence, and integration of economies
What factors influence globalisation
- technology (IT and communication)
- protectionism
- infrastructure
- taxation
Benefits of globalisation?
- Increased competition
- increased choices of goods
- increase economic trade and world welfare
Drawbacks of integration to workers and firms?
- increased exploitation of labour in export processing zones
- shutting down of small and medium businesses
- increased risk to economic shock
