4.1.9 - International Competitiveness

Question 1

What Is International Competitiveness?

Answer 1

Ability of a nation to compete successfully overseas, and to sustain improvements in livings standards and output

Question 2

What Factors Determine Whether A Country Is Competitive?
(3 Points)

Answer 2

~ Price competitiveness of a nations goods and services.

~ Non-price competitiveness. E.g. Branding, quality and innovation.

~ Ability of a nation to attract FDI and FOPs.

Question 3

What Are The Measures Of International Competitiveness?
(3 Points)

Answer 3

~ Relative unit labour costs.

~ Global competitiveness index (GCI).

~ Terms of trade.

Question 4

Describe ‘Relative Unit Labour Costs’ As A Measure Of International Competitiveness
(3 Points)

Answer 4

~ Total Labour Cost / Output Produced.

~ Productivity and skills of the workforce.

~ Is affected by low labour productivity and labour legislation (NWM).

Question 5

Describe ‘GCI’ As A Measure Of International Competitiveness
(3 Points)

Answer 5

~ Recognises the fact that competitiveness is determined by a range of factors, not just labour.

~ All factors are rated then a overall index figure is generated.

~ Stating how competitive that nation is.

Question 6

Describe ‘Terms Of Trade’ As A Measure Of International Competitiveness
(2 Points)

Answer 6

~ Greater the number the better the TOT position, but the worse the price competitiveness.

~ Deterioration of the TOT, means export prices are falling for a nation.

Question 7

What Are The Factors Influencing International Competitiveness?
(7 Points)

Answer 7

~ Unit labour costs.

~ Labour flexibility and skills.

~ Levels of tax regimes. E.g. Corporate and income taxes.

~ Innovation.

~ Infrastructure.

~ Regulation.

~ Economic stability.

Question 8

What Are The Benefits Of Being Internationally Competitive?
(5 Points)

Answer 8

~ Current account surpluses -> more investment overseas.

~ Attracts FDI.

~ Unemployment decreases.

~ Export-led growth -> economic growth.

~ Increased standards of living.

Question 9

What Are The Problems Of Being Internationally Uncompetitive?
(2 Points)

Answer 9

~ Current account surplus -> stronger currency.

~ Competitiveness can be easily lost, to developing countries with low labour costs.

Question 10

What Are Policies To Improve International Competitiveness?

Answer 10

Supply-side policies.