Economics 4.1.4 Flashcards
“What is international competitiveness?”
“International competitiveness refers to how well a country’s products compete in international markets.”
“How can competitiveness change over time?”
“Competitiveness can change over time due to various factors.”
“What metrics are used to compare the competitiveness of two countries?”
“Two metrics commonly used are relative unit labour costs and relative export prices.”
“What is relative unit labour costs?”
“Relative unit labour costs are the total wages in an economy divided by output, indicating the labour costs for each unit of output produced.”
“What does a lower relative unit labour cost indicate?”
“If the relative unit labour cost is lower than another country, the UK is more competitive in the international market.”
“What is relative export prices?”
“Relative export prices involve monitoring export prices to gain insight into their trends over time.”
“What does it indicate if export prices are rising in the UK?”
“If export prices are rising in the UK relative to other countries, then the UK is becoming less competitive.”
“What factors influence international competitiveness?”
“The factors influencing international competitiveness include relative unit labour costs, relative wages & non-wage costs, relative rate of inflation, and relative level of regulation.”
“Why is the concept of ‘relative’ important in competitiveness?”
“The concept of ‘relative’ is important because it highlights how one country’s performance compares to others.”
“What happens if inflation increases at an equal rate across competitor nations?”
“If inflation increases at an equal rate across competitor nations, there will be little change in competitiveness.”
“What factors influence international competitiveness?”
“Factors influencing international competitiveness include relative unit labour costs, relative wages & non-wage costs, relative inflation rates, and levels of regulation.”
“How does a rise in productivity levels affect competitiveness?”
“A rise in productivity levels of UK workers, relative to their competitors, will lower production costs per unit and increase competitiveness.”
“How do relative wages and non-wage costs impact competitiveness?”
“Increases in labour costs, relative to other countries, are likely to make exports more expensive, thus worsening competitiveness.”
“What effect does relative inflation have on international competitiveness?”
“If inflation increases in the UK relative to other countries, foreign buyers pay more for UK exports, worsening competitiveness.”
“What is the impact of government regulation on competitiveness?”
“Government regulation tends to raise production costs, which can decrease competitiveness.”
“What are the benefits of international competitiveness?”
“The benefits of international competitiveness include export-led growth, reduced unemployment, current account surpluses, increased FDI, and improved standards of living.”
“What is export-led growth?”
“Export-led growth refers to the increase in economic activity generated by a rise in exports.”
“What are the effects of international competitiveness on unemployment?”
“International competitiveness leads to economic growth, which decreases unemployment and increases wages.”
“What do current account surpluses indicate?”
“Current account surpluses suggest exports exceed imports, allowing the government to avoid difficult policy decisions.”
“How does international competitiveness affect foreign direct investment (FDI)?”
“Increased overseas FDI provides finance for firms to invest in assets abroad, leading to long-term income and profit growth.”
“How do standards of living improve with international competitiveness?”
“As incomes rise with economic growth, households gain purchasing power and access to a wider variety of goods/services.”
“What problems arise from being internationally uncompetitive?”
“Problems of being uncompetitive include reduced economic growth, higher unemployment, and current account deficits.”
“What impact do government policies have in the context of uncompetitiveness?”
“With a current account deficit and lack of competitiveness, governments may focus more resources on regaining competitiveness, leading to opportunity costs and trade-offs.”
