international competitiveness

Question 1

what factors will determine international competitiveness

Answer 1

productivity
exchange rates
taxation
regulation

Question 2

UK context

Answer 2

9th most competitive country ranked out of 140 countries

Question 3

what approaches can the government take to improve international competitiveness (3)

Answer 3

• government spending targeted in growth sectors- subsidise infant industries
• cut corporation tax - allow firms to invest into R and D
• exchange rate policy - fixed exchange rate

Question 4

what are the limitations of approaches that the government can take to improve international competitiveness

Answer 4

• government spending can have a negative impact on national debt- can lead to currency depreciation -> inflation
• cut in corporation tax can put pressure on public infrastructure -> lower quality education
• sacrifices control over domestic monetary policy -> if the interest rates increase then value of currency may increase