International competitiveness

Question 1

What is meant by international competitiveness and why is it significant?

Answer 1

The ability of a country (their firms) to provide goods and services which are of a higher quality and more price competitive.

It is important so that the economy can sell more exports.

It is important for attracting FDI.

Question 2

What are measures of IC?

Answer 2

Relative unit labour: total wages divided by real output (i.e. the cost of employing labour divided by the amount that the labour produces).

Relative export prices: Relative export prices of UK goods and services compared to export price of the UK’s main trading partners.

Question 3

Factors influencing IC

(FDI)

Answer 3

FDI means that businesses are set-up (either partially or completely) in the UK by overseas investment.

For example, the Chinese firm Huawei provided some infrastructure for 5G mobile technology.

Question 4

What are some non-price factors that effect IC?

Answer 4

Dynamic efficiency means that exports are of a higher quality.

Innovation, quality, branding etc.

Question 5

Taxation effectively…

Answer 5

increases the cost of production.