international competitiveness Flashcards

1
Q

3 measures of international competitivemess

A
  • unit labout costs
  • relative export prices
  • global competitiveness index
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2
Q

how does the global competitiveness index measure competitiveness

A

Looks at infrastucture health education and tech as they affect prices and quality of goods

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3
Q

What does a higher global competitiveness index number mean

A

more competitive

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4
Q

factors affecting global competitiveness

A
  • exchange rates
  • wage costs
  • non wage costs
  • supply side polocies
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5
Q

Why does an increase in wage costs decrease competitivenss

A
  • higher production costs
  • SRAS shifts left
  • increase in price level
  • decreasing competitiveness
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6
Q

Example of non-wage costs influencing competitiveness (3)

A
  • employers contributing towards pension schemes
  • health and safety regulations
  • corporation tax
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7
Q

example of supply-side policy for competitiveness with evaluation (5)

A
  • eg lowering corp tax
  • increases SRAS lowering price
  • BUT have cut in healthcare
  • decreasing productivity
  • shifting LRAS to left increasing price
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8
Q

benefits of improving international competition(3)

A

increased jobs
means exports cheaper so higher demand increasing AD
No trade defecit

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9
Q

problems of improving international competitiveness(4)

A
  • lead to cost push or demand pull inflation
  • more demand for the currency than supply leading to appreciation
  • excessive protectionism leading to retaliation
  • lot of their production for over seas, wb production for domestic consumers? not enough consumer spending
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