Th4.1: Benefits of Competitiveness

Question 1

What are the four benefits of competitiveness?

Answer 1

current account surpluses
foreign investment
rise in wages
economic growth

Question 2

Current account surpluses

Answer 2

this surplus allows them the opportunity to invest overseas and build up a surplus of assets overseas, on which interest, profit and dividends can be earned

Question 3

Foreign investment

Answer 3

likely to attract inflows of foreign investment - either by establishing new economies or buying domestic firms. this will lead to a transfer of knowledge, skills and tech to firms

Question 4

Rise in wages

Answer 4

employment is likely to increase because more goods are being produced, since more goods are exported and less imported, so more are sold internationally and domestically - a rise in labour demand will lead to a rise in wages

Question 5

Economic growth

Answer 5

there will be economic growth, both by supply side improvements due to efficiency and investment and by demand-side improvements relating to X-M