Week 8 - international competitveness

Question 1

What are the three measures to measure international competitiveness?

Answer 1

Relative Unit Labor Costs; relative export prices; global competitiveness index

Question 2

How are relative labour costs calculated

Answer 2

By dividing the average wage in one country by the productivity of labor in that country

Question 3

What does a lower labour unit cost suggest

Answer 3

A lower relative unit labor cost indicates greater competitiveness, as it suggests that a country can produce goods and services at a lower labor cost

Question 4

What do relative export prices compare?

Answer 4

Relative export prices compare the prices of a country’s exports to those of its competitors.

Question 5

What do lower relative export prices suggest?

Answer 5

Lower relative export prices indicate greater competitiveness, as it means a country’s products are more attractively priced in international markets.

Question 6

How do efficient transportation, communication, and infrastructure support competitiveness?

Answer 6

Shortened supply chains can reduce costs and improve delivery times.

Question 7

Give three cost factors that can influence international competitiveness

Answer 7

a. Labor Costs: Lower labor costs can improve competitiveness.
b. Production Efficiency: Efficient production processes reduce costs.
c. Exchange Rates: Favorable exchange rates can make exports more competitive.

Question 8

Give 3 benefits of being internationally competitive

Answer 8

a. Increased Exports: Competitive countries can sell more goods and services abroad, boosting economic growth.
b. Job Creation: Export-oriented industries often create jobs, reducing unemployment.
c. Higher Standards of Living: International competitiveness can lead to higher incomes and improved living standards for citizens.
d. Foreign Direct Investment (FDI): Competitive environments attract foreign investment, leading to economic development.

Question 9

Give three disadvantages of being internationally uncompetitive?

Answer 9

a. Trade Deficits: Uncompetitive countries may import more than they export, leading to trade imbalances.
b. Economic Decline: A lack of competitiveness can result in declining industries and economic stagnation.
c. Unemployment: Uncompetitive industries may shed jobs, leading to high unemployment rates.
d. Income Inequality: A lack of competitiveness can exacerbate income inequality as some industries decline while others thrive.