1.9 International Competitiveness Flashcards
(8 cards)
1
Q
What is competitiveness?
A
Sustainability of a business to sell goods and services profitably
2
Q
What are unit labour costs determined by?
A
1) Labour productivity
2) Average wages/ salaries
3
Q
Non-price competitiveness factors?
A
- Quality
- Sustainability
- Branding
4
Q
Policies to improve competitiveness?
A
1) Exchange rate
2) Tax incentives
3) Investment
4) Stable macro environment
5
Q
What is internal devaluation?
A
Attempting to improve price competitiveness through lowering wage costs or improving productivity
e.g. Greece
6
Q
Risks of internal devaluation?
A
- Loss of output
- Loss of employment
- Reduced living standards
7
Q
What is hysteresis?
A
Permanent loss of output
8
Q
Risks of external devaluation?
A
- Cost-push inflation
- Reduce real incomes
- No guarantee of trade deficit improving
