Policies to improve international competitiveness

Question 1

What type of policies are most used to improve international competitiveness?

Answer 1

Supply-side policies, aimed at improving efficiency, productivity, and innovation.

Question 2

Which supply-side policies improve price competitiveness?

Answer 2

Lower corporate/income tax

Tax allowances on investment

Wage restraint policies

Deregulation to reduce business costs

Question 3

Which supply-side policies improve non-price competitiveness?

Answer 3

Investment in education/training (skills)

R&D subsidies

Infrastructure spending (e.g. transport, digital)

Support for innovation and start-ups

Question 4

How can governments attract Foreign Direct Investment (FDI) to boost competitiveness?

Answer 4

Tax incentives

Regulatory easing

Improved infrastructure

Ensuring macroeconomic stability

Question 5

What is a major drawback of supply-side policies?

Answer 5

They are costly (high opportunity cost), often requiring long time lags, and no guarantee of success.

Question 6

Why must policies be targeted?

Answer 6

Broad policies may miss key sectors — targeting key industries or specific competitiveness weaknesses (e.g. digital, green tech) increases effectiveness.

Question 7

What does it mean that competitiveness is a relative concept?

Answer 7

A country can improve its competitiveness, but if others improve faster, it may still lose global market share.

Question 8

What’s the opportunity cost of improving international competitiveness?

Answer 8

Government resources may be diverted away from healthcare, welfare, or debt reduction — this trade-off must be justified.

Question 9

Can supply-side policies reduce inequality?

Answer 9

Potentially — investment in skills and apprenticeships can reduce structural unemployment, but only if well-designed and accessible.