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Export Competitiveness and Current Account Deficit

Question

Analyse how a country’s current account deficit might be reduced if its firms become internationally competitive.

Category:

International Trade and Exchange Rates

Frequently asked question

Preview Answer

I. 🍃Introduction
- Definition of coherent analysis
- Importance of being internationally competitive

II. Being internationally competitive
- High productivity
- Low inflation
- Low exchange rates

III. How being internationally competitive increases production
- Reduces cost of production
- Decreases price of exports
- Increases quality of exports
- Increases demand for exports
- Increases value of exports / net exports

IV. How being internationally competitive affects imports
- Imports relatively more expensive
- Other countries' products more expensive
- Lower relative quality of imports
- Decreases imports

V. 👉Conclusion
- Summary of key points
- Implications for policy and practice

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