Question

the impact of a factor that influences productivity and Competetiveness

Answer 1

Impact of factor that influences productivity and competitiveness are:

(a) Relative inflation: If the inflation rate is relatively lower in other countries ,then over time that country become more competitive because price of goods are increasing slowly over a pried of time.

(b) Productivity: With improved technology and education, the country can enjoy higher labor productivity and therefore produce goods at a lower cost .Higher labor productivity is the key to increasing competitiveness and living standards.

(c) Exchange rate : Movements in the exchange rate will determine competitiveness.A sharp depreciation will make exports cheaper and more competitive.An increase in the exchange rate i.e appreciation will makes the foreign currency price more expensive.

(d) Tax rates : Tax rates on labor and corporations will determine competitiveness. Higher labor tax will increase the unit cost of labor faced by firms,leading to lower competitiveness.

(e) Infrastructure : Cost of transport is also the factor determine competitiveness.