Competitiveness

A useful entry on the Bond Vigilantes blog on competiveness.

The concluding paragraph of this useful blog reads:
“It is true that the growth rate of an economy will depend on the growth rate of exports, but the problem is the growth rate of exports depends upon world demand and how competitive those exports are in the international marketplace. We doubt an internal devaluation is the answer to Europe’s problems. To say that a reduction in ULCs will result in a rebound in growth numbers is wrong. You have to be producing stuff that people want to buy. Or you need your currency to devalue by enough to make your goods relatively cheap. This isn’t going to happen in Europe, where the euro has been remarkably strong given the sovereign crisis. The growth answer lies in getting credit flowing through the economy again, and central banks recognise that. It is important to realise that sometimes the obvious solution – like “we need to be more competitive” – is not always the right solution.”
Find the whole entry here: http://www.bondvigilantes.com/ where you can also sign up for regular email updates. The articles are intended for investment professionals but there are useful titbits for Economics and Business teachers and students.