Abstract

International Competitiveness of National Economies: a Phenomenon Encountered in Searching a Theory

On the basis of a Ricardian model, this contribution attempts to place the concept of the competitiveness of national economies on theoretical foundations. Within the framework of this theory approach, exchange rate-induced disturbances of the international division of labour can be identified that are independent of the individual economic determinants of foreign trade. Contrary to Krugman, it would thus be correct to say that it is meaningful indeed to operate with the concept of the competitiveness of national economies. It is congruent with Balassa’s approach towards an economy’s overall ability to sell. The yardstick, compatible with this concept, for measuring the competitiveness of national economies is the real exchange rate calculated on the basis of unit labour costs. Empirical studies show that this indicator is, as a rule, well suited for explaining trends in import and export flows. Contrary to the widely discussed concept of overall competitiveness - within the meaning of a country’s relevant variables pertaining to real income and employment - the approach used in this contribution allows specific exchange rate-induced disturbances of the international division of labour to be much more accurately defined.