International Macroeconomics

What is the IMD world competitiveness ranking?

It presents the overall ranking for 69 economies, they are ranked from the most to least competitive

What is used to evaluate the competitiveness of economies in the IMD world competitiveness ranking system?

• Economic performance

• Government efficiency

• Business efficiency

• Infrastructure

What was the most competitive economy in the IMD world competitiveness ranking system in 2025?

Switzerland

What place was the UK on the IMD world competitiveness ranking system in 2025?

29th

What does economic peformance consist of?

• Domestic economy

• International trade

• International investment

• Employment levels

• Price levels

What does Government efficiency consist of?

• Public finance

• Tax policy

• Institutional frameworks

• Business legislation

What does Business efficiency consist of?

• Productivity

• Labour market

• Management practices

• Attitudes and values

What does infrastructure consist of?

• Basic infrastructure

• Technology

• Scientific infrastructure

• Health and envrionment

• Education

What are the competitiveness trends of the UK?

18th in 2021

29th in 2023

29th in 2025

What is international competitiveness?

The ability to sell goods and services at competitive prices in a foreign country

What are the two types of competitiveness?

• Cost competitiveness

• Non-price competitiveness

What is cost competitiveness?

Differences in unit costs between producers-eventually reflected in the market prices for goods and services.

What is non-price competitiveness?

This encompasses technical factors such as product quality, reliability and performance etc.

What is Gross fixed capital formation?

refers to the net increase in physical assets (purchases minus sales), not accounting for land purchases.

What are the terms of trade index?

Tells us the volume of exports needed to buy a given volume of imports. It represents the value of the exports of a country, relative to the value of its imports.

What is the formula for the terms of trade index?

Index of export prices/Index of import prices x100

What is the ‘favourable moment’?

If the terms of trade increases. This means that export prices are rising relative to the price of imports.

What is the ‘unfavorable movement’?

If the terms of trade decreases. This means that export prices are falling relative to the price of imports.

What are some of the factors that affect the terms of trade index?

• Exchange rate, a depreciation in the exchange rate should cause a deterioration the ToT because it will make exports cheaper and imports more expensive

• Competitiveness of domestic firms, export prices will be affected by the cost of raw materials and productivity. Rising costs and falling productivity are likely to increase export prices and result in an improvement in the ToT.

• Relative inflation rates in different countries, higher UK inflation would cause improvement in the ToT as UK export prices would be rising faster than import prices