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Evaluate strategies which may be used by businesses and governments to improve the competitiveness of a country of your choice.

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Introduction

´╗┐Economics Homework Unit 4 Evaluate strategies which may be used by businesses and governments to improve the competitiveness of a country?s goods and services. Competitiveness is the ability of a firm or a nation to offer goods and services that meet the quality standards of the local people and world markets at prices that are competitive and provide adequate returns on the resources employed or consumed in producing them. Governments have an important role for improving the competitiveness of their country?s goods and services. Governments are able to change regulations and taxes according to what they believe about their country?s state of economy. For example, a government may decide to decrease the corporation tax in order to improve the competitiveness of a country?s goods and services. A decrease in the corporation tax will encourage new firms to set up and existing firms to invest. Corporation tax is a levy placed on the profit of a firm with different rates used for different levels or profits. They are taxes against profits earned by businesses during a given taxable period. If there is a decrease in the corporation tax, it means that firms will have an increased retained profit since less money goes to the government revenue. ...read more.

Middle

Greater innovation should lead to better quality products and the creation of patents, copyrights, brands etc. However, increased spending on education and training by the government does not always lead to increased global competitiveness. It will depend greatly on exactly how the money is spent. For example expenditure for improving school buildings or Ofsted inspections may not necessarily improve the effectiveness of the teachers and the quality of education. On the other hand spending on training teachers and advancing their professional development, might be a more effective means of improving educational standards in the future and increasing productivity. However even in this case the effects are not likely materialise until the longer term. Another way in which the government can improve the non price competitiveness and price competitiveness in international markets is to encourage innovation and research. Tax allowances have been made available to businesses spending on innovation and research. However, there has also been a variety of programmes which enable some businesses to gain grants for research and development R & D and to set up knowledge transfer networks and universities. Such measures are likely to be more successful than tax cats since firms are given incentives to research and development through receiving tax concessions and from making connection to universities where they have the opportunity to learn about the latest scientific and technological advancements. ...read more.

Conclusion

If the business increases spending on training, workers will be more educated and informed about their job. This will increase the productivity since they will be able to produce more output at the same working hours and wages. If the productivity is increased, it means that more output will be produced at relatively the same costs. This will allow the firm to get bigger in size, lower the running and operational costs, increase income and gain a greater share of the market. This will increase both price and non-price competitiveness. However productivity doesn?t always improve competitiveness. For example if training isn?t done effectively, and workers do not give attention or really care about the job, then they won?t improve their knowledge and skills, training will not improve productivity, and therefore productivity will not improve competitiveness. In addition, productivity might not improve competitiveness because in the case of increasing the wages in relation of the output the worker producers, there are workers that wouldn?t be motivated by an increase in their salary and therefore will not produce a greater output. Productivity can be used as a measure to improve competitiveness only if it is used correctly and it can increase both price and non-price competitiveness. It can improve price competitiveness by allowing the businesses to set lower prices and improve non-price competitiveness by expanding as a firm and increasing its popularity. ...read more.

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