L16Oct11_306 - Lecture 16: International Competitiveness,...

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Lecture 16: International Competitiveness, Procurement and Investment FRE 306
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L16: International Competitiveness, Procurement, Investment What is International Competitiveness? Why are some firms successful in selling into foreign markets and/or competing successfully against imports but others are not? Important due to jobs, incomes earned for labour, land and capital, tax revenues for government, and growth in all those categories which results in income growth for all . Measured by export growth or maintaining and/or increasing export mkt share Or measured by maintaining or increasing domestic mkt share against imports With high import barriers an industry usually is not internationally competitive 2
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L16: International Competitiveness, Procurement, Investment Components to Success Costs kept low, declining, even if specific input costs (e.g., labour) keep rising Increased productivity of labour and capital, usually due to research (industry or firm level), managerial learning from outside sources, or innovative solutions to challenges Increased product quality; design of new products Successful marketing to raise revenues per unit of output; increased sales if size economies exist Many contributors to such successes: within firm, suppliers, downstream (mktg) firms, govt regulations, industry institutions and arrangements 3
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L16: International Competitiveness, Procurement, Investment Competitiveness with foreign firms? What if border protection declines? (if Doha agreed to… yes) Paradigm of old-school producers: processors are the enemy of farmers, a zero-sum game view But if competition on end-products , then competitn is between farm-processor teams, not within teams All costs in this chain hurt all members of that team; better quality, cheaper products help all team members All this is strengthened with brand names and product differentiation Important for all traded goods, incl export mkts Tree fruit industry example from BC, WA, NZ Problem evident w/ attempted mktg bd control of exports 4
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L16: International Competitiveness, Procurement, Investment If producer raw material cost is 25% higher than foreign competition, what cost disadvantage does this levy on processors? What other data needed? What would be optimal arrangement between producer and
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This note was uploaded on 11/18/2011 for the course FRE 306 taught by Professor Rickbarichello during the Winter '11 term at The University of British Columbia.

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L16Oct11_306 - Lecture 16: International Competitiveness,...

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