Economy and Business Info

Posts Tagged ‘competitiveness’

Although for many entrepreneurs the high exchange rate is the umbilical cord of profitability, economists agree that there are other macroeconomic tools to fall back row instead of resort to devaluation, which will end up devouring wages. Facilitating access to credit, institutional strengthening and modernization of industries are some of the notions that would help foster competition in this context of high inflation and a stable dollar.

To begin, analysts demolished the myth of the overvalued exchange rate, while strengthening the certainty of what an important change in the dollar’s value further bleeding end pockets.

According to the Center of Regional Economics and Experimental (CERX), “the current exchange rate remains competitive. The acceleration of inflation that took Argentina’s economy over the past 3 ½ years reduced the exchange rate advantage gained with the devaluation, but not deleted. “And they claim that the real exchange rate remains 23% higher than it had in 2001.

However, why, if the exchange rate is more competitive than in the ’90s, the companies show similar or greater difficulties to which they were in those years? According to the petition of CERX, the problem is simple: the real exchange rate declined 40.5% compared to the current value in the period 2002-2006. In contrast, production costs sustained increases since 2002. Wage increases, changes in raw material prices and increasing the tax burden put together a combo in which the dollar at $ 3.9 is insufficient for the current productive structure (see graphics).

“The problem we have today in terms of competitiveness in the movie of recent years and not in the current photo. Not so much of the nominal exchange rate is nearly twice as real, but what happens to the prices that are twice the rate of devaluation, “says economist Dante Sic, the consultant Abaci. Y specifies, “The issue is not to devalue, because the characteristics of the Argentine market, any move to price movement and the devaluation effect is lost.”

Other analysts also reject the use of blowing up the American currency. “When reviewing the experiences of countries more competitive, which is observed is that they succeed by appealing to other factors beyond the exchange rate”, says Ricardo Delgado, Analytical. The example chosen is Brazil. “Despite having a low exchange rate has a strong growth of industrial imports. This is possible because it has long-term policies, sect oral regimes have subsidized and allowed to jump to various industries, and, Of course, we must take into account the scale factor, the size of the domestic market. “

In this line CERX mentions a central figure: the real exchange rate of Argentina in relation to Brazil country that is 20% of our exports is still 109% more competitive than it was in 2001. The same applies to other major trading partners like the United States, China, and even today devalued the European Union.

Ace a few days the European Commission announced the contents of the much-heralded European Digital Agenda, the first of seven flagship initiatives under the 2020 European Strategy for smart growth, sustainable and integrated. It has set seven objectives, which will translate into a hundred steps, thirty of which are legislative in nature.

I hope this new European Union strategy, as necessary for future development of the European economy more successful than its predecessor does, the Lisbon Agenda does. Having examined the various documents submitted an ambitious proposal seems critical to the economic fortunes and welfare of Europeans in the coming years.

The implementation of the European Digital Agenda, contribute significantly to economic growth in the EU and distribute the benefits of the digital age among all sectors of society. As also contained a report by the Commission on the digital competitiveness of the European economy, half the productivity growth recorded in the last fifteen years has already been promoted by information technology and communications. See previous entry: The European Commission said the investment in the digital economy remains crucial. However, although it is expected that this trend will accelerate, Europe will need to apply a series of measures to exploit fully the potential benefits of the digital economy.