Edited by Klaus Liebscher, Josef Christl, Peter Mooslechner and Doris Ritzberger-Grünwald
Chapter 13: Competitiveness in a Monetary Union
13. Competitiveness in a monetary union Josef Christl1 International competitiveness ranks among the most widely discussed topics, both within economics and within politics. And the issue truly deserves this prominent standing. Competitiveness is one of the most important and far-reaching features of an economy and is referred to in such diverse contexts as in wage negotiations, industrial and structural policy, exchange rate developments or international trade. Quite a few of the ‘growth miracles’ of the last decades may be traced to impressive gains in international competitiveness and export-led growth. Prominent examples include emerging Asia and China. Competitiveness is a very broad concept and touches many areas, as is reﬂected by the broad range of indicators that have been devised to measure it. These include unit labour costs, sectoral and regional trade structures, quality and technology upgrading of produce and location factors like tax systems. The most prominent and most widely used concepts, however, are diﬀerent exchange rate indicators. Against this backdrop, this chapter discusses whether the exchange rate is in fact as important a measure of national competitiveness as it used to be – approaching the exchange rate subject from the special perspective of the countries of the euro area. In my opinion, exchange rates are signiﬁcant for competitiveness, but they are certainly not the only important factor. For example, one deﬁning feature of the catching-up process of the Central and Eastern European countries (CEECs) was and still is real appreciation, partly due to productivity diﬀerentials...
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