The aim of this chapter is to consider the relationship between competitiveness, international trade and financial factors in the South African economy.
The term ‘competitiveness’ is used here in two closely related but distinct senses. One of these refers to a country’s ability ‘to realise central economic policy goals, especially growth in income and employment, without running into balance of payments difficulties’ (Fagerberg 1988: 355). This may be thought of as competitiveness in the macroeconomic sense, or what we shall refer to as macro-competitiveness. Competitiveness, however, may also be defined as the ability of an economy, or sectors of it, to compete in world markets. Conventionally emphasised sources and indicators of competitiveness in this sense are movements in real exchange rates, productivity and unit labour costs, which are reflections of price competitiveness. As distinct from these, there are various sources of the ability to compete in world markets, such as product differentiation and innovation, and (of particular interest in the context of the present study) access to finance, which may be regarded as aspects of non-price competitiveness.