Relatively low productivity

• What effect does low productivity have on exporting firms?

  It raises costs and decreases competitiveness.
• How does low productivity impact a firm's position in overseas markets?

  It may lead to a price and cost disadvantage.
• What is the consequence of higher domestic prices for consumers?

  Consumers may choose to buy abroad, increasing imports.
• What economic situation arises from falling exports and rising imports?

  A deficit is created.
• What are the implications of low productivity for a country's trade balance?

  • Low productivity raises costs for exporting firms.
  • Leads to price and cost disadvantages in overseas markets.
  • Results in higher domestic prices, prompting consumers to import.
  • Causes falling exports and rising imports, creating a trade deficit.