Productivity, Competitiveness and Lower Prices....

The distribution of labour or the efficient distribution of labour according to skill or specialization has taken a back seat in the discussion circles with the issue of in/equality which means that labour could move from unproductive to productive uses or sectors of the economy, the sectors that have a capacity or excess capacity to increase supply and lower the general price level...

The objective of trade could not be different, to increase productivity and competitiveness by increasing allocation of the excess capacity in the labour market to the sectors that are overheating or protected due to lower lower domestic production and supply and high demand, but only if there is unemployment in the economy and there is scope of efficient distribution of labour in the economy to contain demand and the general price level, but after full employment international trade would help increase domestic competitiveness and increase productivity by lowering the prices in the economy by increasing international supply...

The WTO supports tariffs to protect employment...

Nonetheless, there is another dimension to the argument that trade or import at a higher cost when we could produce at a lower cost also improves competitiveness of the economy...

Generally, importing is costlier than domestic supply due to higher transport costs....

Trade that increases real wages and incomes or domestic demand by lowering the prices would also lower borrowing cost and increase internal depreciation or devaluation (means lower domestic prices relative to the exchange rate or constant exchange rate) and expectations would also increase exports....

Incentives to increase exports and employment must not be confused with dumping and currency depreciation... Lower taxes too increase competitiveness... and lower tariffs after full employment would also increase domestic and international competitiveness and demand...

The lower prices would increase real effective wages incomes and demand and consumption, increase real effective interest rate and savings and lower nominal interest rate would increase investment and supply and real effective exchange rate which means more savings of exchange and demand of the exports which would also increase imports due to higher real effective wages.... and, EXPECTATIONS, too...

Lower prices are expansionary.... it increases demand and also increases supply which help contain demand supply and prices... In the market you can sell more at lower prices in a day and could also earn interest income... lower prices increases savings through higher real interest rate and increases investment.... export demand too....