§ Mr. Gouldasked the Chancellor of the Exchequer what estimate he makes of the relative importance of non-price and price competitiveness.
§ Mr. RidleyNon-price competitiveness may be as important as price or cost competitiveness in determining overall performance, though the unquantifiable nature of non-price competitiveness makes this impossible to test.
§ Mr. Gouldasked the Chancellor of the Exchequer to what extent the price competitiveness of British industry correlates with the export performance of British industry in manufactured goods; and how this level of correlation compares with that for Japan, Germany and France.
§ Mr. LawsonThere are advantages in measuring the competitiveness of British industry in terms of cost rather than price competitiveness, as an article in the June 1982 "Economic Progress Report" made clear. On this basis, the long run elasticity on cost-competitiveness for manufactured exports in the Treasury model is currently-0.5. Comparable elasticities for the exports of goods for Japan, Germany and France, based on the Treasury's world economic prospects model, are given in the following table. These are not directly comparable with the United Kingdom estimate because they are price elasticities rather than cost elasticities, and they cover exports of all goods and not solely manufactures:
Long-run elasticity of exports of goods (in volume terms) Price elasticities Japan -0.9 Germany -0.5 France -2.1 All of these estimates are subject to wide margins of error. Moreover while price and cost competitiveness clearly affect the level of exports, they are not the only relevant factor. Non-price competitiveness also has an important role to play, for example.