Devizni tečaj i konkuretntost
The exchange rate and competitiveness

Summary/Abstract: Maintaining international competitiveness is of extreme importance for countries with currency board regimes. The paper analyzes the exchange rate impact on country competitiveness, with special emphasis on B&H. Main conclusions can be summarized as follows. First, according to professor Porter, devaluation as a mean for solving trade deficit problems can be useful for nations relatively early in the stages of competitive development. Even here, however, overreliance on this policy can ultimately block advancement. Second, in World Economic Forum framework exchange rate impact on the competitive ranking of a country is minor. Third, in the last two years, according to movement of real effective exchange rate of KM, price competitiveness of B&H products has increased in the main trading partners markets. However, having in mind the enormous trade deficit this country is still experiencing, it is obvious that real effective exchange rate of KM in 2000 was not the equilibrium real effective exchange rate.

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