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The country's external competitiveness can be improved by holding real wage growth below that of other trading countries.
"Improvements in external competitiveness indicators remain limited," said the IMF report, noting that only a quarter of the rise in unit labour costs since 2000 has been reversed.
Mr Wolf writes:Recipients of the capital inflow, be they advanced or emerging countries, face uncomfortable choices: let the exchange rate appreciate, so impairing external competitiveness; intervene in currency markets, so accumulating unwanted dollars, threatening domestic monetary stability and impairing external competitiveness; or curb the capital inflow, via taxes and controls.
This is based on the assumption that Portugal, Italy, Greece or Spain, the much derided "Pigs", would be far better off with their own currency, which they could devalue in order to restore external competitiveness.
If currency depreciation is not an option, then the bad news for Ireland is that wage and price deflation, combined with structural reforms, are the only way to restore external competitiveness.
Recent changes in the environment have resulted in a greater role of external factors, such as external labor markets, market pricing, and external competitiveness, on compensation practice.
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Moreover, the rise in the cost of transportation and production activities after oil price increases will increase the prices of industrial products in the global market, which will lead to a decline in the international competitiveness and external demand for these products.
Mr. Duisenberg acknowledged the damaging effect of the exchange rate, saying, "the significant and rapid appreciation of the euro over recent months will dampen external price competitiveness".
This improves the competitiveness of external ice-on-tube systems as compared to other TES systems, such as dynamic ice harvesters and static internal melt systems.
In 2009 the IMF noted Greece's challenges of high fiscal and external imbalances and weakened competitiveness.
These are compared with locally produced alternatives to investigate whether internalising such external costs affects their price competitiveness.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com