Stable Currency and International Export Competitiveness: A Test of Buckley's 3-P Model
This paper tests the Buckley et al (1988) 3-P model of international competitiveness at firm level. It reports on the results of a postal questionnaire sent to companies in the United Kingdom (which has not had a stable currency regime) and Ireland (where the government is committed to the EU's Exchange Rate Mechanism and proposed single currency). A series of post-test interviews contributes qualitative depth to the postal survey. Overall, the results indicate a positive linkage between currency stability and measures of 'potential', 'performance' and 'process' competitiveness. The study highlights profound implications for exporters of long term government commitment to a stable currency environment. The Irish government has learnt the lesson well; in deciding whether to join the ERM, the UK government will have to factor into its decision process, among other things, its view on how it wishes British industry to develop.
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