The question of international competitiveness

International competitiveness is advanced whenever the economic welfare of a nation is enhanced through an increase in the flow of trade or through an alteration in the conditions of trade starting from a presumed initial equilibrium. In order to describe the processes involved in securing and maintaining international competitiveness, the conventional models of international trade theory are used, namely the Ricardian, Heckscher-Ohlin, contemporary standard trade, and industrial organization models. Then, the role of the commodity terms of trade as they are manifested in exchange rates, which are affected by both short-and long-term international capital flows, is considered. Finally, possible implications regarding economic policy are briefly addressed. (JEL F10).