Determinants of international competitiveness: Further evidence from Australian manufacturing trade

This paper contributes to the literature on international competitiveness of Australian manufacturing trade using industry level quarterly data from 1988 to 2005. The investigation of this issue is particular important in the context of Australia's growing trade and current account deficits. Our findings, based on the unrestricted error correction model, suggest that a lower relative price of Australian exports and a lower domestic demand improves international competitiveness in most industries in both short- and long-run. We also find that industries that are open to international competition, and have a higher level of R&D and foreign investment tend to be more competitiveness in both short- and long-run.