abstract:The tradable sector of a country's economy is made up of the industry sectors whose output in terms of goods or services are traded internationally, or could be traded internationally given a plausible variation in relative prices. Most commonly, the tradable sector consists largely of sectors of the manufacturing industry, while the non-tradable sector consists of services, including health, education, retail and construction.
SinceLabourismobile, this in turn leads to higher wages in thenon-tradablesector, where productivitygrowthis slower, soprices rise fasterthaninrichcountries.
Only by tightening internal liquidity and allowing the real exchange rate to fall will competitiveness be restored as the economy will shift resources to the tradablesector.