We calculate the real effective exchange rate, which is appreciating, and conclude that Outer Slobbovia is not competitive, no matter that it is stealing market share from all its competitors. This kind of misperception problem is related to the previously mentioned mistaken paradigm.
Because our framework for thinking about the problem is wrong, we ask the wrong questions, set up the wrong thought experiment, assemble irrelevant data, and come to meaningless conclusions. All, however, is not lost. We have already begun work that may herald a paradigm shift.