Over the past decade, our poor export performance has been explained two-thirds by market structure and one-third by competitiveness. Of the latter, about two-thirds is the currency while the rest is labour costs and productivity. 6 So, net, our strong currency explains only about 20 per cent of our poor export performance.
In short, our underperformance prior to the crisis was more a reflection of who we traded with than how effectively we did it. We are overexposed to the United States and underexposed to faster-growing emerging markets. Recommended response To find and compete in new markets will require a concerted, multi-year effort of workers, firms and governments.