Measuring Competitiveness : Trade in Goods or Tasks?

Author/Editor: Tamim Bayoumi ; Mika Saito ; Jarkko Turunen
Publication Date: May 08, 2013
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: With global supply chains, any value added or production task can be traded as part of goods. This means that competitiveness can be measured either in terms of “tasks” (Bems and Johnson, 2012), or goods, but with goods prices reflecting the cost of tasks embedded in those goods. We show that when measuring competitiveness in goods, the formula used in computing the real effective exchange rates at the IMF (Bayoumi, Lee, and Jayanthi, 2005) needs to be expressed in terms of the price of value added and needs an additional term, which captures a gain or loss in competitiveness of goods due to outsourcing.
Series: Working Paper No. 13/100
Subject(s): Global competitiveness | Emerging markets | International trade | Real effective exchange rates | Economic models

Publication Date: May 08, 2013
ISBN/ISSN: 9781484325803/1018-5941 Format: Paper
Stock No: WPIEA2013100 Pages: 22
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