Competitiveness Indicators: A Theoretical and Empirical Assessment

March 1, 1994

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

This paper discusses five indicators of competitiveness: real exchange rates based on consumer price indices, export unit values of manufacturing goods, the relative price of traded to nontraded goods, normalized unit labor costs in manufacturing, and the ratio of normalized unit labor costs to value-added deflators in manufacturing. It discusses how each of these measures is associated with changes in a country’s balance of trade in goods and nonfactor services and examines the relationship among these indicators. It then examines the empirical performance of three of the indicators in terms of their ability to explain trade flows.

Subject: Consumer price indexes, Exports, Foreign exchange, International trade, Labor, Labor costs, Prices, Real effective exchange rates, Real exchange rates

Keywords: Consumer price indexes, export unit value, exportable goods, Exports, factor service, goods market, index computed using consumer price indices, Labor costs, nominal exchange rate, price terms, Real effective exchange rates, Real exchange rates, traded goods, WP

Pages:
52
Volume:
1994
DOI:
https://doi.org/10.5089/9781451844733.001
Issue:
029
Series:
Working Paper No. 1994/029
Stock No:
WPIEA0291994
ISBN:
9781451844733
ISSN:
1018-5941

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