Assessing Competitiveness and Real Exchange Rate Misalignment in Low-Income Countries

Author/Editor:

Mark W Lewis ; Aurelie Martin ; Gabriel Di Bella

Publication Date:

August 1, 2007

Electronic Access:

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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:

Assessing a country's competitiveness routinely starts with an analysis of the real exchange rate. However, in low-income countries, empirical analysis of the real exchange rate is often subject to important limitations that seriously weaken the results. This paper summarizes the methodologies used to assess real exchange rate misalignments and discusses the range of obstacles common to low-income countries. Recognizing the importance of using a wide range of indicators for assessing competitiveness in low-income countries, the paper discusses alternative competitive measures and then proposes a template of indicators to allow for a systematic assessment of competitiveness in low-income countries. The template is then used to rank countries according to their competitiveness performance in 2006.

Series:

Working Paper No. 2007/201

Subject:

Competition Exchange rates Exports Financial markets Foreign exchange International trade Real exchange rates Terms of trade

English

Publication Date:

August 1, 2007

ISBN/ISSN:

9781451867657/1018-5941

Stock No:

WPIEA2007201

Pages:

46

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