On the Suitability of Alternative Competitiveness Indicators for Explaining Real Exports of Advanced Economies

Abstract

Reproduction permitted only if source is stated.ISBN 978-3-95729-299-5 (Printversion) Non-technical summary Research QuestionReal exports are commonly specified as depending on an indicator of price competitiveness and on a measure of foreign activity. It is unclear, however, which of the available indicators of price competitiveness is most closely connected to a country's export performance. Since the question of indicator suitability cannot be answered purely on conceptual grounds, we address it empirically. ContributionA panel cointegration analysis is conducted to examine which indicator is most closely tied to real exports in the long run for a broad group of up to 20 advanced economies. As a further criterion, the study checks whether models based on any of the indicators lead to superior forecasts of real exports. In the underlying forecast exercise, use is made of repeated sampling-and cross-validation techniques in order to avoid the need for imposing arbitrary sample splits. ResultsAccording to the estimation results, broad price-and cost-based indicators, such as real exchange rates based on GDP deflators, deflators of total sales or unit labour costs for the total economy, are to be preferred to narrow measures such as CPI-or PPI-deflated exchange rates. Nichttechnische ZusammenfassungFragestellung Üblicherweise wird unterstellt, dass reale Exporte von einem Indikator der preislichen Wettbewersfähigkeit und einem Maß der Auslandsaktivität bestimmt werden. Es besteht allerdings bisher kein Konsens darüber, welcher der verfügbaren Indikatoren in der engsten Beziehung zur Exportentwicklung eines Landes steht. Da die Frage der Eignung der verschiedenen Indikatoren auf Basis rein konzeptioneller Erwägungen nicht abschließend beantwortet werden kann, wird hier ein empirischer Ansatz verfolgt. BeitragGenauer gesagt wird eine Panel-Kointegrationsanalyse für eine breite Gruppe von bis zu 20 fortgeschrittenen Volkswirtschaften durchgeführt, um zu untersuchen, welcher der Indikatoren langfristig am engsten mit den realen Exporten verbunden ist. Als weiteres Kriterium zur Beurteilung der Indikatorqualität wird die Prognosegüte von Modellen auf Basis der verschiedenen Indikatoren analysiert. Dabei werden Verfahren der wiederholten Stichprobenziehung und der Kreuzvalidierung verwendet, um willkürliche Unterteilungen des Untersuchungszeitraums zu vermeiden. ErgebnisseDie empirischen Ergebnisse deuten darauf hin, dass breitgefasste preis-und kostenbasierte Indikatoren wie reale Wechselkurse auf Basis von BIP-Deflatoren, von Deflatoren des Gesamtabsatzes oder von Lohnstückkosten in der Gesamtwirtschaft enger gefassten konsumenten-oder produzentenpreis-basierten Indikatoren vorzuziehen sind. Bundesbank Discussion Paper No 36/2016On the suitability of alternative competitiveness indicators for explaining real exports of advanced economies * Christoph Fischer Deutsche BundesbankOliver Hossfeld Deutsche Bundesbank and Leipzig Graduate School of Management Karin Radeck Deutsche BundesbankAbstract Real exports are common...

Repositioning a country for global manufacturing competitiveness: a case of South Africa

“…The conceptual model of the MCI presented in this work is adapted from Delgado-Márquez and García-Velasco (2018), Fischer et al (2018), Terzi c (2017), Ezell andAtkinson (2011), Lall (1992), Abramovitz (1986), Faberberg (1994), Archibugi and Coco (2004), Tan and Tan (2014), Milenkovic et al (2016), Shaker and Zubalsky (2015) and Lall and Albaladejo (2003). Lall (1992) argues that at the country level, capabilities can be grouped under three broad headings: physical investment, human capital and technological effort.…”

“…The broad-based indicators include unit labor cost, deflators of sales and real exchange rates, weighted average of real GDP, aggregate imports of goods and services and volume of global trade. These broad-based indicators are suited well for measuring the competitiveness of countries (Fischer et al, 2018). The competitiveness of a country can also be measured by benchmarking their investments and achievements in the information and communication technologies sector (Milenkovic et al, 2016).…”

Competitiveness at the Country-Sector Level: New Measures Based on Global Value Chains

“…Taking account of this argument, we develop a modified ULC measure at the sectoral level that better describes the competitive stance of each sector. The "embodied unit labor costs" (EULC) of a specific sector not only consider that sector's own ULC but also take account of the ULC incorporated in the intermediate goods delivered to this sector, and therefore are a weighted average of ULC 1 Different price-and cost-related REERs are, for example, compared in Marsh and Tokarick (1996), Chinn (2006), Ca'Zorzi and Schnatz (2007), Christodoulopoulou and Tkačevs (2014) and Fischer et al (2016). Usually it is found that neither competitiveness indicator clearly outperforms the other.…”

Current Accounts and Coordination of Wage Bargaining

“…Due to the limited country coverage of the AMECO database, the number of countries decreases from 46 to 36. See, e.g.,Fischer et al (2018) for a comparison of various indicators of international price competitiveness.…”