The Economic Fitness of Nations in Value Added. 2000-2014

Abstract

In this paper, we explore the Economic Fitness (EF) indicator from the World Bank Database that measures nations' level of international competitiveness. At the same time, using input-output tables, we present our estimations of this new metric, replacing the revealed comparative advantages (RCA) from exports in gross value with an estimate of RCA from exports in domestic value-added (DVA). We find that between 1995 and 2015, there is a positive relationship between Economic Fitness and per capita GDP for low and middle-income countries. Besides, from 2000 to 2014, there has been a widening gap between global exports in gross value and exports in value-added; we also show that the estimations of the EF using the domestic value-added content of exports change significantly. Suggesting that, given the increasing levels of productive links at the international level, the competitiveness of nations is also conditioned by the way they participate in global production networks.