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467 - Measuring quality and non-cost competitiveness at a country-product level

Francesco Di Comite, European Commission

Measuring quality and non-cost competitiveness at a country-product levelpdf(2 MB) Choose translations of the previous link 

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This paper contributes to the ongoing debate on macroeconomic imbalances and external competitiveness by developing a set of indicators of export capability at a country-product level which can be used to complement the existing toolkit of instruments based mostly on unit labour costs and relative price levels. A micro-founded methodology is here proposed to extract information on the capacity of a country's exporters to compete abroad by combining trade and macroeconomic data. In particular, light is shed on two independent components of demand for a particular variety (country-product combination): markups-shifting "quality" and sales-boosting "non-cost competitiveness". Together with cost efficiency and information on foreign prices and consumption, these additional indicators may foster our understanding of the determinants of a country's external position, thus providing better guidance for policymaking.

(European Economy. Economic Papers. 467. November 2012. Brussels. PDF. 50pp. Tab. Graph. Ann. Free.)

KC-AI-12-467-EN-N (online)
ISBN 978-92-79-22988-6 (online)
doi:10.2765/27416 (online)

JEL classification: F12; F41; L11

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