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

Author(s): Francesco Di Comite, European Commission

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

Summary for non-specialistspdf(42 kB) Choose translations of the previous link 

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

Economic Papers are written by the staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The Papers are intended to increase awareness of the technical work being done by staff and to seek comments and suggestions for further analysis. The views expressed are the author’s alone and do not necessarily correspond to those of the European Commission.

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