Measuring Competitiveness: Trade in Goods or Tasks?

By Tamim Bayoumi, Mika Saito, Jarkko Turunen

May 8, 2013

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Tamim Bayoumi, Mika Saito, and Jarkko Turunen. Measuring Competitiveness: Trade in Goods or Tasks?, (USA: International Monetary Fund, 2013) accessed November 21, 2024

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

With global supply chains, any value added or production task can be traded as part of goods. This means that competitiveness can be measured either in terms of “tasks” (Bems and Johnson, 2012), or goods, but with goods prices reflecting the cost of tasks embedded in those goods. We show that when measuring competitiveness in goods, the formula used in computing the real effective exchange rates at the IMF (Bayoumi, Lee, and Jayanthi, 2005) needs to be expressed in terms of the price of value added and needs an additional term, which captures a gain or loss in competitiveness of goods due to outsourcing.

Subject: Competition, Exchange rates, Exports, Financial markets, Foreign exchange, International trade, Production sharing, Real effective exchange rates, Taxes

Keywords: Competition, Cost structure, Exchange rates, Exports, GDP deflator, Global, Global Supply Chains, Goods competitiveness, Price competitiveness, Price equation, Price of goods, Production sharing, Real Effective Exchange Rate, Real effective exchange rates, REER in Goods, Trade weight, WP

Publication Details

Pages:

22
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2013/100
Stock No:

WPIEA2013100
ISBN:

9781484325803
ISSN:

1018-5941

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