The Structural Determinants of the US Competitiveness in the Last Decades: A 'Trade-Revealing' Analysis
28 Pages Posted: 10 Jul 2012
Date Written: May 30, 2012
We analyze the decline in the U.S. share of world merchandise exports against the backdrop of a model-based measure of competitiveness. We preliminarily use constant market share analysis and gravity estimations to show that the majority of the decline in export shares can be associated with a declining share of world income, suggesting that the dismal performance of the U.S. market share is not a sufficient statistic for competitiveness. We then derive a computable measure of country-sector specific real marginal costs (i.e. competitiveness) which, insofar it is inferred from actual trade flows, is referred to as 'revealed'. Brought to the data, this measure reveals that most U.S. manufacturing industries are losing momentum relative to their main competitors, as we find U.S. revealed marginal costs to grow by more than 38% on average. At the sectoral level, the "Machinery" industry is the most critical.
Keywords: Productivity, competitiveness, export shares, marginal cost, firm heterogeneity, firm selection, gravity equation, trade costs
JEL Classification: F12, F17, F19
Suggested Citation: Suggested Citation