Non-Price Competitiveness of Exports from Emerging Countries

33 Pages Posted: 24 Sep 2012

See all articles by Konstantins Benkovskis

Konstantins Benkovskis

Bank of Latvia; Stockholm School of Economics in Riga

Julia Woerz

Vienna Institute of International Economic Studies (WIIW); Tinbergen Institute Rotterdam (TIR)

Multiple version iconThere are 3 versions of this paper

Date Written: September 21, 2012

Abstract

This analysis of global competitiveness of emerging market economies accounts for non-price aspects of competitiveness. Building on the methodology pioneered by Feenstra (1994) and Broda and Weinstein (2006), we construct an export price index that adjusts for changes in the set of competitors (variety) and changes in non-price factors (quality in a broad sense) for nine emerging economies (Argentina, Brazil, Chile, China, India, Indonesia, Mexico, Russia and Turkey). The highly disaggregated dataset covers the period 1999−2010 and is based on the standardized 6-digit Harmonized System (HS). Unlike studies that use a CPI-based real effective exchange rate, our method highlights notable differences in non-price competitiveness across markets. China shows a huge gain in international competitiveness due to non-price factors, suggesting that China critics may be overstressing the role of renminbi undervaluation in explaining China’s competitive position. Oil exports account for strong improvement in Russia’s non-price competitiveness, as well as the modest losses of competitiveness for Argentina and Indonesia. Brazil, Chile, India and Turkey show discernible improvements in their competitive position when accounting for non-price factors. Mexico’s competitiveness deteriorates regardless of the index chosen.

Keywords: non-price competitiveness, quality, relative export price, emerging countries

JEL Classification: C43, F12, F14, L15

Suggested Citation

Benkovskis, Konstantins and Woerz, Julia, Non-Price Competitiveness of Exports from Emerging Countries (September 21, 2012). BOFIT Discussion Paper No. 19/2012. Available at SSRN: https://ssrn.com/abstract=2151236 or http://dx.doi.org/10.2139/ssrn.2151236

Konstantins Benkovskis (Contact Author)

Bank of Latvia ( email )

Riga
Latvia

Stockholm School of Economics in Riga ( email )

Strelnieku iela 4a
Riga, LV 1010
Latvia

Julia Woerz

Vienna Institute of International Economic Studies (WIIW) ( email )

A-1010 Vienna
Austria
+43 1 5336610 24 (Phone)
+43 1 5336610 50 (Fax)

HOME PAGE: http://www.wiiw.ac.at/e/staff_woerz.html

Tinbergen Institute Rotterdam (TIR)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

HOME PAGE: http://www.tinbergen.nl/home.html

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