Measuring Competitiveness: Trade in Goods or Tasks?

23 Pages Posted: 8 Jun 2013

See all articles by Tamim Bayoumi

Tamim Bayoumi

International Monetary Fund (IMF); Centre for Economic Policy Research (CEPR)

Mika Saito

International Monetary Fund (IMF)

Jarkko Turunen

International Monetary Fund

Date Written: May 2013

Abstract

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.

Keywords: Global competitiveness, Emerging markets, International trade, Real effective exchange rates, Economic models, Real Effective Exchange Rate, Global Supply Chains, reer, global supply, intermediate inputs, domestic production, gross exports, net export, elasticity of substitution, export data, trade data, net exports, supply chain, trading partners, bilateral trade, trade patterns, export performance, competitiveness of goods, export equation, export market, export demand, export product, unit labor costs, total exports, export competition, export trade, constant elasticity of substitution, import competition, imported intermediates, trading partner, partner country, export shares, factor pri

JEL Classification: F10, F30

Suggested Citation

Bayoumi, Tamim and Saito, Mika and Turunen, Jarkko, Measuring Competitiveness: Trade in Goods or Tasks? (May 2013). IMF Working Paper No. 13/100. Available at SSRN: https://ssrn.com/abstract=2276336

Tamim Bayoumi (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-6333 (Phone)
202-623-4795 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Mika Saito

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Jarkko Turunen

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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