The "Revealed" Competitiveness of U.S. Exports

Joseph Gruber, Benjamin Mandel (), Massimo Del Gatto and Filippo di Mauro ()

Working Paper CRENoS from Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia

Abstract: We investigate the factors behind the recent decline in the U.S. share of world merchandise exports in an attempt to determine how big a role the changing productivity of U.S. firms has played. We do so against the backdrop of a measure of cost competitiveness which, insofar it is inferred from actual trade ows, we refer to as 'revealed marginal costs' (RMC). Although, in line with our purpose, we derive such measure as an implication of a trade model with (intra-industry) firm heterogeneity, computation does not require firm level data but only aggregate bilateral trade ows, domestic trade included. Brought to the data for the manufacturing sector, such measure reveals that, notwithstanding significant heterogeneity across industries, most U.S. sectors are indeed losing momentum relative to their main competitors, as we find U.S.'s RMC to grow by an average 14%, relative to the other G20 countries. The RMC structure identifies in market size, trade freeness and imports its "revealing-observable" components - while market size is found to be the main responsible of such decline on average, cost competitiveness seems to have benefited from a good combination of increasing trade freeness and decreasing imports, relative to the other G20 countries. The best performing countries in terms of RMC (China and India among others) characterize, however, for an increase in trade freeness higher than in the U.S. At the sectoral level, the "Machinery" industry is the most critical, followed by the "Chemicals" and "Equipment" industries.

Keywords: trade costs; productivity; marginal costs; gravity equation; firm selection; firm heterogeneity; export shares; competitiveness (search for similar items in EconPapers)
JEL-codes: F12 R13 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-bec, nep-eff and nep-int
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Related works:
Working Paper: The revealed competitiveness of U.S. exports (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:cns:cnscwp:201232

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