Trade in value added: do we need new measures of competitiveness?
Paul Ramskogler and
Kirsten Lommatzsch ()
No 1936, Working Paper Series from European Central Bank
It has been argued that the increasing importance of global value chains necessitates a modification of conventional competitiveness measures. We compile a broad dataset including value added trade, gross exports and conventional and value added based real exchange rates. To sharply focus on external competitiveness, a new price competitiveness indicator is introduced, the TWULC (Trade Weighted Unit Labour Cost indicator). It weights sector-specific cost trends according to sector shares in exports. Econometric tests for a panel of 38 countries show that the focus on value added trade generally improves the explanatory power of export equations. Value added exports JEL Classification: F14, J30
Keywords: competitiveness; external trade; labour costs (search for similar items in EconPapers)
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Working Paper: Trade in value added: Do we need new measures of competitiveness? (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20161936
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