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Trade in value added: do we need new measures of competitiveness?

Maria Silgoner, Paul Ramskogler and Kirsten Lommatzsch ()

No 1936, Working Paper Series from European Central Bank

Abstract: 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)
New Economics Papers: this item is included in nep-int, nep-lma, nep-opm and nep-tid
Date: 2016-07
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