Measuring Competitiveness: Trade in Goods or Tasks?

Tamim Bayoumi, Mika Saito and Jarkko Turunen

No 2013/100, IMF Working Papers from International Monetary Fund

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: WP; GDP deflator; Real Effective Exchange Rate; Global Supply Chains; price of goods; goods competitiveness; cost structure; price equation; REER in Goods; trade weight; price competitiveness; Real effective exchange rates; Exports; Competition; Production sharing; Exchange rates; Global (search for similar items in EconPapers)
Pages: 22
Date: 2013-05-08
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Citations: View citations in EconPapers (51)

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