BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 19/2012:
Non-price competitiveness of exports from emerging countries
Konstantins Benkovskis ()
and Julia Wörz
Abstract: This analysis of global competitiveness of emerging market
economies accounts for non-price aspects of competitiveness. Building on
the methodology pioneered by Feenstra (1994) and Broda and Weinstein
(2006), we construct an export price index that adjusts for changes in the
set of competitors (variety) and changes in non-price factors (quality in a
broad sense) for nine emerging economies (Argentina, Brazil, Chile, China,
India, Indonesia, Mexico, Russia and Turkey). The highly disaggregated
dataset covers the period 19992010 and is based on the standardized 6-digit
Harmonized System (HS). Unlike studies that use a CPI-based real effective
exchange rate, our method highlights notable differences in non-price
competitiveness across markets. China shows a huge gain in international
competitiveness due to non-price factors, suggesting that China critics may
be overstressing the role of renminbi undervaluation in explaining China’s
competitive position. Oil exports account for strong improvement in
Russia’s non-price competitiveness, as well as the modest losses of
competitiveness for Argentina and Indonesia. Brazil, Chile, India and
Turkey show discernible improvements in their competitive position when
accounting for non-price factors. Mexico’s competitiveness deteriorates
regardless of the index chosen.
Keywords: non-price competitiveness; quality; relative export price; emerging countries; (follow links to similar papers)
JEL-Codes: C43; F12; F14; L15; (follow links to similar papers)
33 pages, September 24, 2012
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