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Measuring Competitiveness: Trade in Goods or Tasks?
Author:
Mr. Tamim Bayoumi
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,
Mika Saitonull

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, and
Mr. Jarkko Turunen
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Series:
IMF Working Papers
Volume/Issue:
Volume 2013: Issue 100
Language:
English
Publication Date:
08 May 2013
DOI:
https://doi.org/10.5089/9781484325803.001
ISBN:
9781484325803
ISSN:
1018-5941
Pages:
22
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
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2013: Issue 100