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Productivity Performance and International Competitiveness: A New Test of an Old Theory


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The paper uses a modern adaptation of the Ricardian model which incorporates monopolistic competition and multiple factors to derive a MacDougall-type relation between a country’s nternational competitiveness at the industry level and its productivity performance. This relation is implemented empirically for Canada and the United States, using panel data for 25 years and 40 industries. A key finding is that Canadian-U.S. productivity ratio is a significant determinant of relative shares of Canadian firms in both Canadian and U.S. markets. Trade liberalization between Canada and the U.S. also plays an important role in influencing market shares.

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Paper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number 99-02.

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Length: 33 pages
Date of creation: 1999
Date of revision: May 2002
Publication status: Published: – revised version: Productivity Performance and International Competitiveness: An Old Test Reconsidered, Canadian Journal of Economics, Vol. 35, No. 2 (May 2002), pp. 341–362
Handle: RePEc:car:carecp:99-02

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Keywords: International Competitiveness; Ricardian Model;

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Cited by:
  1. Ehsan U. Choudhri & Dalia Hakura, 2001. "International Trade in Manufactured Products," IMF Working Papers 01/41, International Monetary Fund.


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