Non-Price Competitiveness Gains of Central, Eastern and Southeastern European Countries in the EU Market
We propose an export price indicator adjusted for non-price factors as a more meaningful measure of a country’s competitiveness than traditional indicators. Our starting point is the approach developed by Broda and Weinstein (2006), who adjust price developments for changes in varieties of imported products. We relax their assumption of unchanged quality over time and use the proposed index to analyze the momentum of export prices of the ten CESEE EU members which acceded in 2004 and 2007. The index is calculated using data from Eurostat Comext at the highly disaggregated eight-digit CN product level. Our analysis spans the time period 1999 to 2011, thus including the recent global recession period in 2009. The results show that all CESEE-10 countries experienced a loss in price competitiveness, but that the loss was much smaller than is usually suggested by traditional CPI- or ULC-based real effective exchange rate measures. Although relative export prices (unit values) increased more strongly in the CESEE-10 countries as compared to their competitors, the average quality of their goods increased even more strongly, thus fully compensating for the rise in prices. These improvements in non-price competitiveness were pronounced in all CESEE-10 countries.
Volume (Year): (2012)
Issue (Month): 3 ()
|Contact details of provider:|| Postal: P.O. Box 61, A-1011 Vienna, Austria|
Phone: +43/1/404 20 7405
Fax: +43/1/404 20 7499
Web page: http://www.oenb.at
More information through EDIRC
|Order Information:|| Postal: Oesterreichische Nationalbank, Documentation Management and Communications Services, Otto-Wagner Platz 3, A-1090 Vienna, Austria|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mohler, Lukas & Seitz, Michael, 2009.
"The gains from variety in the European Union,"
17589, University Library of Munich, Germany.
- Lukas Mohler & Michael Seitz, 2012. "The gains from variety in the European Union," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 148(3), pages 475-500, September.
- Konstantins Benkovskis & Ramune Rimgailaite, 2010.
"The Quality and Variety of Exports from New EU Member States: Evidence from Very Disaggregated Data,"
2010/02, Latvijas Banka.
- Konstantins Benkovskis & Ramune Rimgailaite, 2011. "The quality and variety of exports from the new EU member states," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(4), pages 723-747, October.
- Konstantins Benkovskis & Julia Wörz, 2011.
"How Does Quality Impact on Import Prices?,"
175, Oesterreichische Nationalbank (Austrian Central Bank).
- Konstantins Benkovskis & Julia Wörz, 2014. "How does taste and quality impact on import prices?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 150(4), pages 665-691, November.
- Edward E. Leamer, 1979.
"Is it a Demand Curve, or is it a Supply Curve?: Partial Identification Through Inequality Constraints,"
UCLA Economics Working Papers
153, UCLA Department of Economics.
- Leamer, Edward E, 1981. "Is It a Demand Curve, or Is It a Supply Curve? Partial Identification through Inequality Constraints," The Review of Economics and Statistics, MIT Press, vol. 63(3), pages 319-27, August.
- Justin R. Pierce & Peter K. Schott, 2012.
"Concording U.S. Harmonized System categories over time,"
Finance and Economics Discussion Series
2012-16, Board of Governors of the Federal Reserve System (U.S.).
- Justin R. Pierce & Peter K. Schott, 2009. "Concording U.S. Harmonized System Categories Over Time," NBER Working Papers 14837, National Bureau of Economic Research, Inc.
- Justin Pierce & Peter Schott, 2009. "Concording U.S. Harmonized System Categories Over Time," Working Papers 09-11, Center for Economic Studies, U.S. Census Bureau.
- Flam, Harry & Helpman, Elhanan, 1987. "Vertical Product Differentiation and North-South Trade," American Economic Review, American Economic Association, vol. 77(5), pages 810-22, December.
- Chonira Aturupane & Simeon Djankov & Bernard Hoekman, 1999. "Horizontal and vertical intra-industry trade between Eastern Europe and the European union," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 135(1), pages 62-81, March.
- Blonigen, Bruce A. & Soderbery, Anson, 2010. "Measuring the benefits of foreign product variety with an accurate variety set," Journal of International Economics, Elsevier, vol. 82(2), pages 168-180, November.
- Ashoka Mody & Deniz Igan & Stefania Fabrizio, 2007. "The Dynamics of Product Quality and International Competitiveness," IMF Working Papers 07/97, International Monetary Fund.
- Uwe Dulleck & Neil Foster & Robert Stehrer & Julia Woerz, 2005. "Dimensions of quality upgrading," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 13(1), pages 51-76, 01.
- Sato, Kazuo, 1976. "The Ideal Log-Change Index Number," The Review of Economics and Statistics, MIT Press, vol. 58(2), pages 223-28, May.
- David Hummels & Peter J. Klenow, 2005. "The Variety and Quality of a Nation's Exports," American Economic Review, American Economic Association, vol. 95(3), pages 704-723, June.
- Juan Carlos Hallak & Peter K. Schott, 2008.
"Estimating Cross-Country Differences in Product Quality,"
NBER Working Papers
13807, National Bureau of Economic Research, Inc.
- Michael A. Landesmann & Robert Stehrer, 2002. "Evolving Competitiveness of CEEC’s in an Enlarged Europe," Rivista di Politica Economica, SIPI Spa, vol. 92(1), pages 23-88, January-F.
- Christian Broda & David E. Weinstein, 2006. "Globalization and the Gains From Variety," The Quarterly Journal of Economics, Oxford University Press, vol. 121(2), pages 541-585.
- Feenstra, Robert C, 1994. "New Product Varieties and the Measurement of International Prices," American Economic Review, American Economic Association, vol. 84(1), pages 157-77, March.
- Gloria Sheu, 2014. "Price, Quality, and Variety: Measuring the Gains from Trade in Differentiated Products," American Economic Journal: Applied Economics, American Economic Association, vol. 6(4), pages 66-89, October.
When requesting a correction, please mention this item's handle: RePEc:onb:oenbfi:y:2012:i:3:b:2. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Birgit Riedler)
If references are entirely missing, you can add them using this form.