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Measuring international competitiveness: experience from East Asia

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  • Meher Manzur
  • Wing-Keung Wong
  • Inn-Chau Chee

Abstract

This paper uses a new measure of real exchange rates as an indicator of international competitiveness. This new measure involves defining all prices and exchange rates on an appropriately weighted basket of currencies rather than a single currency. The measure is applied to the data for Japan, Korea, Thailand, Malaysia and Singapore. For comparison purposes, we calculate real exchange rates based on purchasing power parity (PPP) for these countries. To check for the relative performance of the two measures, cointegration tests are employed. The results indicate that the new measure tends to be closely related with the export growth for the sample countries, while the PPP-based measure is not. Moreover, the PPP-based real exchange rates tend to understate the measures of competitiveness for these countries. This result has important implications in terms of the levels of these countries' exchange rates as well as the well-known Balassa hypothesis.

Suggested Citation

  • Meher Manzur & Wing-Keung Wong & Inn-Chau Chee, 1999. "Measuring international competitiveness: experience from East Asia," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1383-1391.
    • Handle: RePEc:taf:applec:v:31:y:1999:i:11:p:1383-1391
    DOI: 10.1080/000368499323265
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    1. Nguyen Huu Hau & Tran Trung Tinh & Hoa Anh Tuong & Wing-Keung Wong, 2020. "Review of Matrix Theory with Applications in Education and Decision Sciences," Advances in Decision Sciences, Asia University, Taiwan, vol. 24(1), pages 28-69, March.
    2. Chia-Lin Chang & Michael McAleer & Wing-Keung Wong, 2018. "Decision Sciences, Economics, Finance, Business, Computing, And Big Data: Connections," Advances in Decision Sciences, Asia University, Taiwan, vol. 22(1), pages 36-94, December.
    3. Christian Schitter & Maria Silgoner & Katharina Steiner & Julia Wörz, 2012. "Fishing in the same pool: Export strengths and competitiveness of China and CESEE at the EU-15 Market," FIW Working Paper series 096, FIW.
    4. Poomthan Rangkakulnuwat & Sung Ahn & Holly Wang & Susan He, 2010. "Extended generalized purchasing power parity and optimum currency area in East Asian countries," Applied Economics, Taylor & Francis Journals, vol. 42(4), pages 497-513.
    5. Chang, C-L. & McAleer, M.J. & Wong, W.-K., 2018. "Decision Sciences, Economics, Finance, Business, Computing, and Big Data: Connections," Econometric Institute Research Papers 18-024/III, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    6. Wing-keung Wong & Raymond Chan, 2004. "On the estimation of cost of capital and its reliability," Quantitative Finance, Taylor & Francis Journals, vol. 4(3), pages 365-372.
    7. Silgoner, Maria & Steiner, Katharina & Wörz, Julia & Schitter, Christian, 2015. "Fishing in the same pool: Export strengths and competitiveness of China and Central, Eastern and Southeastern Europe at the EU-15 market," China Economic Review, Elsevier, vol. 32(C), pages 68-83.
    8. Heng Chen & Russell Smyth & Wing-Keung Wong, 2008. "Is being a super-power more important than being your close neighbour? A study of what moves the Australian stock market," Applied Financial Economics, Taylor & Francis Journals, vol. 18(9), pages 733-747.
    9. Edmund R Thompson, 2003. "A Grounded Approach to Identifying National Competitive Advantage: A Preliminary Exploration," Environment and Planning A, , vol. 35(4), pages 631-657, April.

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