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The “Revealed” Competitiveness of U.S. Exports

  • B. Mandel
  • J. Gruber
  • F. Di Mauro
  • M. Del Gatto

We investigate the factors behind the recent decline in the U.S. share of world merchandise exports in an attempt to determine how big a role the changing productivity of U.S. firms has played. We do so against the backdrop of a measure of cost competitiveness which, insofar it is inferred from actual trade ows, we refer to as 'revealed marginal costs' (RMC). Although, in line with our purpose, we derive such measure as an implication of a trade model with (intra-industry) firm heterogeneity, computation does not require firm level data but only aggregate bilateral trade ows, domestic trade included. Brought to the data for the manufacturing sector, such measure reveals that, notwithstanding significant heterogeneity across industries, most U.S. sectors are indeed losing momentum relative to their main competitors, as we find U.S.'s RMC to grow by an average 14%, relative to the other G20 countries. The RMC structure identifies in market size, trade freeness and imports its "revealing-observable" components - while market size is found to be the main responsible of such decline on average, cost competitiveness seems to have benefited from a good combination of increasing trade freeness and decreasing imports, relative to the other G20 countries. The best performing countries in terms of RMC (China and India among others) characterize, however, for an increase in trade freeness higher than in the U.S. At the sectoral level, the "Machinery" industry is the most critical, followed by the "Chemicals" and "Equipment" industries.

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Paper provided by Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia in its series Working Paper CRENoS with number 201232.

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Date of creation: 2012
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Handle: RePEc:cns:cnscwp:201232
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  1. Andrea Finicelli & Patrizio Pagano & Massimo Sbracia, 2009. "Trade-Revealed TFP," Temi di discussione (Economic working papers) 729, Bank of Italy, Economic Research and International Relations Area.
  2. Head, Keith & Mayer, Thierry & Ries, John, 2010. "The erosion of colonial trade linkages after independence," Journal of International Economics, Elsevier, vol. 81(1), pages 1-14, May.
  3. University of Iowa & Michael E. Waugh, 2007. "International Trade and Income Differences," 2007 Meeting Papers 492, Society for Economic Dynamics.
  4. Keith Head & Thierry Mayer, 2000. "Non-Europe: The magnitude and causes of market fragmentation in the EU," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 136(2), pages 284-314, June.
  5. Dennis Novy, 2011. "Gravity Redux: Measuring International Trade Costs with Panel Data," CESifo Working Paper Series 3616, CESifo Group Munich.
  6. Natalie Chen & Dennis Novy, 2009. "International Trade Integration: A Disaggregated Approach," CESifo Working Paper Series 2595, CESifo Group Munich.
  7. Del Gatto, Massimo & Mion, Giordano & Ottaviano, Gianmarco, 2006. "Trade Integration, Firm Selection and the Costs of Non-Europe," CEPR Discussion Papers 5730, C.E.P.R. Discussion Papers.
  8. Marc J. Melitz & Gianmarco I.P. Ottaviano, 2005. "Market Size, Trade, and Productivity," Development Working Papers 201, Centro Studi Luca d\'Agliano, University of Milano.
  9. David S. Jacks & Christopher M. Meissner & Dennis Novy, 2008. "Trade Costs, 1870-2000," American Economic Review, American Economic Association, vol. 98(2), pages 529-34, May.
  10. Gregory Corcos & Massimo Del Gatto & Giordano Mion & Gianmarco I.P. Ottaviano, 2009. "Productivity and Firm Selection: Quantifying the "New" Gains from Trade," KITeS Working Papers 002, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Mar 2009.
  11. Martin, Philippe & Mayer, Thierry & Thoenig, Mathias, 2005. "Make Trade not War?," CEPR Discussion Papers 5218, C.E.P.R. Discussion Papers.
  12. Gianmarco I.P. Ottaviano & Daria Taglioni & Filippo di Mauro, 2009. "The euro and the competitiveness of European firms," Economic Policy, CEPR;CES;MSH, vol. 24, pages 5-53, 01.
  13. John Whalley & Xian Xin, 2007. "Regionalization, Changes in Home Bias, and the Growth of World Trade," NBER Working Papers 13023, National Bureau of Economic Research, Inc.
  14. Harald Fadinger & Pablo Fleiss, 2008. "Trade and Sectoral Productivity," Working Papers ECARES 2008_005, ULB -- Universite Libre de Bruxelles.
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