Competitiveness has come to the forefront of the policy debate within the European Union, focusing on price competitiveness and intra-EU imbalances. But how to measure properly competitiveness, beyond price or cost competitiveness, remains an open methodological issue; and what is the resilience of producers located in the EU to the competition of emerging economies is disregarded. We analyze the redistribution of world market shares at the level of product variety, as countries no longer specialize in sectors or even products, but in varieties of the same product, sold at different prices. We decompose changes in market shares into structural effects (geographic and sectoral) and a pure performance effect. Our method is based on an econometric shift-share decomposition and we consider the EU-27 as an integrated economy, excluding intra-EU trade. Revisiting the competitiveness issue in such perspective sheds new light on the ongoing debate. From 1995 to 2009 the EU-27 withstood the competition of emerging countries better than the US and Japan. The EU market shares in the upper price range of the market proved quite resilient, by cumulating good performance and favorable structure effects, contrary to the US and Japan. Finally, while most developed countries lose market shares in high-technology products to developing countries, the EU is slightly gaining, benefiting of a favorable structure effect.
Angela Cheptea, Lionel Fontagné and Soledad Zignago
Classification JEL : F12, F15
Keywords : International Trade, Export Performance, Competitiveness, Market Shares, Shift-Share, European Union
Updated on: 06/12/2018 11:09