Analyzing the international competitiveness of the industry in Portugal, Ireland, Greece and Spain using revealed comparative advantages (RCA) indicators

This paper sheds light on the export structure of the four European countries Portugal, Ireland, Greece and Spain, the so called PIGS countries. These countries were all hit by the economic downturn in the course of the financial crisis and have been struggling with the national debt crisis and recession. One way to identify sectoral international competitiveness is provided by the revealed comparative advantage index developed by Balassa (RCA 1). This indicator evolved through several studies, for example by the German council of experts (RCA 2). Both indicators suggest that the dominant advantages of Portugal and Greece can be found within agriculture and natural resources. The dominant export sectors are also located there. Ireland stands out from the other PIGS, as high-tech and medical/chemical products occur in the top sectors. Spain's top export sectors do not have the competitiveness that one might expect. Furthermore, the Balassa-Index is transformed to a standardized and symmetric index RSCA, which has values ranging from minus one to plus one and is plotted against the trade balance index (TBI). Thus, information on country trade structure can be depicted. Ireland is to a certain extent dependent on the world market, without having a sound national industry as a basis. Gaining from the global economy through export growth will not have a major impact in Greece and Portugal. Spain does have competitive sectors and a degree of specialization, but the most important sectors are less competitive. Finally, the level of specialization (beta-specialization) and the specialization-process (specialization) are identified by a short OLS-estimation. The beta-specialization does not indicate high degrees of specialization in those countries. According to the specialization, there do not seem to be significant specialization or de-specialization trends since 1995

RCAs within Western Europe

This paper analyses the revealed comparative advantage for six European countries: Austria, France, Germany, Italy, the Netherlands and the UK. The results can be summarized as the follows: Italy always had a trade specialisation index which was well above average. Apart from Italy, whose trade performance index decreased substantially, changes in the trade performance index were fairly small. Austria, Germany and the Netherlands faced increasing average RCA-values (but they remain positive), while France, Italy and the United Kingdom faced decreasing average RCA-values. Italy's RCA-value correlated negatively with the other countries (except for the correlation between Italy and France), while the other countries (Austria, France, Germany, the Netherlands and the United Kingdom) faced a positive correlation with each other. The top ten sectors with the highest RCA-value, shared about 50 % of total exports in France, Germany and the Netherlands. In the other three countries, the share was less than 40%. Regarding the top five sectors, specialization can be found only in Germany (>40 %) and the Netherlands (>30 %) whereas in the other countries the share was less than 20%. Germany and the Netherlands were the countries, in which most of the top 10 export sectors in 2005 also had CCA. The other countries had several top 10 export sectors with RCA-indicators significantly below the CCA-benchmarks. --Revealed Comparative Advantage,Comparative Cost Advantage,Trade Specialisation

Economic and employment growth in Germany: The sectoral elements of Verdoorn's Law with regional data

A major aspect of employment growth is discussed in relation to economic growth. This paper deals with the question as to whether the relationship between economic and employment growth, subsumed under the idiom Verdoorn's Law, holds true at the sectoral level. For this reason, the German labor market is divided into regional functionally delineated labor markets. The employees are differentiated into sectoral affiliation, education, national status and part-time employment. The economy is split into six sectors. The labor demand function is derived from the cost-function of companies, and factor prices (interest rates and wages) are considered. It is evident that the construction sector still has intense connections to the labor market concerning output changes. This cannot be verified in the finance, insurance and service sector. Part-time work increased during the economic crisis. The elasticity to factor-prices holds true for most types of employment. It is found that, regional labor market performance is directly linked to industrial structure. The fixed an random-effects estimations used here deliver satisfying results to most investigations. However, some concerns about the results regarding characteristics of employees remain

Revealed comparative advantages in Greece, Ireland, Portugal and Spain

Greece, Ireland, Portugal and Spain were all hit by the economic downturn in the course of the financial crisis and have been struggling with national debt crises and recession. A problem common to all of these countries is the collapse of national demand. Foreign trade might seem a logical way to restore economic strength, but little is known about the international competitiveness of these countries' industries. This paper sheds light on their export structures using the revealed comparative advantage indicator

Sectoral job effects of trade: An input-output analysis for Germany

The current globalisation process is characterized by the emergence of global value chains. That is, production processes are becoming increasingly geographically fragmented. Not only are final goods traded internationally, but in particular, trade in intermediate goods and services has increased significantly over time. In the industrialised countries, the manufacturing sectors were the first that were compelled to face the challenges of globalisation. When services were still considered non-tradable, manufacturing firms had already decided to relocate their production sites to developing or emerging economies, due to lower wage levels abroad and increasing price competition domestically. In this paper, we use input-output analysis to explore the relationship between trade and both job creation and job destruction in the German manufacturing industry in 2005. The results show that being integrated into the world economy is advantageous for the German economy. In 2005, the net exports of the manufacturing industries led to trade-induced job gains of around 2,400,000. This figure is equivalent to 6.2 per cent of total German employment. Furthermore, the job effects of trade were positive for a large majority of countries. The greatest job gains resulted from trade with the United States, the United Kingdom and France. Interestingly, even trade with the new EU Member States is beneficial in terms of job creation. --input-output analysis,international trade,employment

RCAs within Western Europe

This paper analyses the revealed comparative advantage for six European countries: Austria, France, Germany, Italy, the Netherlands and the UK. The results can be summarized as the follows: Italy always had a trade specialisation index which was well above average. Apart from Italy, whose trade performance index decreased substantially, changes in the trade performance index were fairly small. Austria, Germany and the Netherlands faced increasing average RCA-values (but they remain positive), while France, Italy and the United Kingdom faced decreasing average RCA-values. Italy's RCA-value correlated negatively with the other countries (except for the correlation between Italy and France), while the other countries (Austria, France, Germany, the Netherlands and the United Kingdom) faced a positive correlation with each other. The top ten sectors with the highest RCA-value, shared about 50 % of total exports in France, Germany and the Netherlands. In the other three countries, the share was less than 40%. Regarding the top five sectors, specialization can be found only in Germany (>40 %) and the Netherlands (>30 %) whereas in the other countries the share was less than 20%. Germany and the Netherlands were the countries, in which most of the top 10 export sectors in 2005 also had CCA. The other countries had several top 10 export sectors with RCA-indicators significantly below the CCA-benchmarks

RCAs within Western Europe

This paper analyses the revealed comparative advantage for six European countries: Austria, France, Germany, Italy, the Netherlands and the UK. The results can be summarized as the follows: Italy always had a trade specialisation index which was well above average. Apart from Italy, whose trade performance index decreased substantially, changes in the trade performance index were fairly small. Austria, Germany and the Netherlands faced increasing average RCA-values (but they remain positive), while France, Italy and the United Kingdom faced decreasing average RCA-values. Italy's RCA-value correlated negatively with the other countries (except for the correlation between Italy and France), while the other countries (Austria, France, Germany, the Netherlands and the United Kingdom) faced a positive correlation with each other. The top ten sectors with the highest RCA-value, shared about 50 % of total exports in France, Germany and the Netherlands. In the other three countries, the share was less than 40%. Regarding the top five sectors, specialization can be found only in Germany (>40 %) and the Netherlands (>30 %) whereas in the other countries the share was less than 20%. Germany and the Netherlands were the countries, in which most of the top 10 export sectors in 2005 also had CCA. The other countries had several top 10 export sectors with RCA-indicators significantly below the CCA-benchmarks

Walter Eucken`s principles of economic policy today

Walter Eucken was the head of the Freiburg school of economics, a circle of German ordoliberal scholars of the interwar period, whose thoughts were highly influential in the immediate post war period. Being disillusioned by what he called the age of experiments- the failure of both classical liberalism and socialism - he formulated eleven principles for what he called a market economy, in which competition would not only limit the extent of private economic power, but also lead to an efficient allocation of resources and hence to economic prosperity. Although the principles never received much international attention, in light of recent economic research on both institutions and welfare economics, the essence of Eucken's work appears to be very modern indeed. This paper highlights these parallels and proposes a reformulation of Eucken's principles against the background of modern economic theory. We thus attempt to make a contribution to the current debate on the efficient design of those institutions that shape economic activity. --

Sectoral job effects of trade: An input-output analysis for Germany

The current globalisation process is characterized by the emergence of global value chains. That is, production processes are becoming increasingly geographically fragmented. Not only are final goods traded internationally, but in particular, trade in intermediate goods and services has increased significantly over time. In the industrialised countries, the manufacturing sectors were the first that were compelled to face the challenges of globalisation. When services were still considered non-tradable, manufacturing firms had already decided to relocate their production sites to developing or emerging economies, due to lower wage levels abroad and increasing price competition domestically. In this paper, we use input-output analysis to explore the relationship between trade and both job creation and job destruction in the German manufacturing industry in 2005. The results show that being integrated into the world economy is advantageous for the German economy. In 2005, the net exports of the manufacturing industries led to trade-induced job gains of around 2,400,000. This figure is equivalent to 6.2 per cent of total German employment. Furthermore, the job effects of trade were positive for a large majority of countries. The greatest job gains resulted from trade with the United States, the United Kingdom and France. Interestingly, even trade with the new EU Member States is beneficial in terms of job creation