Shedding Light on Price- and Non-price-competitiveness Determinants of Foreign Trade in the Four Largest Euro-area Countries

摘要

Since the mid-2000s standard price-competitiveness indicators for euro-area countries have recently provided conflicting signals, particularly in Italy. The manufacturing unit labor cost (ULCM)-based indicator reports a major competitiveness loss in Italy. Owing to the internationalization of production processes and to the fading representativeness of labor on overall costs we argue that price-based measures are more appropriate than those based on ULCMs to assess external competitiveness and play a more important role in explaining export growth. Measuring non-price competitiveness and considering global value chains are also crucial to correctly identify the determinants of trade flows in the four largest euro-area countries.