The Structural Determinants of the US Competitiveness in the Last Decades: A 'Trade-Revealing' Analysis

28 Pages Posted: 10 Jul 2012

See all articles by Massimo Del Gatto

Massimo Del Gatto

CRENOS - Centre for North South Economic Research; 'Gabriele d'Annunzio' University of Chieti-Pescara - Faculty of Economics

Filippo di Mauro

European Central Bank (ECB)

Joseph W. Gruber

Board of Governors of the Federal Reserve System

Benjamin R. Mandel

Federal Reserve Bank of New York

Date Written: May 30, 2012

Abstract

We analyze the decline in the U.S. share of world merchandise exports against the backdrop of a model-based measure of competitiveness. We preliminarily use constant market share analysis and gravity estimations to show that the majority of the decline in export shares can be associated with a declining share of world income, suggesting that the dismal performance of the U.S. market share is not a sufficient statistic for competitiveness. We then derive a computable measure of country-sector specific real marginal costs (i.e. competitiveness) which, insofar it is inferred from actual trade flows, is referred to as 'revealed'. Brought to the data, this measure reveals that most U.S. manufacturing industries are losing momentum relative to their main competitors, as we find U.S. revealed marginal costs to grow by more than 38% on average. At the sectoral level, the "Machinery" industry is the most critical.

Keywords: Productivity, competitiveness, export shares, marginal cost, firm heterogeneity, firm selection, gravity equation, trade costs

JEL Classification: F12, F17, F19

Suggested Citation

Del Gatto, Massimo and Del Gatto, Massimo and di Mauro, Filippo and Gruber, Joseph W. and Mandel, Benjamin R., The Structural Determinants of the US Competitiveness in the Last Decades: A 'Trade-Revealing' Analysis (May 30, 2012). ECB Working Paper No. 1443, Available at SSRN: https://ssrn.com/abstract=2070554 or http://dx.doi.org/10.2139/ssrn.2070554

Massimo Del Gatto (Contact Author)

CRENOS - Centre for North South Economic Research ( email )

Cagliari
Italy

'Gabriele d'Annunzio' University of Chieti-Pescara - Faculty of Economics ( email )

Faculty of Economics - Department of Economics
Viale Pindaro, 42
Pescara, 65127
Italy

Filippo Di Mauro

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Joseph W. Gruber

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Benjamin R. Mandel

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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