AN ASSESSMENT OF 3 MEASURES OF COMPETITIVENESS

An Assessment of Three Measures of Competitiveness. - This paper discu sses three indicators of competitiveness: real exchange rates based on consumer price indices, export unit values of manufacturing goods, an d normalized unit labour costs in manufacturing. It discusses how each of these measures is associated with changes in a country's balance o f trade in goods and nonfactor services and examines how each one of t hese indicators is related to each other. It then examines the empiric al performance of each in terms of its ability to explain trade flows. The conclusion is that in examining an issue as complex as trade comp etitiveness, the use of one indicator is suboptimal.