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Detail práce
  
Impact of competitiveness on export market shares
Název práce v češtině: Impact of competitiveness on export market shares
Název v anglickém jazyce: Impact of competitiveness on export market shares
Akademický rok vypsání: 2015/2016
Typ práce: diplomová práce
Jazyk práce: angličtina
Ústav: Institut ekonomických studií (23-IES)
Vedoucí / školitel: PhDr. Jaromír Baxa, Ph.D.
Řešitel: skrytý - zadáno vedoucím/školitelem
Datum přihlášení: 16.06.2016
Datum zadání: 16.06.2016
Zásady pro vypracování
Hypotheses:

1. Hypothesis #1: Non-price factors are important contributors to changes in export market shares
2. Hypothesis #2: Price factors play considerably smaller role while other competitiveness gains or losses are less significant in the CEE region
3. Hypothesis #3: Less developed countries experience mostly gains in non-price competitiveness

Expected Contribution:

The thesis will provide a detailed analysis of export market shares developments in terms of price and non-price factors of selected countries in CEE region. The losses and gains in export market shares will be explained by considering both price and non-price factors. The results of the study will provide more insight into what are the differences in countries‘ competitiveness and its changes between countries that decided to join the euro area and those who kept their currencies. Implications of the results will provide more insight both for the Czech Republic as a euro candidate but also for countries like Greece who might consider leaving the euro area. The implications from the findings might serve for policy decisions on how to improve export market shares via various competitiveness factors.
Seznam odborné literatury
Armington, P.S., (1969). A Theory of Demand for Products Distinguished by Place of Production. ……..International Monetary Fund Staff Papers, 16, 159-178
Bems, R., & Johnson, R.C. (2012). Value-Added Exchange Rates. National Bureau of Economic ……..Research Working Paper No. 18498
Benkovskis, K. and J. Wörz (2012). “Non-Price Competitiveness Gains of Central, Eastern, and Southeastern European Countries in the EU Market,” Focus on European Economic Integration Q3/12, 2012, 27-47
Benkovskis, K. and J. Wörz (2013). “Non-Price Competitiveness of Exports from Emerging Countries,” ECB Working Paper Series No. 1612, November 2013
Benkovskis, K. and J. Wörz (2014). “What Drives the Market Share Changes? Price versus Non-Price Factors,” ECB Working Paper Series No. 1640, February 2014
Broda, C. and D.E. Weinstein (2006). “Globalization and the Gains from Variety,” Quarterly Journal of Economics, 121(2), 541-585
Feenstra, R.C. (1994). “New Product Varieties and the Measurement of International Prices,” American Economic Review, Vol. 84, No. 1, 157-177
Rodrik, D. (2008). “The Real Exchange Rate and Economic Growth,“ Brookings Papers on Economic Activity, Fall 2008
Předběžná náplň práce
Motivation:

Real effective exchange rate (REER) and export market shares developments are considered as the two most popular indicators assessing a country’s competitiveness on a macroeconomic level. However, both have significant limitations and drawbacks. REER takes into account only price factors and cannot explain external competitiveness. REER disregards factors such as taste or quality – important non-price factors. Further, REER is limited by wide range of restrictive assumptions, compensating for the lack of available data on prices and elasticities of substitution. On the other hand, observed changes in export market shares developments describe only the outcome, not the fundamentals that are behind them (Benkovskis & Wörz, 2014).
This thesis will focus on the CEE region which offers numerous research opportunities thanks to it’s rich diversity. The thesis will examine export market shares developments in both euro and non-euro countries, with focus on competitiveness changes of new euro members and euro candidates. Further, impact of country’s undervaluation on competitiveness (i.e. Czech Republic, Turkey) and other strategies will be examined. Moreover, overcoming previously stated limitations of REER and export market indicators (as i.e. Benkovskis & Wörz (2013) or Bems & Johnson (2012) noted), which measure both price and non-price competitiveness changes of countries, will be main goal of the thesis.

Outline:

1. Motivation: I will choose criteria (Eurozone, devaluation, commodity exporter...) and identify countries suitable for the analysis and comparison in the region.
2. Previous research: I will briefly describe previous and similar studies and replicate the model with potential improvements (Benkovskis & Wörz, 2014 etc.).
3. Data: UN Comtrade database will be used with Comext serving as an auxiliary in potential more detailed analysis
4. Methods: I will explain the methods used (CES functions, import price index, margin decomposition, robustness checks...).
5. Results: I will discuss the results of the market shares decomposition and try to explain particular cases and reasons for the differences among them.
6. Concluding remarks: I will summarize my findings and their implications for policy and future research.

Methodology:

This thesis follows work of Benkovskis & Wörz (2014) who relax the assumption of constant elasticity of substitution in Armington’s demand-side oriented theoretical model (1969). The indicator is able to distinguish between competitiveness gains along the intensive and extensive margin and takes into account aspects of non-price competitiveness. The changes in global market shares are a measurable outcome and the model used identifies particular price and non-price factors, looking at country’s competitiveness from the import demand side. Armington (1969) describes consumer’s utility as a CES function, combining demand for domestic and foreign products. Benkovskis & Wörz rework the model to account for the extensive margin of trade and evaluate the role of non-price factors such as quality and taste. Along with the price factor, the approach decomposes the global export market shares into non-price factors, global demand shifts, changes in the set of competitors, and contributions from the extensive margin to market share growth.
The analysis uses 6-digit HS codes from UN Comtrade database, which is the most detailed level for all CEE countries considered. The use of highly disaggregated data makes it possible to account for differences in elasticities of substitution across products markets and evaluate the contribution of unobservable changes in taste and quality. The estimated period will depend on availability of data (1996-2014/2015 expected). Eurostat’s Comext database, highly disaggregated EU database, might be used for the detailed EU countries comparison in case of lack of data in UN Comtrade. For the whole CEE region, UN Comtrade database provides information on a sufficiently detailed level.

Předběžná náplň práce v anglickém jazyce
Motivation:

Real effective exchange rate (REER) and export market shares developments are considered as the two most popular indicators assessing a country’s competitiveness on a macroeconomic level. However, both have significant limitations and drawbacks. REER takes into account only price factors and cannot explain external competitiveness. REER disregards factors such as taste or quality – important non-price factors. Further, REER is limited by wide range of restrictive assumptions, compensating for the lack of available data on prices and elasticities of substitution. On the other hand, observed changes in export market shares developments describe only the outcome, not the fundamentals that are behind them (Benkovskis & Wörz, 2014).
This thesis will focus on the CEE region which offers numerous research opportunities thanks to it’s rich diversity. The thesis will examine export market shares developments in both euro and non-euro countries, with focus on competitiveness changes of new euro members and euro candidates. Further, impact of country’s undervaluation on competitiveness (i.e. Czech Republic, Turkey) and other strategies will be examined. Moreover, overcoming previously stated limitations of REER and export market indicators (as i.e. Benkovskis & Wörz (2013) or Bems & Johnson (2012) noted), which measure both price and non-price competitiveness changes of countries, will be main goal of the thesis.

Outline:

1. Motivation: I will choose criteria (Eurozone, devaluation, commodity exporter...) and identify countries suitable for the analysis and comparison in the region.
2. Previous research: I will briefly describe previous and similar studies and replicate the model with potential improvements (Benkovskis & Wörz, 2014 etc.).
3. Data: UN Comtrade database will be used with Comext serving as an auxiliary in potential more detailed analysis
4. Methods: I will explain the methods used (CES functions, import price index, margin decomposition, robustness checks...).
5. Results: I will discuss the results of the market shares decomposition and try to explain particular cases and reasons for the differences among them.
6. Concluding remarks: I will summarize my findings and their implications for policy and future research.

Methodology:

This thesis follows work of Benkovskis & Wörz (2014) who relax the assumption of constant elasticity of substitution in Armington’s demand-side oriented theoretical model (1969). The indicator is able to distinguish between competitiveness gains along the intensive and extensive margin and takes into account aspects of non-price competitiveness. The changes in global market shares are a measurable outcome and the model used identifies particular price and non-price factors, looking at country’s competitiveness from the import demand side. Armington (1969) describes consumer’s utility as a CES function, combining demand for domestic and foreign products. Benkovskis & Wörz rework the model to account for the extensive margin of trade and evaluate the role of non-price factors such as quality and taste. Along with the price factor, the approach decomposes the global export market shares into non-price factors, global demand shifts, changes in the set of competitors, and contributions from the extensive margin to market share growth.
The analysis uses 6-digit HS codes from UN Comtrade database, which is the most detailed level for all CEE countries considered. The use of highly disaggregated data makes it possible to account for differences in elasticities of substitution across products markets and evaluate the contribution of unobservable changes in taste and quality. The estimated period will depend on availability of data (1996-2014/2015 expected). Eurostat’s Comext database, highly disaggregated EU database, might be used for the detailed EU countries comparison in case of lack of data in UN Comtrade. For the whole CEE region, UN Comtrade database provides information on a sufficiently detailed level.

 
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