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Productivity Performance and International Competitiveness: A New Test of an Old Theory

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Abstract

The paper uses a modern adaptation of the Ricardian model which incorporates monopolistic competition and multiple factors to derive a MacDougall-type relation between a country’s nternational competitiveness at the industry level and its productivity performance. This relation is implemented empirically for Canada and the United States, using panel data for 25 years and 40 industries. A key finding is that Canadian-U.S. productivity ratio is a significant determinant of relative shares of Canadian firms in both Canadian and U.S. markets. Trade liberalization between Canada and the U.S. also plays an important role in influencing market shares.

Suggested Citation

  • Ehsan U. Choudhri & Lawrence L. Schembri, 1999. "Productivity Performance and International Competitiveness: A New Test of an Old Theory," Carleton Economic Papers 99-02, Carleton University, Department of Economics, revised May 2002.
    • Handle: RePEc:car:carecp:99-02
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    File URL: http://www.carleton.ca/economics/research/working-papers/carleton-economic-papers-cep-1991-2000/
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    Cited by:

    1. Ehsan U. Choudhri & Ms. Dalia S Hakura, 2001. "International Trade in Manufactured Products: A Ricardo-Heckscher-Ohlin Explanation with Monopolistic Competition," IMF Working Papers 2001/041, International Monetary Fund.
    2. Sarker, Rakhal, 2018. "Trade Expansion, International Competitiveness and the Pursuit of Export Diversification in Bangladesh," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 41(02), pages 1-25, June.

    More about this item

    Keywords

    International Competitiveness; Ricardian Model;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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