Export Competitiveness and Domestic Productivity Facets: Case of Lithuania/Lietuvos Eksporto Konkurencingumas Ir Salies Produktyvumo Demenys

By Travkina, Irina; Tvaronaviciene, Manuela | Journal of Business Economics and Management, March 2011 | Go to article overview

Export Competitiveness and Domestic Productivity Facets: Case of Lithuania/Lietuvos Eksporto Konkurencingumas Ir Salies Produktyvumo Demenys


Travkina, Irina, Tvaronaviciene, Manuela, Journal of Business Economics and Management


1. Introduction: context of competitiveness and export competitiveness

The paper analyses Lithuania's international trade competitiveness from an exporting economic sectors' perspective. The research is organized as follows. The first and second parts focus on export competitiveness from a long-term perspective to capture the main trends of economic sectors' export potential developments. In those two parts Lithuania's performance is being assessed from a mezzo (i.e. sector) perspective, by tracking exporting sectors' development tendencies. The third part focuses on indicators of sectors' competitiveness. Character of three main production factors, such as labour, capital and energy, productivities change is being discussed in this part. Generalizing insights are being formulated.

International competitiveness criteria have to reflect the success for which sectors compete with each other over shares of national and, especially, global export markets (Travkina, Tvaronaviciene 2010). This approach in principle complies with the European Commission's attitude, by which "competitiveness is the ability to produce goods and services which meet the test of International markets, while at the same time maintaining high and sustainable levels of income or, more generally, the ability of (sectors) to generate, while being exposed to external competition, relatively high income and employment levels...." (European Commision 1999).

Taking into account the fact, that separate economic sectors are more open in sense of trade than the wholly taken national economy, competitiveness measuring embraces ability to export, even more, emphasis on export has to be put. As Rowthorn, for example, asserts, "the prosperity of a region is determined primarily- ... all those activities which bring income into the region by providing a good or service to the outside world" (Rowthorn 1999).

If to get back towards development of discussion around content of "competitiveness" notion, Krugman's input has to be emphasized. Hence, Krugman indicates (1994), that if international trade competitiveness has any meaning, then it is simply another way of saying 'productivity'; because "the growth rate of living standards essentially equals the growth rate of domestic productivity, not productivity relative to competitors, but simply domestic productivity". Michael Porter, who is the pioneer of competitiveness theory, also suggests that the best measure of competitiveness is productivity: "The competitiveness, then, is measured by productivity. Productivity allows to support high wages, a strong currency and attractive returns to capital, and with them a high standard of living" (Porter, Ketels 2003). Approach is officially adopted as national competitiveness is already being defined as "ability to produce goods and services that meet the testing of international competition" (Ministry of Economy of the Republic of Lithuania 2003). Later same ideas are replicated, for example, in Lithuanian long-run strategy (2007). Not concentrating on theoretical discussion on competitiveness notion genesis, which has already been presented (Travkina, Tvaronaviciene 2010), authors state, that in the paper, it has been admitted that the sector competitiveness could be measured by such output indicators as export value growth of all sectors, and further it is claimed that sector competitiveness' meaning in principle coincides with international trade competitiveness meaning and could be used as synonymous categories.

The second strand of literature is devoted to sector competitiveness measurement. Export competitiveness relation to indicators reflecting certain dimensions of domestic productivity is being emphasized. It is assumed that data on labour productivity, capital and energy intensity by each sector (European Commission 2009), properly presented and juxtaposed, would provide with new insights about international trade competitiveness and domestic productivity relations. …

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