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Measurement and Analysis of Competitiveness Oxford Handbooks Online Measurement and Analysis of Competitiveness Olumide Taiwo and Julius A Agbor The Oxford Handbook of Africa and Economics: Volume 1: Context and Concepts Edited by Célestin Monga and Justin Yifu Lin Print Publication Date: Jul 2015 Subject: Economics and Finance, Economic Development, International Economics Online Publication Date: Dec 2014 DOI: 10.1093/oxfordhb/9780199687114.013.40 Abstract and Keywords This chapter evaluates the competitiveness of African economies In contrast to the macroeconomic perspective which focuses on the behavior of the Real Effective Exchange Rate, the framework adopted in the chapter emphasizes the fundamental drivers of a country’s ability to maintain competitive advantage in international markets through high-value production and economies of scale while simultaneously raising the living standards of its citizens The study compares a novel measure–the Trade Weighted Value added per capita–with the Real Effective Exchange Rate and demonstrates the merits of the former over the latter in evaluating the competitiveness of African economies Keywords: Africa, competitiveness, external balance, Real Effective Exchange Rate, global value chain, Diamond Model, Trade-Weighted Value-added 23.1 Introduction concept of international competitiveness has gained prominence in both policy and academic circles specifically in relation to countries’ external balance positions.1 THE Policymakers are increasingly evaluating their economies in relation to global markets in a bid to identify the fundamental drivers of competitiveness as well as the associated constraints This is particularly important for African economies, most of which lag behind the rest of the world in measures of economic, financial, and human development Although the competitiveness discourse has come of age since its origin in macroeconomic theory and policy, issues relating to its definition and measurement are far from settled Page of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness Scott (1985) defined national competitiveness as “a nation state’s ability to produce, distribute, and service goods in the international economy in competition with goods and services produced in other countries, and to so in a way that earns a rising standard of living.” In Fagerberg’s (1988) view, competitiveness refers to the ability of a country to achieve the twin goals of raising the living standards of its citizens by way of sustained growth in income and employment, and doing so without running into balance of payment difficulties The OECD Program on Technology and the Economy (1992) defined competitiveness as “the degree to which, under open market conditions, a country can produce goods and services that meet the test of foreign competition while simultaneously maintaining and expanding domestic real income” (237) These definitions emphasize strategic competitive advantage achieved (p 454) through high value addition and economies of scale rather than comparative advantage based on resource endowments.2 We take this distinction seriously In terms of measurement, economists generally lean towards the macroeconomic framework where competitiveness is assessed by a host of price-cost measures.3 Among these measures, the unit labor cost (ULC) and the Real Effective Exchange Rate (REER) have been prominent In this framework, improvements in a country’s ULC relative to the rest of the world are thought to increase its volume of international trade, while a competitive (low) REER is thought to attract foreign demand thus increasing a country’s share of world market Hence, overvaluation of a country’s currency (a manifestation of REER misalignment) results in loss of competitiveness The same happens when the ULC exceeds or grows faster than the rest of the world Therefore, explanations for gain or loss of competitiveness have always been sought from the underlying causes of movements in the REER and the ULC Recent developments in global trade, notably the growing importance of global value chains, are challenging existing competitiveness frameworks, and in particular, the validity of conventional measures of REER The models underlying the REER assume that the final goods traded in international markets are wholly produced by domestic factors (and therefore ignore trade in intermediate goods), which explains why competitiveness has been measured using domestic consumer prices and gross trade data The increasing prominence of trade in intermediate goods arising from globalization of value chains imply that competitiveness needs to be evaluated both on the basis of value addition and on prices reflecting the cost of intermediate inputs There have been two major efforts to revise the macroeconomic framework in the light of these developments Bems and Johnson (2012) proposed a Value-Added Real Effective Exchange Rate (VAREER) that uses value-added trade and prices of factors of production with a view to tailoring the assessment toward competitiveness in the segment of the Page of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness value chain (denoted as “tasks”) that drives a country’s trade in international markets Further, Bayoumi et al (2013) proposed a Goods Real Effective Exchange Rate (GOREER) that is a product of two components One component measures competitiveness in domestic value-added content of goods traded while the other measures competitiveness in foreign value added content Saito et al (2013) examined the two measures and concluded that they both exhibit trade-offs in different contexts In spite of these efforts, the macroeconomic framework of competitiveness faces three principal limitations when applied to African economies First, the framework is more suitable for economies exporting manufactured goods rather than for exporters of raw materials, owing to the fact that prices of raw materials are determined in international commodity markets and therefore not significantly influenced by either REER or ULCs of the countries of origin In other words, export demand for primary products is neither sensitive to the producer’s exchange rate nor to its domestic cost of production,4 but rather depends on international (p 455) market prices Given that most African countries export mainly raw materials and are mostly price-takers in the markets, this framework is of little relevance Second, improvements in non-price factors—which may raise the level of productivity in the economy and thus its overall competitiveness—may not lead to increases in the volume of international trade but might instead show up in improvements in the terms of trade This may be more important for developing countries with large non-traded sectors and may cause the REER to miss important gains in competitiveness.5 Incidentally, most African economies are dominated by services sectors that are largely informal and non-traded Third, movements in the REER of small open economies hardly reflect the state of the countries’ competitiveness owing to the preponderant influence of external shocks (favorable and unfavorable) arising from international goods and capital markets To the extent that adjustments in these economies are sluggish, changes in competitiveness indices might well reflect those exogenous factors rather than actual changes in domestic conditions of production and value addition This chapter proposes an alternative to the macroeconomic framework and evaluates the merits of an alternative index in assessing the competitiveness of African economies In particular, it builds on the micro foundations of the business strategy literature to espouse the merits of the Trade Weighted Value added per capita (TWV) over the REER in the context of African economies The remainder of the chapter is structured as follows Section discusses the conceptual framework, compares the macroeconomic and the business strategy perspectives, and sets the stage for the TWV Section compares the performance of REER and TWV in the African context and discusses the differences while Section concludes Page of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness 23.2 Conceptual Framework Policymakers, scholars, and analysts consider competitiveness as an important goal Be that as it may, there are many views about the appropriate approach to analyzing the concept The three major perspectives identified in the literature are the macroeconomic, international competition, and business strategy perspectives However, this contribution focuses on the macroeconomic and business strategy frameworks from where the REER and the TWV derive respectively A discussion of the two frameworks follows below 23.2.1 The macroeconomic framework The macroeconomic perspective originates from macroeconomic theory and policy and is influenced by the framework outlined in Corden (1994) and Boltho (1996) In the framework, competitiveness entails maintaining internal and external balance in the short-run (Wignaraja 2005) Internal balance is usually defined in terms of full employment (the lowest possible rate of unemployment that is consistent with an acceptable rate of inflation) while external balance is defined in terms of current account equilibrium (or some desirable (p 456) level of the current account) In this context, international competitiveness is defined as the level of the real exchange rate that, in combination with the requisite domestic economic policies, achieves internal and external balance (Boltho 1996) Thus, competitiveness policy is synonymous with exchange rate policy and competitiveness is assessed through the real exchange rate This approach emphasizes the exchange rate as the strategic variable and hinges on the link between the real exchange rate, balance of payments, resource allocation across sectors and competitiveness For example, large current account deficits are related to exchange rate appreciations which in turn hamper the development of tradables including manufactured exports (Wignaraja 2005) Economic theory (in particular trade theory) defines the real exchange rate as the ratio of domestic prices of non-tradables to tradables, An increase in the ratio denotes an appreciation of the exchange rate while a decrease denotes depreciation.6 However, this definition of the real exchange rate faces two empirical challenges First, because the measure uses domestic prices, it lumps exports and imports into the same category as tradables Boltho (1996) argued that the measure is only appropriate for small open economies where the terms of trade are set by the Page of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness world market Second, regular data on tradable and non-tradable prices are hardly available (Wignaraja 2005; Boltho 1996) These challenges have led scholars to rely on proxies for the real exchange rate The first set of proxies are indicators of relative consumer prices such as the Consumer Price Index (CPI) and other indices of cost of living While data is readily available in most countries, these measures suffer drawbacks such as inclusion of a range of goods and services that are not subject to international competition and variation of components and weights across countries Relative indicators based on GDP deflators are sometimes used as remedies but these are also beset by similar limitations The second set of proxies are those measuring relative producer prices of traded manufactured goods and are typically collected from declarations at the customs Although these measures have some merits in the sense that the data is easy to collect and they relate to actual trade, they also suffer many setbacks First, by focusing on actual trade, they ignore potential trade and therefore fail to cover all tradable goods and sectors Such exclusion may be problematic by not taking into account possible loss of competitiveness of excluded goods as they become too highly priced to be traded Second, there are variations in the quality of the measures across countries as well as lack of homogeneity in weighting and coverage These shortcomings make international comparisons less meaningful Third, changes in competitiveness tend to be heavily influenced by changes in prices of intermediate goods Fourth, by focusing on relative price changes, these indices are only meaningful in markets with differentiated products In perfectly competitive settings where prices are given, competitiveness manifests in terms of profits rather than prices (Boltho 1996) The third set of proxies are those measuring relative costs The most commonly used is the index of Unit Labor Cost (ULC) in the manufacturing sector, defined as labor cost per (p 457) unit of manufactured output The advantage of this measure is that improvements in competitiveness, through increase in labor productivity, fall in wages or nominal exchange rate depreciation, are associated with “either declines in tradable prices or with increases in profitability, or with a mixture of the two, depending on what strategies firms follow and on the nature of the markets in which they compete” (Boltho 1996: 3) The challenge with the ULC is that it is an aggregate concept that focuses on labor cost and productivity while ignoring other costs of production This selective focus on labor is justified on two grounds First, it is assumed that all non-price factors and other costs relevant to competitiveness are embodied in the production function and are therefore captured in labor productivity.7 However, Monga (2013) argued that if things were that simple and levels of transaction costs induced by non-price factors are unimportant, then manufacturing firms would have been moving from China, Brazil and other emerging economies where unit labor costs are already rising into low-wage labor Page of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness intensive African countries such as the Democratic Republic of Congo, Ethiopia and Tanzania Second, it is argued that labor costs are more important determinants of competitiveness than the cost of capital and other inputs that are assumed to be equalized across countries through international trade For example, Boltho (1996: 3) argued that “cost of capital and other raw materials will be more similar across countries due to capital mobility and the existence of international commodity markets.” Meanwhile, while the assumption of capital mobility may hold among the group of industrialized countries, extending it to the global economy may be implausible given higher cost of capital in less developed countries than industrialized countries The idea that increases in a country’s relative ULC leads to loss of competitiveness could be weaker than portrayed for many reasons For example, differential changes in nonlabor costs will affect competitiveness but might not be reflected in ULC Also, higher capital-labor ratio, which entails higher capital costs and lower labor costs, could lead to relative ULCs that overstate competitiveness.8 Fagerberg (1988) noted that countries which achieved the fastest growth in terms of exports and GDP in the early post-war period were those that also experienced much faster growth in relative ULC This phenomenon, referred to as “Kaldor Paradox” in reference to Kaldor (1978), implied that the focus on relative unit labor costs as an important determinant of competitiveness is rather too simplified, and could be sometimes misleading In practice, most analysis use the REER obtained from the purchasing power parity (PPP) framework The REER is obtained by deflating a trade-weighted average of nominal exchange rates between a country and its trading partners The deflators being used in practice include relative consumer prices, relative producer prices, relative GDP deflators and unit labor costs in manufacturing Researchers have noted the shortcomings of the REER, particularly in relation to producers of primary commodities Cashin et al (2002) pointed out that the usual behavior of REER in many developed and developing countries may not apply in the case of commodity-exporting countries Harberger (2004: 4–5) argued that the common conceptual measure of real exchange rate as the ratio of the price of non-traded to traded goods runs into trouble when large inflow of earnings due to a rise in commodity (p 458) prices induces an appreciation of the real exchange rate as a result of excess supply of foreign currency, a phenomenon commonly referred to as the Dutch disease In a related literature, Fagerberg (1988, 1996) and Dosi et al (1990) concluded that a competitive real exchange rate alone does not deliver international competitiveness if backward institutions, deficient technology, inefficient business environment, poor infrastructure and low human capital characterize an economy Wignaraja (2005) argued further that these factors could be more important for competitiveness of developing Page of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness countries, especially those in Africa Thus, the utility of relative price-cost measures in assessing competitiveness in the presence of substantial structural and capacity constrains is questionable 23.2.2 The business strategy framework This approach originates from the business studies literature and was pioneered by Porter (1990), who, in his study of eight developed and two newly industrializing countries, attempted to explain why some countries are more successful in particular industries than others (Moon et al 1998; Smith 2010) In contrast to the macroeconomic approach, this approach considers a nation as an aggregation of industries and applies micro-level business strategy concepts in studying international competitiveness In effect, the approach implies that continuous upgrade is the key to sustaining a competitive edge and competitive advantage of a country is the result of firm-level innovations and success in gaining large shares of world markets Further development in the microeconomic literature on learning and innovation has given rise to extension of the initial framework to emphasize creation and adoption of technology as drivers of competitive advantage The basic underlying model, referred to as the “Diamond Model,” classifies economies into four stages that are reminiscent of the Rostow stages of development These are the factor-driven, investment-driven, innovation-driven and wealth driven stages.9 The model considers competitiveness as the outcome of interactions among the following four critical attributes (diamonds) of a nation: Factor condition: this relates to the country’s position in factors of production such as skilled labor and infrastructure necessary to compete in industries Demand condition: this captures the nature of home-market demand for products or services Related and supporting industries condition: this refers to the presence of supplier industries and other related industries that are internationally competitive Firm strategy, structure and rivalry: this captures the conditions governing how firms are created, organized and managed as well as the intensity of domestic competition In terms of usefulness in economic analysis, a major criticism of the diamond model has been that it fails to specify how we measure competitiveness—whether it is total factor productivity or something entirely different Economists have attempted to distill the framework in order to proffer relevant measures of competitiveness Gray (1991) suggested that Porter’s (p 459) definition of national competitiveness comes down to the rate of growth of GDP Reinert (1995) disagreed with Gray and contended that the Page of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness definition is hardly operational In his view, competitiveness is divorced from issues of productivity and efficiency, and high productivity levels not necessarily lead to competitiveness He contended that “[a] lthough it is difficult to be competitive if you are not efficient and have a high productivity, it is by no means obvious that being the most efficient producer of an internationally traded product makes a country competitive —i.e enables it to raise the standard of living” (26) The model has also been criticized in relation to its usefulness in analyzing trade patterns Krugman (1980) objected to the idea that countries compete in international markets like corporations He contended that international trade is not a zero sum game but one in which specialization and trade according to comparative advantages yield welfare gains to all nations Waverman (1995) also described the model as too general in that it tries to explain every aspect of international trade and competition but eventually describes nothing However, Grant (1991) contended that the model does better in understanding the patterns of trade and investment in the new world economy than the theories of trade and investment On the international business side, most of the criticisms have focused on what is missing in the model Critics point out that the model ignores the attributes of a country’s largest trading partners and is flawed if applied to small trading economies (Rugman 1991, 1992) Others point to omission of the role of multinational corporations (Dunning 1993) Following these criticisms, the model has been extended to account for the role of external diamonds, resulting in the double diamond model (Rugman and D’Cruz 1993; Rugman and Verbeke 1993), the generalized double diamond model (Moon et al 1998) as well as multiple diamond models (Bellak and Weiss 1993; Cartwright 1993) Porter’s approach has since been improved by incorporating the critiques from economists and business strategists Indeed, the enriched model now serves as the underlying framework for the most widely referenced measure of competitiveness: the Global Competitiveness Index (GCI) prepared by the World Economic Forum, as well as other competitiveness rankings produced by other institutions.10 The GCI defines competitiveness as: “the set of institutions, policies and factors that determine the level of productivity of a country,” and analyzes competitiveness based on both “microeconomic and macroeconomic foundations of national competitiveness.” The index is built on twelve pillars grouped into three categories that reflect the key drivers of competitiveness in economies at different stages of development: the factor-driven, efficiency-driven and innovation-driven stages The GCI is sensitive to these differences by varying the weights assigned to the sub-indexes in the computation of national competitiveness along the stages of development The World Bank Doing Business Index (DBI) also examines some of the components of the GCI framework Although the DBI ranking of countries is not in lockstep with the GCI’s, a correlation coefficient of 0.83 was Page of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness established between the (p 460) rankings in GCI 2012/13 and DBI 2013.11 The African Competitiveness Report (ACR) complements these efforts by underscoring the continent’s competitiveness challenges while highlighting “areas requiring policy action and investment to ensure Africa lay the foundation for inclusive and sustained growth.” The generalized double diamond model (Moon et al 1998) provides a simple analytical framework that incorporates the basic features of the competitiveness index, and is consistent with recent developments in international trade, and in particular, with globalized supply chains The model thus offers the basis for an analytic measure of competitiveness in value addition in the following ways First, production sharing through global value chains is implied in the model through the role of trading partners’ diamonds In this setting, the final goods traded by a country in the international market are not produced exclusively by means of domestic factors but could also have trading partners’ factors embedded in them Therefore, as Bayoumi et al (2013) demonstrates, a country could experience loss of competitiveness in domestic factor costs (due to weakness of domestic diamond) but may not lose competitiveness in the pricing of traded goods due to the moderating influence of trading partners’ factors (due to strength of foreign diamonds) A particular implication of the foregoing is that factor prices not have to equalize across countries for trade to take place, thus violating the neo-classical law of factor-price equalization and perfect competition Reinert (1995) concluded that it is this violation, consistent with imperfect competition and economies of scale in international trade that underlies international competitiveness Second, the business strategy framework, by design, emphasizes factors that are pertinent to the creation of high value sectors and industries through economies of scale Under imperfect competition, the entire benefits of reduced costs associated with economies of scale are not passed onto consumers in the form of lower prices through international trade as would be the case under perfect competition Rather some of the benefits (taken as “rents”) are kept within the producer countries and distributed in the form of profits, wages and, ultimately, government income through taxation, all of which are important determinants of living standards Therefore, a country becomes competitive by reallocating resources to the “high-value sectors or industries” that in effect lead to rising national living standards while simultaneously producing goods that meet the test of international markets That is, a country becomes competitive as it strategically accumulates higher rents (or value) compared to the rest of the world (importantly its trading partners), and does so by reallocating more of its human and physical factors into value-creating activities Page of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness Third, a reasonable measure of competitiveness in the framework must rely on the rate of accumulation of distributable rents per unit of tradable output, whether the output is intermediate or final good From first principles, the simplest measure is of the form of C = (A–B)/Y, where C is rent-per-unit of output, A is current-year rent distributed in the form of wages and profits in those sectors, B is what wages and profits would be in the absence of current year rents (proxied perhaps by previous year’s wages and profits) and Y is tradable output However, by focusing on the tradable sectors alone, this measure ignores the Balassa–Samuelson effect, that is, diffusion of gross rent into non-tradable sectors of the (p 461) economy that may induce increases in wages, prices and profits there In addition, other factors of production, including capital, may capture part of the rent through deliberate pricing mechanisms For example, financial intermediaries in the services sector will capture part of gross rents through service fees and charges to tradable sectors In the final analysis, a robust index of competitiveness would cover both tradable and non-tradable sectors, in order to capture gross distributable rents In this framework, competitive economies are those able to accumulate aggregate rents faster than others This view is consistent with Reinert’s (1995) suggestion that rapid changes in the level of productivity tend to raise competitiveness The merits of the value-addition approach to assessing competitiveness of African countries are as follows First, it does not require that countries produce final manufactured goods since the measure applies well to economies that produce intermediate goods Consequently, the measure of competitiveness derived from this framework is applicable to economies at different stages of development irrespective of whether they are in steady state or not Second, the approach emphasizes strategic competitive advantage that countries deliberately pursue through policies rather than comparative advantage in resource endowments For instance, countries that simply dig raw materials and ship them overseas without capturing portions of global value chains would not make gains in competitiveness under this framework Third, data on aggregate rents (value-added) for all countries are readily available in the National Income and Product Accounts (NIPA) These particular merits render the framework suitable for analyzing competitiveness of African economies 23.3 Measuring Competitiveness We propose an alternative measure of competitiveness: the Trade-Weighted Value-added per capita (TWV) of a country relative to its main trading partners.12 In effect, by comparing accumulation of value-added induced by rents in a country relative to its main trading partners, and in essence, comparing rate of value addition at home and abroad, Page 10 of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness the proposed measure is consistent with the interpretation of competitiveness under the new trade theory Notably, variants of TWV have been used in various forms to reflect phenomena that are tangential to the objective pursued here The denominator, Trade-Weighted Real Valueadded of a country’s trading partners (see Dos Santos et al 2003) is a well-established determinant of price and demand for a country’s exports in the international trade literature (Cronovich and Gazel 1998; Vieira and Haddad 2011).13 Movements in the ratio of domestic value-added to foreign value-added is a plausible indicator of the extent to which a country is making technological progress and gaining larger shares of global value chains relative to the rest of the world in the double-diamond framework In line with this interpretation, Abdih and Tsangarides (2006) referred the measure as “productivity index” and used it as proxy for technological progress in their analysis of equilibrium real effective exchange rate (p 462) Wagner and Zeckhauser (2006) used a similar measure to demonstrate the differential rates of competitive progress among 157 countries around the world over the period 1960-2000 A graph of trade-weighted relative GDP per-capita against relative GDP per-capita14 shows Singapore, South Korea and Ireland as three countries that achieved substantial progress during the period covered, with Singapore being the most successful in moving from the group of least competitive countries to the group of highly competitive countries during the period Coincidentally, Singapore and South Korea were the two Newly Industrializing Countries (NICs) included in the study by Porter (1990) that led to the development of the diamond model In particular, the outcome which shows that Singapore was more successful than South Korea is consistent with the finding by Moon et al (1998) in the context of the generalized double diamond model Page 11 of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness 23.3.1 TWV for African countries 1980–2011 Figure 23.1 presents a graph showing the evolution of TWV for a sample of African countries and the position of their GDP per capita relative to the SubSaharan African (SSA) average for three ten-year periods covering 1981– 2010 The empirical range of values on the vertical axis is reasonable given that all the economies are smaller than their trading Click to view larger partners On the horizontal Figure 23.1 TWV and relative GDP per capita 1981– axis, a line drawn at the 1990 TWV and relative GDP per capita 1991–2000 TWV and relative GDP per capita 2001–2010 value of indicates the Source: Olumide Taiwo and Julius A Agbor position of the average SSA economy during the respective period A movement northward (along the vertical axis) reflects an increasing rate of value addition per capita relative to the country’s main trading partners (driven by gains in global value chains) while an eastward movement (along the horizontal axis) reflects expansion of the economy relative to SSA average An economy that is simultaneously gaining increasing share of global value chains and expanding faster than the average SSA rates would progress in the north-east direction Economies that basically extract and sell primary commodities in response to world demand would remain roughly in the same spot for the entire period Because many SSA countries are doing similar things, each country can only expand at the average SSA rates As the figure shows, this is the experience of a vast majority of the countries that remained in the bottom-left corner of the graph through the entire period The trajectories of two countries, South Africa and Gabon, provide important lessons Although not located in the bottom-left quadrant, South Africa remained roughly at the same spot through the entire period The country started out as roughly six times the average SSA country in terms of per-capita GDP but its growth has been driven by the extractive industries since the 1990s Because its growth driver is similar to many African Page 12 of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness countries, the rate of expansion of its economy (on per-capita basis) is not faster than the average SSA In addition, its TWV stayed roughly in the same spot.15 On its part, Gabon started out in the early 1980s with per-capita GDP that was about nine times the average SSA and a TWV of roughly 33 percent By the 2000s, these positions have fallen to seven times and about (p 463) (p 464) 18 percent respectively Gabon thus presents the case of a country that went backward While this loss of advantage might reflect the growing diversification of trading partners16 it is not a sufficient explanation for the decline A group of countries led by Benin, which includes Djibouti and Swaziland to lesser degrees, exhibited a particularly different type of progress In the case of Benin, there was a gradual upward movement on the vertical axis beginning in the 1990s although there was no movement on the horizontal axis through the entire period In essence, the country seems to be doing well at capturing larger components of value chains but only expanding at the average SSA rate.17 A few countries emerged during the period with impressive north-east trajectories, both gaining in terms of value chains as well as expanding faster than the SSA average rate The most notable success in this sense is Equatorial Guinea which moved from just about the average SSA economy and TWV of percent in 1986 to nearly 14 times and 58 percent respectively in 2011 Other notable successes are Libya and Mauritius to a large extent, and Botswana and Cape Verde to lesser degrees While Equatorial Guinea and Libya have not been included in the GCI, Mauritius and Botswana which progressed north-eastward, and Seychelles which remained in the north-east through the period, have received high rankings 23.3.2 TWV versus REER In principle, export price competitiveness (low REER) leads to increased shares in international markets and induces re-allocation of domestic resources from non-traded to traded sectors The movement of (human and physical) resources into the value-addition sectors enables the country to achieve two things: (i) accumulate value at a higher rate than the rest of the world and, (ii) so in a more inclusive manner These ultimately lead to increase in domestic value-added per capita relative to trading partners, leading to competitiveness in value addition (high TWV) Therefore, for consistency, the TWV and the REER should be negatively correlated Table 23.1 presents correlations between the TWV and REER for a sample of African countries Because the REER series are only available for 1998–201218 and the TWV is available for 1980–2010, the table presents correlations for the overlapping 13-year period 1998–2010 The indices are substantially positively correlated in the top 13 Page 13 of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness countries (marked in red) and negatively correlated in the bottom 19 countries (marked in blue) Page 14 of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness Table 23.1 TWV and REER 1998–2010 Country Corr Coef Equatorial Guinea 0.89 Sudan 0.83 Mali 0.76 Nigeria 0.72 Guinea Bissau 0.69 Ethiopia 0.64 Cameroon 0.54 Central Africa Republic 0.39 Gabon 0.27 10 Botswana 0.26 11 Comoros 0.26 12 Mauritius 0.25 13 Senegal 0.21 14 Mozambique 0.07 15 Madagascar 0.05 16 Congo republic 0.03 17 Cape Verde –0.01 18 Mauritania –0.14 Page 15 of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness 19 Niger –0.16 20 Morocco –0.17 21 Ghana –0.22 22 Burundi –0.25 23 South Africa –0.26 24 Swaziland –0.26 25 Congo Democratic Rep –0.44 26 Cote d’Ivoire –0.49 27 Kenya –0.54 28 Rwanda –0.60 29 Chad –0.62 30 Malawi –0.67 31 Burkina Faso –0.70 32 Gambia –0.72 33 Zambia –0.75 34 Lesotho –0.78 35 Uganda –0.78 36 Tunisia –0.88 37 Djibouti –0.90 38 Tanzania –0.91 Page 16 of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness 39 Sierra Leone –0.92 Interestingly, out of the nine countries marked in red, five of them are major oil exporters (Equatorial Guinea, Sudan, Nigeria, Cameroon, and Gabon) demonstrating that the REER (p 465) is vulnerable to the Dutch disease Inclusion of Botswana and Mauritius in this group also implies that the REER is moving in non-competitive direction in economies that have made substantial gains in competitiveness during the period This is arguably a reflection of the Balassa–Samuelson effect Similarly, it is not certain whether the REER reflects technological change, realization of economies of scale or gains in market shares in some of the cases where it is negatively (p 466) correlated with the TWV Its movements in some cases could simply reflect changes in foreign monetary policies that are not remotely connected with technological progress and value addition in the domestic economy For example, Ramirez and Tsangarides (2007) show that during 2001–2006, the REER appreciated at the same time as the economies of the CFA franc zone19 lost competitiveness in value addition However, the appreciation of REER had nothing to with technological downturn or any fundamentals of the economies Instead, it was the consequence of strengthening of the Euro, the currency to which the CFA franc is pegged In summary, the TWV is potentially more relevant than the REER for measuring competitiveness in the African context for the following additional reasons First, as noted, the TWV is a good proxy for technological progress in an economy (Abdih and Tsangarides 2006) It is well known that exporters of raw materials capture very trivial portions of product value chains Banga (2013) shows that only percent of total value added in global value chains accrue to less-developed and developing countries whose exports are typically dominated by raw materials In the absence of improvement in domestic technology to enable primary commodity exporters capture increasing portions of value chains while their trading partners continue to advance technologically, the process of normalizing domestic value addition rates by the weighted average of trading partners’ would lead to a loss of competitiveness Second, the TWV captures changes in both price factors and non-price factors such as structural and capacity constraints that affect competitiveness Movements in the measure therefore reflect changes in labor productivity, capacity, other costs of doing business related to the state of infrastructure, governance, rent-seeking behavior and other non-price factors in a country relative to its trading partners Third, a good measure of competitiveness must be relevant to countries with different economic structures at different stages of development and enable international comparison despite these differences International comparability of this measure has been demonstrated by Wagner and Zeckhauser (2006) Page 17 of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness 23.4 Conclusion After a period of slow growth from the late 1970s into the early 1980s, African countries began implementing sound macroeconomic policies during mid-1980s to early 1990s with the view that a stable macro-economy would create conditions for a competitive economy Despite the stable macroeconomic environment achieved through these reforms, the expected investment and growth outcomes did not manifest Indeed African policymakers refer to the 1990s as the “lost decade.” On the other hand, the next decade ushered in impressive macroeconomic performance evident in low inflation rates, improved current account positions and relatively high rates of economic growth, but these were accompanied by lack of productivity growth in most sectors and rising rates of unemployment and poverty These two regimes present a paradox that brings into question the role of macroeconomic (p 467) performance in Africa’s competitiveness as well as the relevance of the macroeconomic approach to analyzing competitiveness It is evident that this paradigm is yet to address the fundamental determinants of competitiveness on the continent The prevailing paradigm of price–cost competitiveness rests on, among others, the fundamental assumption of harmony between external and internal balance The idea being that once the external is achieved, the internal would follow Thus, public policy has a very narrow but direct role in competitiveness: government simply intervenes in the currency exchange market when necessary Policymakers in African countries have generally followed this blueprint under the surveillance of the International Monetary Fund The quality of skills, education and health of the population, infrastructure, internal mobility, strategic urbanization and most other conditions necessary for achieving internal balance are under-emphasized Consequently, programs which focus on real domestic issues are half-heartedly pursued only to the extent that they are believed to be good for social development For instance, education expansion programs in many African countries are being encouraged merely as a strategy of enhancing primary or secondary enrolments, rather than as strategies for developing competitive workforce It is true that African economies are growing rapidly and increasingly undergoing structural transformation, but its pattern of transformation is strikingly different from that observed in the advanced economies and successfully replicated by emerging economies of Asia and Latin America Despite enormous potential for labor-intensive industrialization, the African continent is in fact less industrialized currently than it was in the 1980s At the moment, only a few African countries are capable of generating up to 10 percent of GDP from manufacturing Rather than moving from the farm into the tradable manufacturing sector, workers are instead migrating from rural sector into Page 18 of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness urban non-tradable and largely informal commerce and distribution sector Given that African economies are substantially lacking in manufacturing output, and much less exports, the relevance of a price-cost framework in analyzing their competitiveness is questionable The fact that many African countries are increasingly being ranked lower in global competitiveness rankings; in spite of their remarkable growth performance should provoke policy makers to ponder on where they might be missing the mark We hope that the business strategy competitiveness framework proposed in this chapter would inspire policy makers on the continent to be more adventurous in pursuing such broader policies as population health, skills and infrastructure development, industrial clusters and other relevant industrial policies References Abdih, Y., and Tsangarides, C (2006) FEER for the CFA Franc IMF Working Paper No 06/236, Washington, DC: IMF Adolfson, M., Andersson, M.K., Linde, J et al (2007) Modern forecasting models in action: improving macroeconomic analyses at central banks International Journal of Central Banking, 3(4):111–144 Banga, R (2013) Measuring Value in Global Value Chains, Background Paper for Regional Value Chains, Unit of Economic Cooperation and Integration amongst Developing Countries (ECIDC) New York: UNCTAD Bayoumi, T., Saito, M., and Turunen, J (2013) Measuring Competitiveness: Trade in Goods or in Tasks? IMF Working Paper 13/100, Washington DC Bellak, C.J., and Weiss, A (1993) A note on the Austrian diamond Management International Review, 33(2):109 Bems, R and Johnson, R (2012) Value-Added Exchange Rates NBER Working Paper No 18498 Boltho, A (1996) The assessment: international competitiveness Oxford Review of Economic Policy, 12(3):1–16 Cashin, P., Cespedes, L., and Sahay, R (2002) Developing Country Real Exchange Rates: How Many Are Commodity Countries? IMF Working Paper WP/02/223, Washington, DC: International Monetary Fund Page 19 of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness Cartwright, W.R (1993) Multiple linked diamonds and the international competitiveness of export-dependent industries: the New Zealand experience Management International Review, Special Issue, 33(2):55–70 Corden, W.M (1994) Economic Policy, Exchange Rates and the International System Oxford: Oxford University Press Cronovich, R., and Gazel, R (1998) Do exchange rates and foreign incomes matter for exports at the state level? Journal of Regional Science, 38(4) 639–657 Dos Santos, C.H., Shaikh, A., and Zezza, G (2003) Measures of the Real GDP of U.S Trading Partners: Methodology and Results Working Paper No 387, The Levy Economics Institute of Bard College Dosi, G., Pavitt, K., and Soete, L (1990) Economics of Technical Change and International Trade Brighton: Wheatsheaf Dunning, J.H (1993) Internationalizing Porter’s diamond Management International Review, Special Issue, 33(2):7 Durand, M., and Giorno, C (1987) Indicators of international competitiveness: conceptual aspects and evaluation OECD Economic Studies, 9:147-181 Fagerberg, J (1988) International competitiveness Economic Journal, 98(2):355–374 Fagerberg, J (1996) Technology and competitiveness Oxford Review of Economic Policy, 12(3):39–51 Grant, R.M (1991) Porter’s competitive advantage of nations: an assessment Strategic Management Journal, 12(7):535–549 Gray, H.P (1991) International competitiveness: a review article International Trade Journal, 1(2):503–517 Harberger, A.C (2004) The Real Exchange Rate: Issues of Concept and Measurement, A Paper Prepared for a Conference In Honor Of Michael Mussa, University of California, Los Angeles Kaldor, N (1978) The effect of devaluations on trade in manufactures, in Further Essays on Applied Economics London: Duckworth, pp 99–118 Krugman, P.R (1980) Scale economies, product differentiation, and the pattern of trade American Economic Review, 70(5):950–959 Page 20 of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness Monga, C (2013) Winning the jackpot: jobs dividends in a multipolar world, in J Stiglitz, J Yifu, and E Patel (eds), The Industrial Policy Revolution II: Africa in the Twenty-First Century Palgrave Macmillan, pp 135–173 Moon, H.C., Rugman, A.M., and Verbeke, A (1998) A generalised double diamond approach to the globalized competitiveness of Korea and Singapore International Business Review, 7:135–150 OECD, (1992) Technology and the Economy: The Key Relationships Paris: OECD Onyekwena, C., and Taiwo, O (2013) An examination of South Africa’s trade with the BRICs Working Paper Centre for the Study of Economies of Africa, Abuja Nigeria Porter, M.E (1990) The Competitive Advantage of Nations London: Macmillan Press Ramirez, G., and Tsangarides, C.G (2007) Competitiveness in the CFA Franc Zone IMF Working Paper WP/07/212, Washington, DC: International Monetary Fund Reinert, E.S (1995) Competitiveness and its predecessors: a 500 year cross national perspective Structural Change and Economic Dynamics, 6:23–42 Rugman, A.M (1991) Diamond in the rough Business Quarterly, 55(3):61–64 Rugman, A.M (1992) Porter takes the wrong turn Business Quarterly, 56(3):59–64 Rugman, A.M., and Verbeke, A (1993) The Double Diamond Model of international competitiveness: the Canadian experience Management International Review, Special Issue, 33(2):17–39 Saito, M., Ruta, M., and Turunen, J (2013) Trade Interconnectedness: The World with Global Value Chains Washington, DC: International Monetary Fund Scott, B (1985) U.S competitiveness concepts, performance, and implications, in S Bruce and G Lodge (eds), US Competitiveness and the World Economy Boston: Harvard Business School Press Smith, A.J (2010) The competitive advantage of nations: is Porter’s diamond framework a new theory that explains the international competitiveness of countries? Southern African Business Review, 14(1):105–130 Vieira, F.V., and Haddad, E.A (2011) A Panel Data Investigation on the Brazilian State Level Export Performance The University of Sao Paulo Regional and Urban Economics Lab Working Paper Page 21 of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness Wagner, G., and Zeckhauser, R J (2006) “Trading Up” Unpublished Manuscript, Kennedy School of Government, Harvard University Available at: Last accessed on September 11, 2014 Waverman, L (1995) A critical analysis of porter’s framework on the competitive advantage of nations, in A Rugman, J Van den Broeck, and A Verbeke (eds), Research in Global Strategic Management: Beyond the Diamond Volume V, Greenwich, CT: JAI Press Wignaraja, G (2005) Competitiveness analysis and strategy, in Competitiveness Strategy in Developing Countries: A Manual for Policy Analysis Routledge Studies in Development Economics Routledge: London and New York, pp 15–60 Notes: (1) Measures and determinants of international competitiveness are becoming hot topics in academic and policy circles As Ramirez and Tsangarides (2007) posit, competitiveness analysis is about identifying the elements necessary to ensure sustainable growth and improvement in living standards (2) This also marks a distinction between the emphasis on increasing returns to scale in the new trade theory and comparative advantage underscored in the conventional trade theory (3) Durand and Giorno (1987) provide an excellent overview of the different types of indices proposed and applied in the literature (4) In several instances across Africa, domestic production costs seem to rise as a result of growing insecurity and social unrest Examples include the crisis in the oil-rich NigerDelta region of Nigeria, the Islamist hostage crisis that is affecting natural gas production in Algeria and the terror attacks on uranium mines in Niger, just to name these few While these incidents not necessarily affect export prices of the particular commodities, they nonetheless undermine competitiveness by raising domestic cost of production (5) This point is emphasized by Durand and Giorno (1987: 149) (6) This is one of the ways the real exchange rate has been defined Another interesting way of defining the real exchange rate (credited to Rudiger Dornbusch) is the ratio of domestic wages to the nominal exchange rate (measured as price of foreign currency in units of local currency) In this setting, the real exchange rate can be defined as the domestic wage in the foreign currency, typically the US dollar If wages are high, then Page 22 of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness domestic producers of tradables will not be able to compete against imports and therefore will export less Overvaluation then leads to high (cheap) imports and low (costly) exports (7) These include other costs of doing business notably those related to the state of infrastructure, institutions, access to capital, quality of human capital and governance institutions (8) This insight is credited to Scott Rogers (9) Wignaraja (2005) notes that the diamond model was influential in the development of the Global Competitiveness Indicator (GCI) published regularly by the World Economic Forum, and that Professor Porter served as advisor in the process (10) Other competitiveness ratings include World Competitiveness Yearbook (WCY), Irish National Competitiveness Council (NCC), Doing Business Index (DBI) and Africa Competitiveness Report (ACR) The WCY framework identifies four main aspects of competitiveness: economic performance, government efficiency, business efficiency and infrastructure, and produces a ranking of countries along those lines The Irish NCC distinguishes between inputs to national competitiveness (over which policy-makers have considerable leverage) and so-called “essential conditions” that must be present (11) This is taken from a presentation by Scott Rogers, at the Centre for the Study of the Economies of Africa on June 26, 2013 (12) The measure is in real terms and is obtained using statistically determined weights of trading partners (13) In addition, Adolfson et al (2007) demonstrate its usefulness in Central bank forecasting models (14) The former is relative to trading partners while the latter is relative to the world (15) Indeed, South Africa’s exports transited from a fairly diversified structure in the nineties to a mineral and resource dominated structure in the mid and late 2000s in ways that have been demonstrated to be consistent with China’s demand for resources (Onyekwena and Taiwo 2013) (16) In the earliest period, 1980-1985, France, USA, Spain, UK, and Korea were the top five trading partners with trading weights in descending order During 2006–2011, the list changed to USA, China, France, Trinidad and Tobago, and Thailand Page 23 of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016 Measurement and Analysis of Competitiveness (17) There is anecdotal evidence to support this implication The country is a notable “passage” especially for importation of goods prohibited at Nigerian ports In addition, its agro processing industry is prominently involved in packaging of finished fruit juices, a task that is located near the end of the fruit processing value chain (18) The data is obtained from UNCTAD (19) The countries are Cameroon, Gabon, the Central African Republic, the Republic of Congo, Equatorial, Guinea and Chad, Benin, Burkina Faso, Côte d’Ivoire, Senegal, Togo, Mali, Niger, and Guinea-Bissau Olumide Taiwo Olumide Taiwo (corresponding author), Center for the Study of the Economies of Africa (CSEA), Abuja Nigeria; Tel: +234-809-264-8629; Email: otaiwo@gmail.com Julius A Agbor Julius A Agbor, Department of Economics, Stellenbosch University, South Africa; Tel: +1-240-506-2353; Email: jagbor1970@gmail.com Page 24 of 24 PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com) (c) Oxford University Press, 2015 All Rights Reserved Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy) Subscriber: OUP-Reference Gratis Access; date: 03 September 2016