ASEAN: Regional Trends in Economic Integration, Export ... - USITC

economies) and export competitiveness. The former is based on macroeconomic factors,
such as access to healthcare, education, macroeconomic stability, innovation,
technological readiness, market size, the efficiency of the goods market, and the
sophistication of the business and financial markets, that raise long-term economic
growth rates and standards of living within an economy. 11 On the other hand, export
competitiveness focuses more narrowly on specific industries and the factors that affect
competition for global market share and exports. For example, in past reports, the USITC
has defined export competitiveness “as the ability of producers to sell goods in foreign
markets at price, quality, and timeliness comparable to competing foreign producers.” 12
Changes in export competitiveness indicate the relative positions of firms in international
markets and their potential opportunities for growth and investment.
To the extent that economic integration results in trade creation and overall gains to
participating economies, it contributes to the long-term competitiveness of those
countries. It also contributes to export competitiveness to the extent that firms located
within the member countries are able to take advantage of economies of scale, improved
market efficiencies, the creation of larger markets, and other opportunities from
economic integration to expand exports.
Export Competitiveness Factors
A number of common supply and demand factors affect the ability of firms to export and
increase market share (table 1.2). In general, factors that improve firm productivity and
lower costs (supply side factors) improve industry competitiveness. Additionally,
increasing demand or growth in demand for enhanced quality or specific product
characteristics can also benefit specific firms, including exporters. Macroeconomic
factors, such as exchange rates, also influence export competitiveness. A change in the
“real” exchange rate affects the cost competitiveness of all industries in a country, while
exchange rate volatility could reduce export demand to the extent buyers are faced with
uncertain prices. These factors and their relationship to ASEAN industry competitiveness
in the six sectors are discussed more fully in Chapters 3–8.
11 These factors, among others, form the basis for the World Economic Forum (WEF)’s Global
Competitiveness Index. The remaining factors not listed in the text above are institutions, infrastructure, and
labor market efficiency. WEF, Global Competitiveness Report 2009–2010, 335.
12 USITC, Sub-Saharan Africa, 2009, 1–2. The European Commission (EC), using a definition like that
of the USITC, defined industry competitiveness as the position of an industry relative to its foreign rivals in
terms of market shares, volume of trade, and relative cost, particularly in regard to labor productivity and the
relative cost of labor. See EC, Enterprise and Industry Directorate-General, “European Competitiveness
Report,” 2009, 27.
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