Competitiveness Research Network

CompNet news

12th CompNet Conference Prague 2016

The 12th conference of the Competitiveness Research Network (CompNet), jointly organised with the European Central Bank and the Czech National Bank, took place in Prague on 21-22 April 2016. The topic was “Productivity and External Rebalancing”.

12th conference of the Competitiveness Research Network: Productivity and External Rebalancing
Summary of contributions


Exchange Rate devaluations: when they can work and why

The effect of exchange rate devaluations on a country’s exports is frequently debated, with some supporting a strong impact and others suggesting no sizeable response of exports to relative price changes.

Antoine Berthou and Filippo di Mauro, members of the steering Committee of CompNet, argue that firm heterogeneity in terms of productivity and size can explain the opposing views. The measured reaction of aggregate exports to relative price movements is largely determined by the reaction of the most productive/largest companies.

Exchange rate devaluations: When they can work and why

CompNet approach and takeaways

This memo and this presentation provide a broad overview of the CompNet database and its approach to measure and compare competitiveness across countries.

They also summarize a range of very recent publications of network members and their main (policy-relevant) takeaways.

CompNet key features and main policy-relevant takeaways
Assessing European competitiveness: the CompNet approach

The Competitiveness Research Network (CompNet) of the European System of Central Banks (ESCB) functions as a forum in which to discuss different approaches to, and measures of, competitiveness.

Its main activities include the regular updating of its micro-based competitiveness database for 17 EU countries, and research on competitiveness, productivity enhancement and resource reallocation, including macro assessment and the role of the global value chain.

About the Network

CompNet is a network of researchers that is led and guided by a steering committee composed of:

Chairman Filippo di Mauro
Steering Committee Carlo Altomonte (external consultant, Bocconi University)
João Amador (Banco de Portugal)
Eric Bartelsman (external consultant, Vrije Universiteit Amsterdam)
Konstantins Benkovskis (Latvijas Banka)
Antoine Berthou (Banque de France)
Matteo Bugamelli (Banca d’Italia)
Ettore Dorrucci (ECB)
Pavlos Karadeloglou (ECB)
Paloma López-Garcia (ECB)
Contact compnet@ecb.europa.eu
List of CompNet Partner Institutions and corresponding representatives

 

CompNet Partner Institutions

Banca d'Italia
Banca Naţională a României
Banco Central de la Rep. Argentina
Banco de España
Banco de Portugal
Bank of England
Banka Slovenije
Banque centrale du Luxembourg
Banque de France
BIS
Bocconi University
Central Bank of Croatia
Central Bank of Cyprus
Central Bank of Ireland
Central Bank of Malta
Central Bank of Turkey
Česka Národni Banka
Danmarks Nationalbank
De Nederlandsche Bank
Deutsche Bundesbank
EBRD
ECB
Eesti Pank
EU Commission
Hungarian Academy of Sciences
London School of Economics and Political Science
ISTAT
Latvijas Banka
Latvijas Banka | IMF
Lietuvos bankas
Magyar Nemzeti Bank
Národná banka Slovenska
Narodowy Bank Polski
National Statistics Institute of Finland
Nationale Bank van België /Banque Nationale de Belgique
OECD
Oesterreichische Nationalbank
Rheinisch-Westfälisches Institut für Wirtschaftsforschung e.V. (RWI)
Stanford University
Statistical Office of Ireland
Statistical Office of the Netherlands
Statistical Office of Sweden
Suomen Pankki
Trinity College Dublin
University of Maryland
University of Milan
University of Paris
University of Pavia
US International Trade Commission
Vrije Universiteit
WIIW

Research focus

CompNet’s purpose is to:

  • strengthen the analytical framework for assessing competitiveness
  • identify what drives the dynamics of competitiveness and productivity in EU countries and firms
  • relate competitiveness indicators with aggregate outcomes (e.g. exports, economic growth).

CompNet began operating in 2012 and since then has provided a substantial contribution of novel research.

The ultimate objective of CompNet is to identify the structural factors that contribute to raising the economy’s long-term growth potential, by effectively linking instruments, mechanisms and outcomes. To do so, CompNet has developed a set of novel indicators and a comprehensive firm-level database, and has undertaken original research.


CompNet schema: Micro level, Macro level, Cross-border level
Research output

CompNet members have published more than 40 papers both in the ECB’s Working Paper Series and in a number of journals.

Three main areas have been investigated in order to provide policy recommendations: trade and competitiveness, shock transmission in a global context and resource allocation and productivity.

Trade and competitiveness

CompNet’s analyses offer an in-depth and comprehensive explanation for recent trade developments that goes beyond the usual practice of relying heavily on measures of price and cost competitiveness.

Research Papers
No. 1789
04 May 2015
Exploring price and non-price determinants of trade flows in the largest euro-area countries
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No. 1788
04 May 2015
Assessing European firms' exports and productivity distributions: the CompNet trade module
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No. 1777
07 Apr 2015
Exports and domestic demand pressure: a dynamic panel data model for the euro area countries
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No. 1761
09 Mar 2015
Global value chains: a view from the euro area
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No. 1752
17 Dec 2014
How do exporters react to changes in cost competitiveness?
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No. 1740
11 Nov 2014
Exports and capacity constraints - a smooth transition regression model for six euro area countries
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No. 1739
24 Oct 2014
Global value chains: surveying drivers and measures
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No. 1736
29 Sep 2014
Measuring the effectiveness of cost and price competitiveness in external rebalancing of euro area countries: What do alternative HCIs tell us?
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No. 1695
22 Jul 2014
Collateral imbalances in intra-european trade? Accounting for the difference between gross and value added trade balances
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No. 1691
14 Jul 2014
Crisis-proof services: Why trade in services did not suffer during the 2008-2009 collapse
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No. 1681
30 May 2014
Euro area external imbalances and the burden of adjustment
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No. 1680
23 May 2014
Verti-zontal differentiation in export markets
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No. 1670
28 Apr 2014
Identifying hubs and spokes in global supply chains using redirected trade in value added
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No. 1640
21 Feb 2014
What drives the market share changes? price versus non-price factors
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No. 1617
22 Nov 2013
Crowding-out or co-existence? the competitive position of EU members and China in global merchandise trade
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No. 1612
19 Nov 2013
Non-price competitiveness of exports from emerging countries
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No. 1601
04 Nov 2013
How do firms in Argentina get financing to export?
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No. 1535
16 Apr 2013
Trade adjustment in the European Union - a structural estimation approach
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Books
  • Di Mauro, F. and Ronchi, M. (2015), “Assessing competitiveness in an increasingly borderless world”, in Investment and Investment Finance in Europe, Chapter 7, European Investment Bank.
Shock transmission in a global context

Given the persistent imbalances in the EU, researchers have investigated a number of channels through which cross-border shocks are transmitted, drawing from the CompNet database.

Research Papers
No. 1833
15 Jul 2015
The great collapse in value added trade
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No. 1801
09 Jun 2015
The exchange rate, asymmetric shocks and asymmetric distributions
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No. 1787
29 Apr 2015
"Made in China" - How does it affect our understanding of global market shares?
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No. 1720
19 Aug 2014
Export dynamics and sales at home
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No. 1650
11 Mar 2014
The euro plus pact: cost competitiveness and external capital flows in the EU countries
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No. 1559
20 Jun 2013
Fishing in the same pool? export strengths and competitiveness of China and CESEE in the EU-15 Market
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No. 1556
18 Jun 2013
Measuring institutional competitiveness in Europe
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No. 1412
04 Jan 2012
Global value chains during the great trade collapse: a bullwhip effect?
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Resource allocation and productivity

Nominal frictions are often a source of resource misallocation that can ultimately impact growth. CompNet research has helped gain an understanding of the effects that distortionary policies have on growth via productivity.

Research Papers
No. 1836
06 Aug 2015
Assessing the financial and financing conditions of firms in Europe: the financial module in CompNet
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No. 1823
07 Jul 2015
Financial constraints and productivity: evidence from euro area companies
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No. 1764
16 Mar 2015
Assessing European competitiveness: the new CompNet microbased database
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No. 1751
17 Dec 2014
Competition in the Portuguese economy: estimated price-cost margins under imperfect labour markets
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No. 1748
15 Dec 2014
Enterprise productivity: a three-speed Europe
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No. 1704
04 Aug 2014
Are foreign-owned firms different? Comparison of employment volatility and elasticity of labour demand
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No. 1701
28 Jul 2014
European competitiveness - A semiparametric stochastic metafrontier analysis at the firm level
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No. 1615
20 Nov 2013
Fragmentation, incomes and jobs: an analysis of European competitiveness
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No. 1603
05 Nov 2013
Competition in the Portuguese economy: insights from a profit elasticity approach
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No. 1596
15 Oct 2013
Managers' mobility, trade performance, and wages
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No. 1554
12 Jun 2013
Business groups as hierarchies of firms: determinants of vertical integration and performance
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No. 1482
02 Oct 2012
Optimism bias? The elasticity puzzle in international economics revisited
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Firm-level-based database

CompNet has created an EU firm-level-based database. The dataset is unique in terms of its coverage and cross-dimensional analysis potential as it links, for example, trade or the financial status of firms with their productivity.

To preserve the confidentiality of firm-level information and to improve cross-country comparability, CompNet has adopted the “distributed micro-data approach” as developed by Bartelsman et al. (2004). In this approach a common methodology is used to:

Micro data - Country teams expertise - ECB Data harmonization and preparation
  • extract information from existing firm-level datasets available within each National Central Bank (NCB) or National Statistics Institute (NSI)
  • aggregate indicators at industry, macro-sector and country level to resolve confidentiality issues
  • harmonise the resulting set of indicators across countries in terms of the definition of measurements and the treatment of outliers, deflators and Purchsing Power Parities (PPPs).

The final outcome is a wide range of indicators, based on micro-level data, which can be used systematically to analyse competitiveness-related issues.

Available indicators by area of research

Productivity

CompNet provides a large set of the most widely recognised indicators to analyse productivity trends and levels over time. These indicators allow researchers to take country-specific snapshots, study productivity divergence across EU countries, and gain a better understanding of the causes behind the resource allocation process.

Productivity indicators include:

  • Labour productivity
  • Real value added
  • Total factor productivity (TFP)
  • Marginal product of labour and capital
  • Olley and Pakes gap (OP gap)
Financial

CompNet financial indicators provide extensive information regarding the financial and financing condition of firms.

Financial indicators include:

  • Leverage
  • Return on assets (ROA)
  • Capital depreciation (and growth)
  • Indicator of credit constraints
  • Cash flow ratio
Trade

CompNet trade indicators enable researchers to focus on the linkage between firms’ international activities and productivity.

Trade indicators include:

  • Share of exporting firms
  • Export value
  • Export ratio
  • Export value added
  • Correlation of firms' characteristics with export value
Markup

CompNet provides a large set of indicators of market competition and its dynamics over time.

Markup indicators include:

  • Price-cost margin
  • Market share
  • Concentration ratio for the 10 largest firms
  • Herfindahl-Hirschman index
Labour

CompNet labour indicators allow researchers to analyse employment dynamics at a granular level. In constructing the database, CompNet traced firms’ growth over time.

Labour indicators include:

  • Number of employees
  • Labour cost
  • Unit labour cost
  • Wage share
  • Employment change

How to access data

All researchers can apply to have access to the firm-level-based CompNet data by submitting the data request form to the CompNet team.

CompNet members and participating institutions that would like to access the data are requested to submit a shortened project description that is available upon request.

Please refer to the CompNet Governance Rules for more information on the procedures for data use and its dissemination.